Rushing from Gas Pumps to Charging Stations? Consider the Consumer by Allan Vivian

Rushing From Gas Pumps to Charging Stations? Consider the Consumer By Allan Vivian

In 2009 the U.S. Congress passed legislation that mandates a corporate average fuel economy standard of 35.5 miles per gallon by the 2016 model year. By September 2011, the Obama administration plans to establish new standards that will apply to the 2017 through 2025 model years. These standards will likely increase the pressure on manufacturers to design, build, and market more fuel-efficient vehicles during the remainder of this decade and beyond. Among automobile manufacturers, the transition to more fuel-efficient and environmentally friendly vehicles has Many more alternative powertrain vehicles are now in the been going on for quite some time, but this phenomenon pipeline, including new body-style variations of the leading is accelerating in 2011. January 2011 marks the first time hybrid vehicle, the Toyota Prius. Hybrid vehicles differ that an executive from a major automotive manufacturer from plug-in hybrid, because they retain a gasoline engine has publicly thrown down the gauntlet to his peers and that powers the vehicle alongside a battery. The gasoline declared, “Let’s remember, the destination for all of us is engine kicks in only when needed, and this results in much zero emissions.” By implication, he may also be saying, the higher fuel economy than a conventional gasoline engine. ultimate goal is a world where gas pumps will be replaced Toyota plans to bring 12 new or redesigned alternative-fuel by charging stations. vehicles to market by the end of 2012.

No one expects this transformation to occur any time The U.S. consumer is now, and will continue, in the soon. However, judging from the products on display at foreseeable future to be, presented with many new and the 2011 Detroit Auto show, automotive manufacturers are exciting models that possess alternatives to the standard stepping up their efforts and will soon be offering a bevy gasoline engine. We will soon see how the public responds of alternative powertrain vehicles to the U.S. consumer. to the Leaf and Volt, but consumer reception given to hybrid The Nissan Leaf and Chevrolet Volt were introduced late vehicles to date, has been less than enthusiastic. For the in 2010. The Leaf is a true electric vehicle, with a range past three years, hybrid sales have actually been in decline. of approximately 100 miles between charges, and the It has been predicted, though, that this will turn around in Chevrolet Volt is a plug-in hybrid, with a more limited battery 2011, based on an improving economy, higher gas prices range, but with an on-board gasoline-powered engine (fuel prices now tipping the $3.00 per gallon mark in some that recharges the battery while the vehicle is on the road, parts of the country and predicted to go as high as $5.00 extending its range to approximately 300 miles. per gallon) and the proliferation of exciting new hybrid models.

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Plug-in Hybrid Hybrid Vehicle Vehicle Electric Vehicle 28% 27% 22% 21% 19% 14% 7% 2% 2% 2% 0% 0%

Not At All Somewhat Very Familiar Have Driven Own/Owned Not At All Somewhat Very Familiar Have Driven Own/Owned Familiar Familiar Familiar Familiar Question: Automobile manufacturers are developing alternatives Question: Automobile manufacturers are developing alternatives to the standard gasoline engine. How familiar are you with the to the standard gasoline engine. How familiar are you with the following types of automobile technology? following types of automobile technology?

Of course, any sustainable shift away from gasoline- While the 2009 law was no doubt designed with two goals powered vehicles to alternative drivetrain vehicles must in mind: first, to reduce our nation’s dependence upon be accompanied by a shift in consumer acceptance. The foreign oil, and second to reduce pollution caused from first indicator of acceptance is likely to be a significant tailpipe emissions—policies that benefit the collective good increase in consumer familiarity with these vehicles. U.S. of the country—U.S. consumer priorities are inextricably consumers are unlikely to purchase a big-ticket item like a tied to their own wallets. Clearly, the way to consumer new vehicle equipped with an engine with that they have hearts and minds is going to follow a very different path little or no experience with or prior knowledge. Hybrid than federal mandates. Federal legislation alone is unlikely vehicles have been on the market in the U.S. since 1999 to affect the needed change in consumer behavior and when Honda introduced the Insight. Toyota followed a year could ultimately only waste the heavy investment now being later with the Prius. But, despite its availability for over made by manufacturers. a decade, hybrid familiarity among consumers remains surprisingly low. The overwhelming majority of consumers For the transition to take root among consumers, two still lack firsthand knowledge of anything but the standard factors are critical. The first is that they must feel these gasoline engine-powered vehicle. alternatives provide them with an attractive opportunity to reduce or eliminate their expenditures on gasoline. As the Auto Technology Familiarity—Hybrid chart above This is the most influential consideration for consumers. shows, less than one in ten (9%) of those currently in the Certainly, if gas prices remain high or go higher, this will market to buy a new vehicle have actually driven or owned have a significant impact on consumer interest in these a hybrid. Approximately two-thirds of U.S. new vehicle new vehicles. The second factor is likely to be the tougher intenders today say that they are only somewhat familiar of the two for manufacturers to achieve. The price of the or not at all familiar with them (63%). In order for the vehicle needs to be lower than, or at least competitive transformation to charging stations to take place, we would with, gasoline-powered vehicles. Consumers must be expect this statistic to be one of the first things to change. convinced by the MSRP on the Monroney sticker in the window of that shiny new vehicle that it will cost them no More recently developed products, like the plug-in hybrid more, and preferably less, to purchase or lease a vehicle and the electric vehicle just now coming to market, are with alternative drivetrain technology than one that is gas even further back on the consumer familiarity curve. More powered. Other considerations such as maintenance than three quarters of consumers currently in the market to cost and range are also important to consumers, but if the buy a new vehicle are not at all or only somewhat familiar first two factors are not addressed, the others won’t really with them. See Auto Technology Familiarity—Plug-in matter. See Most Influential Vehicle Characteristic chart Hybrid/Electric chart above. on page 3.

Lower Fuel Costs 31% Hybrid Vehicle 33% 10% Less Expensive to 25% Purchase/Lease Somewhat likely Plug-In Vehicle 17% 3% Less Expensive to Very Likely Maintain 12%

Offers Equivalent Electric Vehicle 16% 4% Range as Gas Vehicle 10%

Reduces Our Country's 9% Question: How likely are you to purchase a vehicle equipped with Dependence on… the following powertrain or fuel types for your next vehicle? Better for the Environment 8% PurchasePurchase Likelihood—Next Likelihood – Next purchase 10 Years Offers Equivalent Acceleration 3% Hybrid Vehicle 36% 20% Offers Equivalent Engine Speed 2% Somewhat likely Plug-In Vehicle 27% 10% Question: If you were to consider purchasing a vehicle that Very Likely had an alternati