Westlake Village, California – The U.S. market for “green” vehicles remains limited for the foreseeable future despite rising fuel prices, according to a new report by J.D. Power and Associates. The company said that the growth of alternative powertrain vehicle sales will be limited by consumer concerns about costs and functionality.
Despite a rapid increase in the number of alternative powertrain models expected in the next several years, automakers will be fighting over the relatively small number of consumers who are willing to “drive green.”
The study examined the attitudes of U.S. consumers toward hybrid electric vehicles, clean diesel engines, plug-in hybrid electric vehicles and battery-electric vehicles.
While consumers often cite saving money on fuel as the primary benefit of these vehicles, the reality for many is that the initial cost of the vehicles is too high, even as fuel prices in the U.S. approach record levels. Although consumers also recognize the environmental benefit, this is mentioned far less frequently than saving money on fuel. The study found that 75 per cent of consumers who indicated they would consider a hybrid cited lower fuel costs as a main benefit, with only 50 per cent citing “better for the environment” as a main benefit. Consumers not considering purchasing these vehicles also recognize the fuel cost savings, but cite significant perceived or actual impediments to ownership, including purchase price, driving range, increased maintenance costs and compromised vehicle performance. These consumers are far more likely to buy a more fuel-efficient conventional vehicle than an alternative powertrain.
“Alternative powertrains face an array of challenges as they attempt to gain widespread acceptance in the market,” said Mike VanNieuwkuyk, executive director of global vehicle research. “It is the financial issues that most often resonate with consumers, whether it is the higher price of the vehicle itself, the cost to fuel or charge the vehicle, or the fear of higher maintenance costs. The bottom line is that most consumers want to be ‘green,’ but not if there is a significant personal cost to them.”
VanNieuwkuyk said that concern over the purchase price of alternative powertrain vehicles has become even more of an issue in 2011, since U.S. tax credits for these vehicles under the Energy Policy Act were phased out at the end of 2010.
“Hybrid electric vehicles have been available in the automotive market for more than ten years, and consumer awareness and understanding of them has grown during that time,” VanNieuwkuyk said. “As concerns about the functionality and performance of hybrid vehicles have abated, vehicle price has become more prevalent as the primary purchase impediment. Without a tax credit to offset the price premium, consumers must absorb all of this additional cost. Furthermore, aggressive government subsidies are unlikely to be sustainable over the long term. Ultimately, the true cost of the technology needs to come down substantially.”
Although there are also significant price premiums for battery-electric vehicles, functional concerns such as driving range and charging site availability are the two concerns cited most often by buyers who are not considering this powertrain. The so-called “range anxiety” contributes to battery vehicles having the lowest consideration levels of the primary alternative powertrain technologies. For clean diesel engines, fuel prices and availability have long been impediments to technology acceptance. Negative perceptions of older diesel-powered vehicles also continue to affect perceptions of clean diesel vehicles, with consumers frequently citing concerns about emissions and exhaust odour. VanNieuwkuyk said that advocates of clean diesel engines “tend to be some of the most vocal among consumers who tout the benefits of their chosen technology,” but “this consumer group is relatively small. Clean diesel technology continues to struggle not only against concerns about cost and perceived fuel availability, but also against the lingering perception that diesel is ‘dirty’.”
J.D. Power and Associates expects that by the end of 2016, there will be 159 hybrid and electric vehicle models available for purchase in the U.S., a significant increase from only 31 models available in 2009. Despite this, automakers, government entities and others “have considerable work to do in educating consumers as to the true costs and benefits of these technologies,” the company said.