Is the Volt a cost-effective path to energy independence?
Will $4.00 gas significantly increase hybrid and plug-in sales?
Today, hybrid cars make up less than 3 percent of all US auto sales, with the Toyota Prius alone accounting for more than 50 percent of all hybrid sales. However, as gas prices have increased, interest in hybrid vehicles, particularly in the Prius, has also increased.
So, what will $4.00 gas mean for hybrid market penetration? Will share double, triple or even quadruple? What will $4.00 gas mean for plug-in sales?
Ultimately, is the US finally on the path to energy independence?
Maybe. Still, the US isn’t going to achieve energy independence any time soon.
Even if only electric cars were sold in the US starting today, it would still take more than 20 years to replace all the current gas-guzzlers now already part of the 300 million US automotive fleet. Sadly, the auto industry is nowhere close to such an output.
As of today, Toyota, Ford and Nissan have offered the most aggressive hybrid and plug-in vehicle forecasts for 2020. Toyota believes that up to 30 percent of their sales could be hybrid by 2020. Ford has forecast 10 – 25 percent penetration by 2020 with most vehicles being hybrids, then plug-in hybrids, followed by plug-in electric cars. While Nissan still isn’t producing many hybrids, the automaker has claimed 10 percent EV penetration by 2020 is possible.
Inevitably, even by 2020 US auto sales are still going to be dominated by conventional gasoline-powered vehicles based upon today’s trajectory, or on today’s automaker plans. Consequently, minimally, the US will be dependent upon foreign oil for at least 2 – 3 more decades when the the legacy effect of our current fleet is factored into the equation. Minimally.
If gas prices stay at today’s levels permanently, hybrid and plug-in sales are certain to increase, but even if Prius and hybrid sales quadruple, that’s still only a little over 10 percent of all US auto sales.
Can more expensive plug-in vehicles offer better market penetration?
Let’s say Chevy Volt costs, for instance, decrease to $30,000 within the next few years. It would still take about 14 years for Volt owners to recover their extra upfront costs compared to something like the Prius even if the Volt only used electricity according to the government. If the Volt uses any gas, the numbers extend out even further.
And, while the Volt’s personal foreign-oil fighting credentials are impressive, the extra upfront costs will probably be too big of a barrier for most consumers to overcome. Even the smaller extra upfront costs of the Toyota Prius are too hard for most consumers to overcome today.
For instance, if you have less money to spend because of higher gas costs, why not buy a Toyota Corolla or a Yaris versus a Prius? Sure, both are smaller, but the difference in upfront costs means it would take 10 years or more of $4.00 gas before the Prius would have been a better deal. Again, that’s not apples to apples as the Prius is bigger than both the Yaris and the Corolla, while offering more high tech amenities. Still, such sacrifices aren’t hard to imagine in a tough economy with high gas, food and everything else prices.
The same argument can be made for a Cruze versus a Chevy Volt.
Certainly, some will argue that pure EVs offer a better economic case compared to hybrids and plug-in hybrids, or range extended EVs, as GM prefers to call the Volt. However, 100 mile EVs require a renaissance in US consumer-thinking. That simply isn’t going to happen overnight.
Ultimately, in terms of cost-effectiveness and consumer-friendliness, conventional hybrid cars offer far greater market penetration potential compared to plug-in vehicles like the Chevy Volt, even assuming huge plug-in cost-reductions. Unfortunately, hybrid car potential – even with $4.00 gas – seems limited. And unless vehicles like the Prius and the Volt begin to dominate US auto sales, they offer little towards foreign oil independence.
One way or another, the US is currently on a slow path towards energy independence. Even building nothing but gasoline-free vehicles starting today would still require more than a decade to end foreign oil dependence. Yet, it will probably be decades before such an output is even possible.
Based on the last decade of US oil dependence alone, is it reasonable to assume that the US can survive another 2 -3 decades of addiction?
While hybrids and plug-ins are an important part of the solution, aren’t even more options needed? Sure, $6.00 or $7.00 gas might make hybrids and plug-ins the defacto option for new car buyers. But, if $7.00 gas is just around the corner, how many Americans will even be able to afford a new car?