What kind of pricing pushes hybrids or EVs towards at least 10 percent of market share?
Watching some March Madness action this weekend, I noticed that hybrids and plug-ins have found some serious face time in this year's commercial mix. The Lexus CT 200h, the Infiniti M35 hybrid and the Chevy Volt have enjoyed heavy exposure so far in this year's annual college basketball tournament. Unfortunately, the cheapest vehicle in this list still starts at $30,000.
Then this morning, the buzz in the auto world was the announced launch of the Porsche 918 plug-in hybrid, starting at just $850,000.
Are hybrids and plug-ins still just vehicles that mostly resonate only with upper class Americans?
After more than 10 years on the market, hybrid vehicles still account for less than 3 percent of all US auto sales. And, while consumer studies suggest that most Americans are interested in either hybrids, plug-ins or both, most just aren't buying. Sadly, new car consumers have ultimately indicated they just don't want to pay extra to buy a hybrid, despite any long term fuel savings. Certainly, some are willing to pay extra, but even most in that consumer segment want payback in just a couple of years or less – typically far shorter than the average payback time for battery-powered vehicles.
Coincidentally, gas prices are again on the rise, and hybrid demand is increasing, but what's the real potential of these vehicles? Will a significant percent of new consumers move to hybrids, or would they rather downsize to smaller, cheaper vehicles?
Most automakers seem to be betting on smaller, cheaper vehicles. Consequently, consumers just might not have much choice, even if they want to go hybrid or EV.
Even hybrid king Toyota seems unwilling to make the Hybrid Synergy Drive, the powertrain of the Toyota Prius, the standard powertrain for the majority of its vehicles. One pullback in gasoline prices, it seems automakers worry, and US consumer interest in fuel efficiency instantly declines.
Interestingly, this current gasoline spike might be different than past spikes. North Africa and the Middle East seem destined for years of turmoil, making energy future's speculation an integral part of oil pricing for the foreseeable future. Couple that with a possible shift away from any nuclear power, and demand for fossil fuels could increase far more than analysts have been forecasting.
$4.00 gas could be around for years.
Undoubtedly, higher gas prices will make many hybrids and EVs more appealing to more consumers. Unfortunately, if supplies can't quickly catch up to demand, then hybrid and EV prices will only increase – as happened in 2008 – decreasing cost-effectiveness, and demand. Resolving this supply and demand conundrum could take years, even longer if demand for such vehicles significantly spiked.
Is there any fix for this problem?
If $4.00 or $5.00 gas is the new American norm, will automakers drastically change their product portfolios towards hybrids and plug-ins? Can they? Or, have automakers committed to keeping hybrids and EVs as options only for the wealthy until they can be guaranteed forever more profitable compared to conventional technologies?