DETROIT – It’s about the economy, stupid; that’s the answer alternative-powertrain experts have for the slow adoption of hybrid and all-electric vehicles in the U.S.
Scott Miller, president and chief operating officer of Vision Critical International, a consumer research firm, says the recession brought out a new altruism among new-vehicle buyers who feel an obligation to protect their household income from impractical investments.
And right now, most Americans would consider an electrified vehicle entirely impractical, Miller says.
“As a result of the financial crisis, our paradigm has shifted,” he tells the SAE World Congress here. “Our ability, collectively as 400,000 consumers, to go out and say, ‘I know it might not make financial sense, but I’ll purchase one because it is the right thing to do’” is gone.
“There are a lot fewer of those people today than there were 10 years ago,” Miller adds. “We’re being very practical today.”
Hybrids accounted for 3.1% of light-vehicle sales through March. EVs represented a fraction of that, just 0.5%, WardsAuto data shows.
Earlier this month, market-research firm R.L. Polk found only 35% of HEV owners buy another hybrid when they return to the market. Take away an industry-high return rate of 60% for owners of thePrius and the market-wide figure drops to 25%.
Higher fuel prices, which according to the American Automobile Assn. closed yesterday at $3.85 per gallon, are not driving return purchases of HEVs and EVs, Polk determined.
Miller argues that during the economically headier days before the recession, when Polk’s sample group bought their first hybrids, buyers were not considering the overall value proposition of the alternative-powered vehicles.
Most experts agree payback for a consumer buying more-costly electrified vehicles takes an average of seven years, too long for a majority of buyers financing their new vehicle over five years.
“Ten years ago, hybrid owners did not do the math,” Miller says. “They just thought it was the right thing to do.”
But Timothy White, head of powertrain development at, warns: “There will always be people that don’t do the math, and we have to be aware of that and as an industry be prepared for shifts in the market due to either consumer acceptance, economical or political situations.
“You’ve got to have these technologies in your portfolio,” he says. “Maybe not in volume, but they have to be there and ready.”
Being prepared for market uncertainties is a key driver behind the strict new corporate average fuel economy rules from the Obama Admin., with its authors arguing a lack of fuel-efficient vehicles during the fuel spike of 2008 helped doom the businesses ofand .
By 2017, the U.S. new-vehicle fleet must attain an average of 35.5 mpg (6.6 L/100 km) and a proposed 54.5 mpg (4.3 L/100 km) by 2025. The 2017-2025 rules include a mid-term review to determine if they are proving successful, and the bogey could go higher.
“If the industry is successful and the consumers are accepting advanced technology, when we get to that mid-term review, we can’t preclude that we maybe can do even better,” says James Tamm, Fuel Economy Div. Chief Office of Rulemaking at the National Highway Traffic Safety Admin., which drew the new CAFE rules.
Tamm thinks the new U.S. rules also will make auto makers more competitive on a global basis by diversifying the technology available across all the vehicles they build.
“It can’t do anything but help, as far as enabling those products to be used globally,” Tamm says. “It should be a plus for those involved in the U.S. market.”