My 11-year-old son enjoys a wide variety of activities: tennis, singing and reading are just a few. However, his favorite hobby seems to be correcting his 7-year-old sister.
When my wife and I tell him that his sister is only 7 and it's OK if she believes in Santa Claus or thinks that raccoons are cuter than puppies, my son almost always gives the same answer. It goes something like this: "But I'm right! How could Santa travel all over the ..."
We've tried to remind him that being right isn't always the best thing. We also tell him it matters more how he treats his sister and that it's OK for her to think raccoons are cute, or that Santa is real.
The same can be said of alternative-fuel cars. In many ways, it doesn't matter what's true, it matters what the public thinks is true. And in this case, the public thinks hybrids, EVs and diesel-powered cars are too expensive.
The future pricing of alternative-fuel cars will likely determine their success or failure.
AutoTrader.com recently conducted a survey asking people who say they have "some knowledge of alternative-fuel vehicles" about their reasons for considering or not considering an alternative-fuel car.
Seventy percent of those surveyed said "better fuel economy" is a reason for purchasing an alternative-fuel vehicle. Seems logical, right?
Yet when it comes to hybrids and plug-in hybrids, about 70 percent of those surveyed selected "too expensive to purchase" as their reason against buying a hybrid or plug-in hybrid.
Granted, this doesn't explain how my daughter thinks a large rodent with a striped tail is cuter than a puppy, but there is an easy translation for new car shoppers: They don't believe the money saved on fuel is enough to offset the extra cost of buying an alternative-fuel car or truck.
Basically, most people don't want to spend $36,000 on an all-electric Ford Focus. Based on their answers, it seems they're likely unaware of affordable alt-fuel cars like the Toyota Prius c ($19,080), Honda Insight ($18,725) or Honda CR-Z ($19,995).
The federal tax credits often touted by automakers don't seem to matter much to the average shopper either, according to AutoTrader's survey. Only 24 percent of those surveyed listed "Federal Tax Credit" as a reason for considering a diesel, hybrid or all-electric car.
However, drop the price a little and chances are they'll quickly change their mind. How do I know? "Too expensive to purchase" is the first reason listed for not considering a hybrid or plug-in hybrid, and the second reason for not considering an all-electric car.
Nissan provides more evidence. Earlier this year, Nissan lowered the price of the all-electric Leaf and offered a special lease rate of $199 per month. Guess what happened to Nissan Leaf sales? Karl Brauer, senior analyst with KBB.com, says Leaf sales essentially doubled after the price drop. He added "this isn't just a temporary spike. Sales went up immediately and have maintained about 2x threshold ever since."
The bottom line here is that most shoppers thought the Leaf was too expensive despite the money saved on not fueling up at a gas station. Lower the price and an all-electric car like the Leaf suddenly has more takers.
Of course, there are many reasons to consider buying a car that uses very little or no gasoline at all. Some buyers want a car that's better for the environment (28 percent), but most are just looking to save money.
Given what this survey says about EV, diesel and hybrid shoppers, it's easy to see that the lower-priced alternative-fuel cars will likely be the most successful.
Mazda will soon be offering a diesel powered Mazda 6, Kia will soon offer an all-electric Soul and we're anxiously awaiting the all-electric VW e-Golf. If they're not priced right, these cars may not achieve the popularity each company is expecting.
I could never have predicted that my daughter would like smelly raccoons more than puppies, but I can tell you which alternative-fuel cars will be popular: the most affordable ones.
Tax credits, low emissions and super high mpg are all worthy goals, but in the end, it's all about the price. Lower the price and sell more cars -- in this case, it's just that simple.
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