Soaring gas prices should be equating to free marketing for energy-efficient plug-in vehicles like the Nissan Leaf and the Chevy Volt. The higher prices are at the pump, after all, the more a driver stands to save by using a car that requires little or no gasoline. Even so, sales of these vehicles remain dismal. Why?
The New York Times recently reported that the Obama administration wants to raise the electric vehicle (EV) bonus incentive—a rebate given back to drivers who purchase plug-in cars—from $7,500 to $10,000. Increasing incentives, let alone having them at all, obviously wouldn’t be necessary if consumers thought the vehicles were worth the prices listed by automakers.
For now, even with hefty EV incentives, most consumers are choosing other paths to cope with rising gas prices. These alternatives to alternative-energy cars may not seem particularly “alternative” in the mid’90s “alternative” rock sorta way—because they’re not. They’re actually quite mainstream. And thus far, they’re the paths widely chosen over EVs to rein in fuel costs.
Small, Inexpensive Fuel-Powered Cars
Higher gas prices may not be causing drivers to buy electric cars in large numbers, but fuel costs do have a demonstrable effect on consumer choices. The clearest indication of this is the recent increase in sales of small, traditionally-powered cars with good gas mileage. In February, for instance, Ford, which offers vehicles such as the 40 mpg, sub-$16K Fiesta, nearly doubled the number of compact cars sold, compared to February 2011. Overall, small cars accounted for 23% of vehicles sold in February 2012, compared to 19% the year before.
The trend continues in March: USA Today notes that through the early part of the month, 23% of cars sold are small vehicles (compacts and subcompacts). Besides soaring gas prices, part of the reason that small cars are selling well is that this time around automakers are ready to meet consumer needs and desires. Drivers can now select among 41 small cars in the U.S. market, compared to just 30 in 2007. Projections indicate that for the year as a whole, small cars should account for about 20% of all automobiles sold in the U.S. in 2012, the highest percentage ever.
Proven, Dependable Hybrids
Just 2.2% of vehicles sold in 2011 were hybrids, and sales of most hybrids remained lackluster in 2012, even as $4-per-gallon became common. The one major exception comes from the unquestioned king of hybrids, Toyota. The automaker, whose Prius has been around long enough to be proven reliable (and valuable for resale) and still accounts for the vast majority of hybrid sales, saw hybrid sales rise 56.3% in February, compared to the same period last year.
Using Less Gas
Increased usage of fuel-efficient vehicles such as the Prius, Fiesta, Chevy Cruze, and others has made it easier for drivers to fill up less at the pump. The average new car sold gets over 23 mpg, compared to 20 mpg four years ago. So even as gas prices have risen, the average driver needs fewer gallons.
But better gas mileage doesn’t fully explain how and why Americans are using less gasoline. The Detroit Free Press cites data indicating that gas consumption has decreased 3% over the past year. More fuel-efficient vehicles help the cause, but experts also say that “Americans are taking fewer trips to restaurants and shopping malls,” and that, “when they take a vacation, they’re staying closer to home.”
Hanging onto Old Cars Longer
As a purely money-saving proposition, it’s hard to argue that a driver should trade in a reliable used car with decent gas mileage in order to upgrade to a $40K electric vehicle. Making such a swap might help the driver save on energy/gas costs, but it won’t be a money saver overall.
Today, it’s fairly common for cars made by Honda, Toyota, and Volvo to reach 200,000 miles on a regular basis, so it makes perfect sense that the average car on the road has never been older (a bit over 11 years). In terms of cars, the old phrase, “If it ain’t broke, don’t fix it,” can be tweaked to “If it doesn’t need pricey repairs, keep driving it.” Educated consumers know that they’re likely to not get full market value by trading in a used vehicle, and that they’ll also pay a premium to buy a new vehicle—and so the smartest financial move is to just keep driving what they’re driving until it can’t be driven anymore.
No Car At All
A survey published earlier this year offers some optimism for the future of hybrids and electric vehicles: Today’s young consumers—known as Gen Y or Millenials—are more interested than the average American in these alternative cars. A majority (59%) of these consumers in the poll said that they prefer an “electrified” vehicle, meaning a hybrid or plug-in that is at least partially powered by battery.
The problem, from automakers’ point of view, is that these consumers have exhibited another difference from previous generations: They’re a lot less interested in owning cars period. Studies have shown that fewer teenagers have drivers’ licenses, and that Millenials are more interested in car sharing and public transportation than other demographics.
An Atlantic post rounded up a series of other data points showing why young Americans aren’t as keen on car ownership (88% want to live in an urban environment), and that, because of the economy and cultural needs and interests, they’re less likely to buy cars. About 27% of cars are now purchased by Americans ages 21 to 34, compared to 38% in 1985.
Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.
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