More evidence of the limited market for a product whose only point of differentiation is its “greenness” comes from Saturday’s Washington Post. As automakers introduce new alternative fuel vehicles at next week’s Detroit Auto Show, actual demand for the vehicles remains low:
Only a small fraction of the cars on the roads are hybrids and diesels, which get better fuel mileage than gasoline-only cars and burn cleaner than they used to. While such vehicles have distinct advantages, consumers for the most part seem unwilling to pay their higher prices.
Unlike the Wal-Mart lightbulbs, however, hybrids are more expensive to buy and own. In fact, because the gas mileage is often less than is claimed, the only benefit to owning one of these vehicles is the social benefit of appearing more eco-conscious than your friends. Diesels are also more expensive to buy and in America suffer from memories of older models that smelled and left a coating of soot wherever they went.
As environmental groups pressure the federal and state governments to mandate better fuel economy, automakers seem to finally be getting serious about alternative fuel vehicles. Tom Purves, chief executive of BMW’s North American operations said, “As an industry, I believe we’ve never worked as hard on these problems.” Unfortunately that doesn’t placate the environmental groups as they accuse automakers of creating “automotive vaporware.” John M. DeCicco, senior fellow at Environmental Defense is quoted as saying, “We would be much more impressed if GM were to say the U.S. needs to cap greenhouse gas emissions. That would be a wonderful new concept.” It’s amazing to hear that DeCicco would prefer that the auto companies spend their time discussing regulations rather than developing cheaper and more efficient vehicles. It’s hard, however, to feel sorry for automakers whose idea of innovation has been inventing new ways of lobbying governments to keep mileage requirements low.
In the end, as much as both sides (automakers and environmentalists) try to distort the market, alternative fuel vehicles will only be successful when looks and performance approach gasoline vehicles and, most importantly, they actually save consumers money. The give and take between environmentalists is a good thing, but only when that effort is spent working to give consumers a viable choice, not in trying to force feed poor choices.
