Disappointing Hybrids

If lotteries are a tax on people who are bad at math, what are Toyota’s profits from Prius sales? The thought was in the back of my mind when I came across the 2006 Alternative Powertrain Study by J.D. Power and Associates.

The study finds that consumers considering hybrid vehicles expect an average fuel economy bump of – hold onto your hats – 28 mpg over a comparable gas-only vehicle (actual improvement: 9 mpg). These expectations aren’t just weird, but 200-mpg carburetor weird.

Though the typical Prius owner may be annoyed to learn he can’t drive from Berkeley to Takoma Park on a gallon of Venezuelan, the shock of realization is less acute than that of the affluent burgher who finds he sometimes needs two credit cards to fill up his H2.

The average hybrid owner is 55 years old with a household income of $113,400 according to the study. That pesky $3,000-$10,000 premium over a comparable gas-only vehicle doesn’t loom large for this buyer, and he probably sees the rolling appliance as a platform for that leftover Re-Defeat Bush bumper sticker, not as a way to save $1.59 per on his next twenty trips to Wal-Mart. This segment is small, with hybrids accounting for just 1.2 percent of light vehicles sold in the U.S. in 2005.

The expectation disconnect is unsustainable and the cost of wringing it out will be borne by the auto industry as it seeks to expand the vehicles’ appeal to younger, less-affluent consumers. With credit cards scorched by a summer of $80 fill-ups, the car-shopping public may be astonished to discover that hybrid fuel economy hasn’t reached a permanently high plateau.

The technology will get there. Though the actual R&D is slow and costly, I am confident that any technical hurdle can be overcome by sufficient application of wishful thinking, as is my understanding from watching politicians who play energy experts on television.