Americans Like EVs, But Don't Want to Pay Extra for Them

Jim Motavalli

Jim Motavalli | Nov 17, 2010

The Nissan Leaf: $32,780 before subsidies. (Nissan photo) If I were an auto executive (and thank goodness I'm not, because the job security is roughly analogous to that of a liberal politician in Tea Party country), I'd be tearing my hair out over the results of the latest Consumer Reports survey. Why? Because it makes crystal clear that the American people want it all, but they don't want to pay for it all.

I'm going to the Los Angeles Auto Show tomorrow, and will drive all the new EVs whose arrival on American roads is imminent. But their reception is still very uncertain, and interpreting the signals from consumers is critically important right now.

According to the poll by CU's National Research Center, based on random telephone interviews with 1,713 adult car owners, 82 percent say that higher fuel economy will be "a motivating factor" when they buy their next new car. A very significant 63 percent say they expect their next jalopy to be much more fuel efficient than the current one, and an impressive third say their next car may be something other than traditional internal-combustion.

What's more, even though taxpayers are in a cost-cutting mood, 79 percent said they'd support increased government investment in alternative-fuel vehicle infrastructure, meaning EV charging stations. And they're willing to go along with tax rebates to help consumers buy EVs, too. More than 70 percent also like the idea of funding initiatives that make communities more walkable or bikeable, and they go along with higher fuel economy requirements for automakers.

So far so good. A majority say they like just the kind of programs that the Obama adminstration has been promoting (and which were, some say, repudiated by the voters on Election Day). But what car owners definitely don't want to do is pay extra for anything. Some 59 percent of respondents say they like fuel-efficient cars because they perceive them not only as easier at the pumps but also cheaper. And when it comes to Honda Civics and Toyota Corollas, that has traditionally been true--how do you think Toyota became the largest car maker?

American motorists, fed up as transportation takes an expanding share of the family budget, don't like paying for programs that give fuel-efficient cars and trucks an edge in the marketplace but also affect the family bottom line. These include a fuel tax (just 14 percent like it) or gas-guzzler surcharges (40 percent support). Higher gas prices would do the most to get people into greener cars, but gas taxes (which are minuscule here compared to what they are in Europe) are political suicide.

The Coda sedan will sell for $44,900 before subsidies. (Coda Automotive photo) But fuel prices are likely to go up even without government intervention. It's hard to predict where a barrel of oil is going, but The Energy Bulletin points out, "This one's easy. Even if we could keep expanding oil production (which no one who has looked into it believes), oil will become increasingly more expensive to extract as we are forced to look farther out into the ocean for it."

When asked to cite green car disadvantages, 66 percent (the highest number) cited "high purchase price." That means that consumers are starting to understand the price is going to be higher. And it's a big problem, especially with battery cars, because they are indeed significantly more expensive.

For a car with 100-mile range and the utility of those Civics and Corollas, we're talking about $30,000. (The Nissan Leaf is $32,780.) Of course, those subsidies consumers actually like (such as the $7,500 income tax credit for EV purchases) take away some of the sting, and there are state subsidies, too. California's $5,000 EV subsidy is still intact, and that means a Leaf is $20,000 there (with free access to the HOV lanes, a big plus).

Still, there's going to be some sticker shock. The Coda sedan is $44,900, the Fisker Karma $87,900. Eric Evarts, associate editor of Consumer Reports, told me that "there is kind of a disconnect here. Following the gas price spikes of 2008, people like knowing there are other options other than gasoline out there, because they're stuck with long commutes. But if cars don't help with the family budget, people won't buy them."

As Evarts puts it, "People have no trouble with spending their tax money on specific government programs, like the EV subsidies they like. But they get upset with government spending as an overall concept." And that helps explain the Tea Party gains.

So some people are going to balk at buying EVs, even if they can tie into some subsidies. Evarts says, and I agree, that the first year or two of production should sell out to all the early adopters now on waiting lists. Beyond that, what will happen with the mass audience is very unclear. Some surveys expect 10 percent green car penetration by 2020 (including hybrids), and others a much higher 50 percent (also including hybrids). The latter figure is irrational exuberance, but Evarts says we may reach 20 or 30 percent by then.

Given public attitudes, the key factors in EV penetration are these:

  • Gas prices. If the pumps go over $4 a gallon again, as they did in 2008, expect a flood of new EV customers.

  • Subsidies. The new Congress, and possibly the upcoming lame-duck session, will address some outstanding issues, such as an expiring tax credit for EV chargers, and a $500 million bill to create subsidized early adopter EV communities.

  • Technology. If prices come down with mass production, or there are breakthroughs in battery development, we could even up EV and gas car pricing.

  • Framing. As Evarts points out, Americans have a bipartisan appreciation for anything that reduces our dependence on foreign oil. Describe the same program in terms of its global warming impact, and support drops off a cliff. Maybe that's why the Obama administration's program measures environmental impact in miles per gallon instead of grams per mile of carbon dioxide.

Ending on an optimistic note, I expect most of these things to fall the EVs' way. Gas prices will go up, the subsidies will be there (bipartisan support), and tech breakthroughs will reduce prices. And car makers and politicians will get the framing thing down, so from now on it's all about taking us off foreign oil. That's not spin--EVs really do support domestic energy production.

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