Studies Showing Cost-Effectiveness of Green Improvements Not All Roses
Filed Under: green automotive technology, Green Technology on October 2, 2010
The economics and viability of some green technologies in the near-term as well as the perceived payoff versus the actual for consumers is shaky. There are a lot of reasons for this, the largest being the newness of the technologies themselves. This makes arguing for alternative cars based purely on consumer economics a losing bet. Other intangibles, of course, can’t be measured in such a way, but are reflected in recent consumer surveys.
Hybrid Vehicles Not a $ Saver
A comparison study done by CarGurus.com shows that hybrid cars are not a good investment, from a purely financial standpoint, for the consumer. They compared hybrid vehicles currently on the market with their conventional counterparts across 45 models. So vehicles like the Toyota Prius and Honda Insight were not included as they have no conventional counterpart for an apples-to-apples comparison.
The results showed that many hybrid vehicles all have a much higher retail price versus their conventional counterpart. Those costs, over the life of the vehicle (total cost of ownership), are not likely to be returned in fuel savings. Many hybrids, such as pickup trucks, SUVs, and luxury vehicles, are a large net loss in value, in fact.
CarGurus.com says to look for a lower price premium for the hybrid versus its conventional (such as the Lincoln MKZ which has no premium over its V6 counterpart) and for a much higher fuel savings (MPG). Few models meet both criteria.
See also Wired.com’s summary.
Are Consumers Really Ready to Flock to Green Transportation?
A survey by Autobytel found that 57% of respondents have an interest in buying an alternative fuel vehicle in the next year. But this headline is misleading for one large reason: most of those responses (50%) said that “economics” were their reason.
The trouble is that most fuel alternatives or alternative vehicles come with a “green premium” that raises their price considerably versus a conventional petroleum-fueled vehicle. The payback over time may or may not happen and is difficult to calculate without conscious, concerted effort.
This means that, when push comes to shove, it’s not likely that these economics-driven consumers will really purchase an alternative car. Most serious improvements in green technology that would greatly boost efficiency are also expensive up-front and often require some kind of lifestyle change (such as with electrics) – changes in habits that many consumers may also not be willing to make. An Accenture survey showed that 65% of respondents love alternative vehicles, but aren’t interested in sacrificing anything to get one.
National sales figures seem to back these assertions up. In 2009, 10.5 million vehicles were sold in the United States and only 290,232 of those were hybrids (about half were the Toyota Prius). Toyota sold twice as many gasoline-powered Camry cars than it did Prius hybrids, for comparison.
So What’s Coming for Vehicle Efficiency If It’s Not Hybrids?
The near-future (5-10 years) of alternative car and vehicle technologies will still likely rest on gasoline and diesel vehicles. A 3-year study by the National Research Council (NRC), commissioned by the National Highway Traffic Safety Administration, made educated estimates of fuel consumption benefits versus costs for about forty technologies that are commercially available and can be implemented in the next five years.
In Assessing Fuel Economy Technologies for Light Duty Vehicles, the NRC compared the fuel economy improvements by incremental cost to the consumer for every percent of fuel economy improvement gained. The best values were not hybrid or electrification technologies, but were instead engine and vehicle improvements:
- Low Viscosity Lubricants – avg. cost for 1% improvement: $12
- Variable Valve Timing Cam Phasing – avg. cost for 1% improvement: $21
- Variable Stroke air conditioning – avg. cost for 1% improvement: $22.86
- Turbocharging and engine downsizing – avg. cost for 1% improvement: $25.80
- Low rolling resistance tires – avg. cost for 1% improvement: $26.67
- Aerodynamics (5-10% improve) – avg. cost for 1% improvement: $30
Alternative vehicle options such as hybridization had much higher costs. For instance, introducing a Continuous Variable Transmission has a $51.63 price per 1% improvement and an 8-speed Transmission has a $60.71 cost per 1% improvement whereas a full hybrid has a whopping $127.66 cost per 1% fuel economy improvement. A stop-start hybrid nearly doubles that price to $221.25.
Looking at incremental costs to the consumer, the first three improvements on the top-6 list above are less than $100 each and the 8-speed transmission is $425 while the full hybrid is the most expensive on the NRC’s list at $6,000 (a stop-start hybrid is only $885 in comparison, but has a higher $ per 1% improvement because of it’s relatively low MPG boost).
These costs are likely to explain to many why there aren’t more hybrids on the road and why many of these alternative car technologies are so expensive up-front and aren’t generally available on most models.
The Future of Alternative Vehicles
Much of the improvements we’re likely to see in the near-term are obviously going to be in current-technology vehicular changes. Gasoline and diesel are going to continue to rule the road for the time being.
Hybrids have always been considered an interim, rather than a solution, by both automakers and electrification proponents. Yet battery electric cars are not likely a solution either, with consumers, as mentioned, making it clear they aren’t interested in “going green” if it means a lot of compromise for them.
Other hybrid-electric technologies, such as combustion, fuel cell, or similar “electric range extension” concepts, are more viable as truly alternative car options for both their range and ease of use. Fuel alternatives are also gaining ground quickly and could become another avenue leading us away from petroleum.
It’s likely that the future will see several propulsion technologies as the accepted norm rather than any single option. A future with battery electric cars driving along next to bio-fueled and fuel cell hybrids on tomorrow’s roadways is becoming the vision.
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