Gas prices have risen $0.40 on average for all grades in the past six weeks, igniting consumer interest in more fuel efficient vehicles. Small car market including hybrids, electric vehicles (EVs) and plug-in hybrids (PHEVs)—soared almost 30 percent to 3.2 percent, its fifth highest month ever. The stars would seem to be well-aligned for EV and PHEV sales to take off, but that has not yet happened. Hybrid sales—particularly Toyota Prius —accounted for the bulk of February's momentum. EV/PHEV market share, meanwhile, fell 30 percent in February. The months ahead could see the same stalling momentum as well.
An argument could be made that the current gas crisis came too soon for electric-drive vehicles.
- Playing hard to get: At least nine EV and PHEV models are expected to become available in 2012, but only three—the Nissan Leaf, the Chevy Volt and the Mitsubishi i-MiEV—are currently available for sale. What’s more, the i-MiEV is not yet available nationwide and the Leaf just this month completed its nationwide rollout. The bigger problem is that all three of these cars are only available on a pre-order basis, with common waiting periods of six months or more (despite the apparent over-production of Volts that recently caused General Motors to halt production for five weeks). Since consumer interest in fuel efficiency tends to be urgent when gas prices spike and then weakens when prices retreat, the order-and-wait process may not appeal to many prospective buyers.
- No charge: Even if vehicles were readily available, one key hurdle that won’t be overcome in the near future is the lack of charging stations. There are over 100,000 gas stations in this country, but only 2,600 EV charging stations, of which more than 300 are private. Charging a vehicle only at home at night is insufficient for some consumers’ driving habits; other consumers are simply plagued by range anxiety and do not want to risk being stranded.
- Losing the numbers game: The main obstacle to EV/PHEV adoption is the price difference between these vehicles and their closest gasoline-powered competitors. For example, compared to a Nissan Versa, a Leaf owner would have to hold on to the Leaf for seven years in order to recoup the price difference through fuel cost savings even if gas prices rise to $4 per gallon. Compared to a Chevy Cruze, a Volt owner would need 12 years. But according to a recent Edmunds.com analysis, consumers tend to own their vehicles for just five to six years, on average.
- Meanwhile, on the other side of the tracks: EVs and PHEVs face increasing competition from a growing roster of highly fuel efficient gas-powered vehicles. The combination of a familiar fuel technology, lower prices and greater selection due to a wider range of vehicles could present a compelling argument for many consumers seeking fuel efficiency to purchase one of these vehicles instead of an EV or a PHEV.
What about you? Will rising gas prices lead you to buy, or at least consider, an EV or a PHEV? If so, why are these issues not a deterrent? If not, which of these issues explains your lack of interest? Are there other factors holding you back?
Posted by Lacey Plache, Chief Economist, Edmunds.com
Lacey Plache is the Chief Economist at Edmunds.com. By training, she is a competition economist and an economic historian, with a Ph.D. from UCLA. She finds it fascinating to analyze the numerous competitive forces at play in the auto industry and to predict emerging trends. And, she thinks it’s a great job perk to go to auto shows and see the latest hot new cars. Lacey spends a significant portion of her time attempting to disprove the notion that economists can neither write nor speak so that the rest of the population can understand what they are saying. When she’s not writing about auto industry economics, she writes poetry in her spare time—usually not about cars or economics. Lacey is an environmentalist when it makes economic sense and is a proud early adopter of the hybrid car and now the plug-in hybrid. Her favorite form of motion is running, followed closely by biking. She also enjoys taking jet planes to beautiful beaches and must take a road trip to the desert every spring. Lacey is delighted to be a guest blogger for Polk and looks forward to lively forum discussions with Polk readers.
You can follow Lacey Plache on Twitter @AutoEconomist.