With many auto makers currently selling, or planning on selling, alternative fuel vehicles a study released by J.D. Power and Associates is worrisome. The study concludes that there are “relatively few consumers” in the American alternative fuel vehicle market. It estimated that the alternative fuel vehicles will capture less than 10% of the U.S. market by the end of 2016.
Alternative fuel vehicles are indeed on the rise in the United States and capturing around 10% of the U.S. market in five years is nothing to scoff at. However, while gas prices are continuing to climb and alternative fuel vehicles are becoming more available the 10% figure does seem a bit low.
J.D Power and Associates’ study looked at the attitudes of American consumers towards four main alternative power train technologies– gasoline-electric hybrid vehicles, clean-diesel engines, plug-in hybrid vehicles, and battery-electric vehicles. The study concluded that consumers did acknowledge the saving of money on fuel and positive environmental benefits of owning alternative fuel vehicles. 75% of consumers cited lower fuel costs as a main benefit of alternative fuel vehicles while 50% cited “better for the environment” as a main benefit of these vehicles. The study also found that some consumers had concerns about the performance of alternative fuel vehicles such as driving rage and maintenance costs; but the main issue keeping consumers away was the high price tag of alternative fuel vehicles.
The purchase price of alternative fuel vehicles will be even more of an issue in the years to come. At the end of 2010, tax credits from the Energy Policy Act of 2005 were stopped eliminating an up to $4,500 in federal tax credits for hybrid vehicles. Eventually Congress will eliminate the $7,500 federal tax credit that lowers the purchase price of plug in alternative fuel vehicles such as the Chevrolet Volt. “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.” said Mike VanNieuwkuyk the executive director of global vehicle research at J.D. Power and Associates.
Battery-electric vehicles ran into two major dilemmas for consumer according to the J.D Power and Associates’ study; one being the high price tag of the vehicle and the other being the lack of public charging stations. Clean-diesel engines that can currently be found in some Audi and Volkswagen models have run into problems in recent years as well due to lack of availability and the rising cost of diesel fuel. Additionally, negative views of older diesel powered vehicles continue to affect perceptions of clean diesel vehicles and keep consumers away.
At the end of the day the J.D Power and Associates’ study found that consumers are interested in alternative fuel vehicles and do understand the positive benefits of the technologies. Unfortunately, it once again comes down to the all mighty dollar as it is the high price tag of the alternative fuel vehicles that is currently keeping American consumers away. Only through promotion, education, and a significant drop in the price of the technology will a noteworthy numbers of American consumers become comfortable with both the financial investment and lifestyle changes needed to make the leap from traditional fuel vehicles to alternative fuel vehicles.
UPDATE: The Consumer Federation of America responded to the J.D. Power study by saying that 1 million plug-in vehicles on the road by 2016 will a positive, not a negative. Read the response here.
Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail.