Costs Lock Drivers Out of 'Green' Cars


WESTLAKE VILLAGE, Calif. (TheStreet) -- Green, or lack thereof, is the reason the future of "green" hybrid and electric automobiles looks so gray for the next decade.

According to a report from J.D. Power and Associates, global sales of hybrid cars and plug-in battery-powered cars are slated to reach 5.2 million in 2020. While that's more than five times the 954,500 such vehicles projected to be sold this year, it's only 7.9% of the 70.9 million vehicles J.D. Power believes will be sold a decade from now. That's a scant 5.1 percentage point increase in market share within a decade, and it's all tied to consumer sentiment.

Consumers complaints about hybrid and battery technology included performance and power issues (14%) and complaints that the Toyota (Stock Quote: TM) Prius, Honda (Stock Quote: HMC) Insight, Ford (Stock Quote: F) Focus and other hybrid vehicles were just too ugly (36%). Half of the problem, however, rests in car buyers' wallets; roughly 40% said that hybrid technology was just too expensive, with 10% finding a trip to the mechanic just as costly.

Even after a $7,500 federal tax credit, a 2011 Chevrolet Volt still won't leave the lot for less than $33,000. The all-electric Nissan (Stock Quote: NSANY) Leaf is slightly less expensive, but still costs more than $25,000 after the credit. By comparison, a midsized Nissan Altima is far less fuel efficient at a combined 27.5 miles per gallon, but starts at $20,000. Chevy's top-selling Malibu is similarly thirsty at 27.5 miles per gallon, but can be had for around $22,000 -- or $11,000 (almost an entire Chevy Aveo) less than the Volt.

"Many consumers say they are concerned about the environment, but when they find out how much a green vehicle is going to cost, their altruistic inclination declines considerably," said John Humphrey, senior vice president of automotive operations at J.D. Power and Associates, in a statement. "For example, among consumers in the U.S. who initially say they are interested in buying a hybrid vehicle, the number declines by some 50% when they learn of the extra $5,000, on average, it would cost to acquire the vehicle."

A base-model Toyota Prius can be had for $22,000, similar to the Malibu, but that's still a $6,000 to $7,000 premium over the similarly sized Corolla or Matrix. Camry owners, meanwhile, pay $7,000 or more to upgrade to a Camry Hybrid that gets them only six extra miles per gallon compared with the nearly 20-mile-per-gallon upgrade from the Corolla to Prius.

Unless automakers can make a stronger argument for their mileage and savings, the survey sees only three solutions to hybrid/electric ennui: a spike in fuel prices over the next decade; a technological breakthrough that makes green vehicles less expensive and less likely to leave drivers with huge battery maintenance and disposal costs; and an increased government incentive to buy. Unless China decides hybrid or electric technology is the way to go, throws a lot of money at developers and drops the hammer on efficiency standards -- which is a stretch, considering China is slated to sell 100,000 of those vehicles in 2020 compared with 1.7 million in the U.S. -- those scenarios seem about as likely as Americans dealing with a little noise to go green with a biodegradable Sun Chips bag.

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