Gasoline price pain revives electric car drive
Copyright © 2000 Reuters Limited
June 30, 2000
NEW YORK(Reuters) - Summer's gasoline price shock has put the spotlight back on energy-efficient electrical cars, but analysts said it will take more than a spike in fuel costs to prise drivers away from their conventional cars.
``Motorists will not change to more efficient energy cars, not unless gasoline prices stay this high for a long time,'' said Kevin Lindemer, senior director at Cambridge Energy Research Associates.
``If you try to charge a premium for green vehicles such as electric cars and there is an alternative that satisfies both economics and taste as well, consumers are going to buy the latter,'' Lindemer added.
Democratic presidential candidate Al Gore this week unveiled a $75 billion energy efficiency plan, including gasoline-free cars, as one way to protect against future oil supply crunches.
Japan's Toyota Motor Corp. next month launches the Prius -- what it calls the first mass-market green car, combining a gasoline-powered engine with an electric motor -- in the giant U.S. market.
Yet the new breed of electric car will have to cost much less than it does at the moment as well as matching conventional cars style and safety, if they are to win motorists over, analysts argue.
COUNTING THE COST OF CLEAN AIR
U.S. consumers appear to be attached to their gas-guzzling sports utility vehicles, which have enjoyed strong sales so far this summer despite high sticker prices.
But that attachment may have to loosen as the real costs of clean air are counted.
Gasoline's spike above $2 a gallon this month, caused in part by laws requiring use of a new super-green gasoline grade in a third of the U.S., may be an early signal that the days of cheap fuel are numbered. Motorists are simply starting to feel the cost of clean air, some argue.
``Gasoline prices are incredibly low, even at $2 a gallon, compared with European prices,'' said Roby Roberts of the Renewable Energy Policy Project. Adjusted for inflation, gasoline pump prices were higher 20 years ago than today, he said.
Electrical cars can get as much as 80 miles to the gallon, against just 20 miles for conventional cars, analysts say, and that may help to overturn consumer reluctance.
The next challenge will be to convince sceptical consumers that the new cars are as fast and as safe as the models they have bought for decades.
``We believe there will be a major transition to a new breed of cars within the decade even assuming there is no oil shock.'' said Hunter Lovins of Colorado's Rocky Mountain Institute, an environmental research center.
``What will do it is simply a superior product.''
LOSS LEADERS
The commercial logic is still in the balance. Toyota aims to sell about 10,000 of its new Prius vehicle priced at around $20,000 and admits it will still have to absorb losses on the technologically expensive cars.
To help change America's car-buying habits, Gore's proposal includes a $46 billion package of incentives for consumers to buy energy efficient products, including tax credits up to $6,000 for non-gasoline powered cars.
If government sponsored tax credits are approved the U.S. three leading automomakers, General Motors Corp., Ford Motor Co., and DaimlerChrysler AG say they could have a hybrid-electric cars early this decade.
New green cars ``could be on the road in less than two years,'' President Clinton said this week. ``It is just a question of whether we treat this as a national priority.''