Are Green Vehicles Overhyped?

Hybrids, electrics and other alternative vehicles are dominating automotive news these days. General press hype started the drumbeat. Here at Driving Today, we’ve done story after green story on hybrids, plug-in hybrids, electric vehicles (like the Chevrolet Volt) and battery-electric cars (like the Tesla Roadster and Nissan LEAF). Based on media coverage, you might get the impression that the majority of new cars will soon be alternative. And you might think the gasoline engine is headed down the path of the passenger pigeon.

But that impression is very wrong, according to a new report from market research firm J.D. Power and Associates. The title of the report, Drive Green 2020: More Hope than Reality, offers more than a flavor of what’s contained in it.

Frankly, there’s both positive and negative news on electric car sales for alternative vehicle advocates.

Alternative Vehicle Sales in the Big Picture

On the positive side for proponents of alternative vehicles, the research report predicts electric car sales will shoot up sharply in the next decade. This year, J.D. Power and Associates predicts that fewer than one million alternative vehicles (battery electric and hybrid electric) will be sold worldwide. It expects some 5.2 million alternative vehicles to be sold in 2020. That, obviously, is a big increase. But considering projected market share (the percentage of total hybrids and battery electric sales vs. total vehicle sales), alternative vehicles won’t dominate the market. 

This year, hybrids and battery-electrics are expected to make up 2.2 percent of the 44.7 million new light vehicles sold. While J.D. Power and Associates expects that market share to triple by 2020 -- to 7.3 percent of the 70.9 million car sales forecast worldwide -- that’s still far from dominant

So after all the publicity, after all the talk about green cars and green jobs, why are alternative vehicle sales expected to remain less than 10 percent of total car sales? The report suggests that, for a number of reasons, “it will be difficult to convince large numbers of consumers to switch from conventionally powered passenger vehicles to HEVs (hybrids) and BEVs (battery-electric vehicles).” In essence, the typical consumer has big questions about alternative vehicles. And while vehicle manufacturers can address some of those concerns, others will be much harder to solve.

Consumer Concerns Damper Sales

So what are key consumer concerns? The most addressable include:

  • Styling. Alternative vehicles’ current look and design disdains consumers -- somewhat ironic since auto manufacturers intentionally decided to give their hybrids (including the Chevrolet Volt) and battery electrics distinctive exterior and interior styling. While that gambit might appeal to early adopters and those who want to be seen as environmentally correct, it doesn’t appear to appeal to the mainstream consumer. Of course, manufacturers can address design in new versions of their alternative vehicles.
  • Power and performance. Dissatisfaction with overall power and performance also concerns customers. While current hybrids are far from race cars, they generally perform well. And the latest additions to the alternative-vehicle category, the electric Chevrolet Volt and the battery-electric Nissan LEAF, offer excellent all-around drivability. Both vehicles accelerate better than consumers might typically expect. These are not golf carts. As more hit the road, word will get out.
  • Reliability. Consumers also worry about the reliability of new technologies. While we can’t offer an opinion on the reliability of the Volt or LEAF -- they’re too new to the market -- the overall record of hybrids like the Toyota Prius, Honda Civic Hybrid and Ford Escape Hybrid have been very, very good. Again, as more vehicles sell, the word will spread.

Other consumer objections will prove much harder to address:

  • Driving range. Anxiety about driving range and battery recharge time has always been the bane of battery-electric cars. Current “pure” electrics offer a practical range of 100 miles or so before requiring rather lengthy battery recharge. That might well be a deal killer for many buyers accustomed to driving 300 miles on a tank of gas, filling up in five minutes or less, and going 300 more. The Volt uses an on-board gasoline engine to keep the battery pack at a proper state of charge, increasing theoretical range substantially. But to reach that range, drivers must buy and burn gasoline.
  • Cost. All things considered, the most important reason most consumers are likely to shy away from alternative-energy vehicles is cost. As J.D. Power and Associates said, “While many consumers around the world say they are interested in HEVs and BEVs for the expected fuel savings and positive environmental impact they provide, their interest declines significantly when they learn of the price premium that comes with purchasing these vehicles.” 
“Many consumers say they are concerned about the environment, but when they find out how much a green vehicle is going to cost, their altruistic inclination declines considerably,” said John Humphrey, senior vice president of automotive operations at J.D. Power and Associates. “For example, among consumers in the U.S. who initially say they are interested in buying a hybrid vehicle, the number declines by some 50 percent when they learn of the extra $5,000, on average, it would cost to acquire the vehicle.”

So, will sales of alternative vehicles remain a relatively small subset of the market? Quite possibly -- but one or more scenarios could change all that. Hybrids and BEVs would get a significant boost if gasoline prices significantly increase over the next few years. Alternative vehicles would similarly benefit if government regulations and tax policy does a great deal more to encourage acceptance. A technology breakthrough leading to better, cheaper batteries would help as well.

While these scenarios are possible, J.D. Power and Associates doesn’t expect any to significantly move the sales needle. And that means that hybrids and battery electrics will likely be much-discussed … but not much-purchased.