Hybrid Impediments

Why must doing the right thing be such a costly enterprise?

Looking for a new car, a hybrid vehicle seems a natural choice. Saving significantly on gas, I figure, would be good for my personal economics, while contributing to reducing our nation’s dependence on imported oil and helping to improve the environment.

So eager was I to join the hybrid wave, I walked into a Honda dealer two years ago and put down a $500 deposit to become one of the first to buy the new hybrid Accord. The fact that it would cost about $5,000 more than the standard Accord model did not, at first, dampen my enthusiasm.

As I awaited the call alerting me that the car had arrived at the dealership, I paused to consider how long it would take for any reduction in gasoline usage to compensate for the premium affixed to the purchase price. It did not add up.

Sticker shock was the first disincentive. In this, Honda is not alone. Car manufacturers typically charge several thousand dollars more for a hybrid version than a standard model. Toyota’s suggested retail price for a 2008 hybrid Camry, for example, is nearly $7,000 more than a standard model.

Car manufacturers might argue that those who desire a hybrid will pay the price. Yet, after ten years of sales, such “green” cars account for only two percent of the market.

Does the technology, which we are told is designed to help the nation, the environment and us consumers, really cost that much more? How is that surcharge supposed to encourage mass use of this technology?

A 2005 survey by the Polk Center for Automotive Studies confirmed that many do not want to spend the additional money. Sixty-one percent of those surveyed indicated that the cost to buy a hybrid could be a hindrance. Nearly 30 percent of respondents believed benefits they would receive from a hybrid would not justify the extra investment.

To ease the pain of the surcharge – and apparently to encourage hybrid sales – the Energy Policy Act of 2005 provided for tax credits, beginning as high as $3,100, depending on the car manufacturer and model.

However, this apparent incentive came with a legislative catch. In deference to U.S. automakers, which already were far behind Honda and Toyota in developing the technology, Congress imposed limits. The tax credit would gradually phase out after 60,000 cars of a certain model were sold. Disappointingly, but not surprising, Toyota’s popular Prius is no longer eligible for the tax credit. The future of the credit, for whatever hybrid car, is in doubt.

So, the second disincentive is elimination of the tax credit. That offer, in retrospect, seemed designed not so much to encourage the purchase of hybrids, but to protect American automakers from foreign competitors.

The current lack of incentives to encourage consumers to purchase hybrid cars is a shame. Further, as the New York Times pointed out in a special Cars section (Oct 24), vehicles are not a twenty-first century innovation. “More than once the technology has been championed as a breakthrough” during the past century, reports the Times.

But, given the ebb and flow of interest in hybrids, achieving a sustained commitment to developing and marketing such vehicles has been more than challenging. The result is a niche market for those who don’t mind paying more for “green” items, like organic food, because it makes one feel good about doing good.

Indeed, that’s sort of the idea behind the luxury line of hybrids, like the Lexus, which may not achieve an energy-efficient rate of miles per gallon. The Lexus gets only 26 mpg, according to the U.S. Department of Energy – but, heck, it is a hybrid!

Today, when the price of oil is nearing $100 a barrel, when there is a growing recognition across the U.S. that the environment is endangered, government leadership, in partnership with car manufacturers, is needed urgently to encourage a shift in consumer thinking regarding the advantages of hybrids.

To succeed will require moving beyond rhetoric and doing something tangible so that consumers can do right in an affordable, not a more costly, way.

Kenneth Bandler is AJC’s Director of Communications.