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Do Americans have an appetite for EVs and hybrids?
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Will the EV revolution rescue the ailing auto industry or cause another rash of bankruptcies?
A survey conducted recently by Harris Interactive at the behest of Johnson Controls Inc. shows one of the major problems facing the hybrid automobile market…confusion. While almost 9 out of 10 people in the survey believed that “the United States government should support the advancement of battery technology for hybrid cars in the country,” and that “the United States needs to become a leader in the research, development, and manufacture of hybrid cars,” nearly 8 out of 10 believe that current hybrid purchase prices are too high and fuel cost savings are not high enough to convince them to buy a hybrid vehicle now. View the results of the survey HERE.
Americans seem to be confused about hybrid and electric vehicle technology. Nearly 5 out of 10 respondents claimed confusion on the hybrid issue. Costs range from the low $20Ks to over $50K. Some cars are gas-electric hybrids, some are all electric, others combine EVs with flex-fuel engines; some plug into the wall, some charge their batteries from regenerative braking systems. Confused shoppers do not become buyers, and with the number of hybrid and electrical vehicles coming to market in the next few years, without clarification, the end result may be an oversupply and another slew of bankruptcies.
Another concern with EVs and hybrids is that Americans may not be quite willing to embrace smaller cars with lower horsepower yet. Americans have become accustomed to the hum of the internal combustion engine (ICE), as exemplified in the following Volkswagen commercial. The Jetta TDI boasts 58 mpg with no hybrid technology and starts at under $18K; and it has the infamous hum.
How do hybrid and electric vehicles prices compare? Mitsubishi and Subaru both have electric models staged to enter the market in the next few years at around $40K; Nissan’s price is around $30K. The Chevy Volt is slotted to come in around $40K. Toyota and Honda EVs are also prohibitively expensive. Even with the incentives, a majority of these EVs slated for sale are still considerably more expensive than cars with internal combustion engines geared toward driving farther on less gas.
Toyota and Honda’s hybrid models built around a regenerative battery system come in more reasonably around $20K, but these types of cars only provide modest improvements in gas mileage in stop-and-go traffic, and they have higher maintenance costs over the long-term.
GM is banking its comeback on the Volt. “We’ve steadfastly retained all our core, high-volume vehicle, and advanced-technology programs. We foresee no impact on product development. It’s still the No. 1 product at GM,” a GM spokesperson said referring to the Volt. Without $5 gas, GM may be designing its future around another failed business model. Americans don’t seem willing to pay more for EVs or knowledgeable enough about hybrids yet to justify a mass production of the technology.
While government and corporate fleets converting to hybrid or EV technology show considerable savings based upon the sheer volume of vehicles, individual drivers may not have the extra money to throw down on a vehicle in today’s economic climate. The idealized picture painted by the heavy hitters in the industry may, in effect, cause a glut of hybrids and EVs that simply sit idle on auto dealer parking lots because the average American is not yet ready to purchase a more expensive, unfamiliar automobile.
So much stimulus money is flooding into the hybrid industry that any auto executive who does not add one of these vehicles to their production line would be considered crazy. In essence, hybrids and EVs are already slated to be mass produced over the course of the next decade; but with nearly 10% unemployment currently and relatively inexpensive gasoline, the numbers don’t add up for the average American to pay more now to save some later. Even if gas goes to $5 per gallon, it would take several years to make up the cost differential between an efficient combustion engine vehicle and an EV.
Maybe auto executives know something that the average American does not; perhaps a gas tax hike is imminent, making $5 gasoline a regular thing with spikes upwards from there; even then, EVs won’t solve the emission crisis.
One thing is for certain, EVs are not a solution to climate change. With our current grid structure, plugging our vehicles into our electricity sockets will simply require us to mine and burn more coal. Mass producing electric vehicles before any noticeable advancements are made to the electric grid will simply worsen the problem that we are trying to solve.
Gas-electric hybrids may be the logical ‘bridge’ until the grid can be retrofitted; but only 1 out of 4 Americans is willing to pay more for a hybrid, and right now the cost of buying a hybrid is higher than ICE cars.
Whether the transition to more efficient vehicles will work out is still unclear; will Americans gobble them up or will there be a glut? What is clear is the fact that the transition has begun, whether Americans are financially ready or not, and every automaker has become involved in the build-out, afraid they might miss the next big thing.
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