Here’s a story likely to put a damper on Earth Day celebrations. Faced with low gas prices, Americans are turning out to be fair-weather friends when it comes to hybrid and electric cars. And what are they buying instead? Gulp ... SUVs! The Great American SUV Delusion is back with a vengeance.
When gas hit $4 a gallon, you couldn’t give away Hummers and Chevrolet Suburbans. With $2.50 gas, the situation has reversed: According to Edmunds.com, 22 percent of the people who traded in either a hybrid or electric car this year have opted to drive home in a new SUV. The green-car-to-SUV rate was just 18.8 percent last year. All told, 45 percent of 2015 trade-ins have been replaced with another alternative-fuel vehicle (down from 60 percent in 2012).
If you believe, as I do, that we need to plug in our entire vehicle fleet because of climate change imperatives, a return to gas-guzzling SUVs (along with a potential rise in vehicle miles traveled because of those low fuel prices) is the worst possible news.
With these kings of the road in the way, there's no room for electric cars. (Photo: David Valenzuela/flickr)
“I think that green vehicles have become mainstream, so the unique quality isn’t there anymore,” Edmunds analyst Jessica Caldwell told me. “Gas prices are really low, and internal-combustion engines are so much better and more fuel-efficient, that green cars are a less-enticing proposition for a lot of people.”
Caldwell said that if fuel goes back up to $4, we might see a change again — the public tends to flip-flop on this issue. “But I don’t know — small cars and crossovers offer a lot of competition at a lower price point.”
She sees it as an economic issue. Debating between a Camry or a Camry Hybrid? At $4.67-per-gallon gas (the price in October 2012), it takes five years to pay down the higher hybrid bottom line. At $2.27 (the price now) it would take 10.5 years.
The just-concluded New York International Auto Show was a crossover introduction festival, and even supercar makers are coming out with SUVs now. It’s a bit grim out there, at least if you thought that the auto industry was evolving.
But there are still plenty of positive signs. Some 10,341 plug-in cars were found U.S. homes in March, up from 6,951 in February and 9,650 in March of 2014. Mercedes is investing $1 billion to build electric powertrains at a factory in Germany; some 50,000 EVs have been sold in Norway (which has great subsidies) and 6,000 were sold in the U.K. in March.
But the percentage of alt-fuel vehicles in the national mix is down, from 3.3 percent in the first quarter of 2014 to 2.7 percent in 2015. Meanwhile, SUVs are thriving, taking 34.2 percent of the American market in Q1 2015 versus 31.8 percent in Q1 2014.
So low gas prices are great for the family pocketbook and the corporate bottom line, but they suck the life out of the clean car market.
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- Low gas prices hurt hybrid market