The other day I posted about how Americans wont be fooled again, buying gas guzzling SUV’s because fuel prices are at a relative historic low, as are wages.
But instead of being proven right I read an article just days later that we are not buying hybrids or high gas milage vehicles but once again the sales of SUV’s are on the rise in the April 22 USA Today “Earth Day or not, hybrids take a hit”.
The article states that many electric or hybrid owners are less likely to trade their current vehicles in for another hybrid but would get an SUV instead.
The article goes on to say that “For better or worse, it looks like many hybrid and EV owners are driven more by financial motives rather than a responsibility to the environment,” says edmunds.com Director of Industry Analysis.
Although the impact on the environment does have a cost though we choose not to quantify it. It’s an unaccounted for externality that makes the Internal Combustion Engine (ICE) Vehicles look cheaper than they actually are.
I question who the sample size or who these vehicle owners are. Just a look around the streets and highways of Phoenix, Arizona (where I live) you will see lots of hybrids. And many of those are older cars from the first generation Prius as well.
From the looks of things, hybrid owners don’t replace their cars that often. In the last year, as well, I have seen many new model (2014+) hybrids on the road. My mother just bought one, a 2015 Prius V. So in my opinion, any car company that forgoes hybrids and BEV’s or PHEV’s and builds lots of SUV’s is doomed to repeat the mistakes of the past that allowed Japanese car makers to take much of the US market share that they retain to this day.
As long as car makers let fuel prices decide what they build instead of sound long term strategies the shortsighted idea of current fuel prices staying low forever will lead car makers off the cliff of bankruptcy over and over.
Efficient cars should lead fuel prices lower instead of low fuel prices leading to cars that consume more fuel which has historically lead to higher fuel prices.
Innovation leads to success. Henry Ford was an auto industry innovator. Maybe the last one. Why? Because many of the innovations of the auto industry in the last 50 years were forced on them by regulation. Seat Belts, MPG requirements just to name a couple biggies. For the most part the auto industry is like your grand parents. Dragged into the next century kicking and screaming if they don’t die first.
The article also states that GM has temporarily halted production of the Volt. Well, considering they announced that next year they will have the Volt 2.0 that’s going to be significantly better, who’s going to pay full price for last years technology. They might as well keep dropping the price till the last buyer wants it so cheap it makes more sense to donate them to a charity for the tax break.
People who can pay full price for an iPhone don’t go running out once the timeframe for the new iPhone is near. Which is why Steve Jobs kept the next big thing a big secret till it was ready for sale.
And while car dealers give rebates and incentives on last years model all the time cars like the Volt will be much more sensitive to new model announcements. Many of the people buying these cars want the latest and greatest tech. This will also become more common on all cars as things like blind spot monitoring, adaptive cruise control and a host of many other technologies become more prevalent in cars of all trim levels.
The USA Today article also talks about dismal sales of Plug in Toyota hybrids being down 61%. That might have something to do with the fact that it’s hard to find one on a dealers lot if you don’t live in a CARB State.
Toyota only sold their Rav4 EV in California. Yet I personally know 3 people who bought one and brought it back to Arizona. They love that SUV. Even though it’s sort of a bastardized RAV4.
Honda only sold their Fit EV in AZ for a very short time and then only leased them. And then discontinued making then shortly there after.
I’m not sure car dealers like EV’s much, especially BEV’s as they require so little maintenance. A large profit center for dealers.
When I was car shopping with my mother earlier this year their were no plug in Prius’s to be found in Arizona. How can someone buy one when dealers don’t have them to sell?
And when I went shopping for my Ford Focus Electric (FFE), you couldn’t find any of those in Arizona either. At least The dealers sold them all 20 minutes after they hit the lot. I had to go to California to buy mine. And the economics made sense. And they still make sense as gas prices are actually 15% higher than the day I bought it. The price of gas would have to go to 70 cents a gallon to equal the price of electricity per mile. And since most of the electricity produced at night is from nuclear the amount of carbon per mile is much lower.
The tags in AZ for the equivalent Ford Focus are $500 for the first year. The cost of the tags for my Focus, $60 for 5 years. Access to the HOV lane. I would say you can’t put a price on that but you actually can. There are people who can no longer get a HOV access plate with a new hybrid car who are leasing plates from prior Prius owners for $1000 per year.
If people are buying SUV’s and trading in their hybrids it has nothing to do with the economics. It has more to do with the emotions.
Hybrids for the most part are pretty boring and very utilitarian. The Toyota Prius does make a great Taxicab though. It has a very large back seat with lots of legroom.
The fact that hybrids are so boring is why Tesla is so successful. Their cars, while quite expensive are actually fun to drive. They don’t handle like a box truck. They aren’t the bottom of the line trim levels. But the VW Golf E, The Kia Soul E and Ford Focus E are actually very nice cars as well and at the top trim levels can be had for less than 30k after the tax credit.
Had Ford not dropped the price of the FFE to 32k and the dealer not also dropped another 2k off the price I would have probably bought a Volkswagen Golf Electric. Another car maker who chose to go top of the line trim instead of bottom of the line trim. Just like the FFE. That’s what swayed me away from the Leaf. In order to have the price make sense the only Leaf would have been the S or bottom trim level.
One other thing car makers need to do, not just in their EV vehicles but all vehicles is stop selling expensive Nav packages with old useless tech. Almost everybody today has a smartphone. All they need to do is put the necessary interfaces for people to use their smartphones. At least Tesla chose to make their tech an improvement on current display tech vs using 3 or 4 year old tech in the average new car.
Like 15 or 20 years ago nobody new they wanted let alone needed a smartphone and that they would become as ubiquitous as watches were just 20-70 years ago. In 10-20 years the Electric Vehicle that primarily drives itself, will be the new iPhone. All it takes is some leadership and vision from an industry that has a dismal track record of predicting the future.
Elon Musk will be seen as the next Steve Jobs but just like Apple it took companies like Google, Samsung and LG to join in on the road to the future we now know. Maybe it’s time those companies take their huge stockpiles of cash and start building cars while the current car companies fade into the sunset and stop perpetuating the myth that bring hydrocarbons is good for the planet.
While GM got it’s bailout, like Chrysler before it, this will probably not be the last time we see a big automaker in need of a financial lifeline. It’s time they stopped being pretending to be experts. The last thing they need to do is build the next Hummer. If they can’t lead they need to follow or just get the hell out of the way.
This time if we support innovators with the bailout money instead we can transform our society into the future sooner rather than later.