Ford analyst: Hybrid cost still a factor
Ford's chief sales analyst says the future of hybrids is "bright" but the main challenge remains: "What price are consumers willing to pay for technology?"
He said that even if gas hit $4 to $5 per gallon, the payback for some hybrids doesn't come for five or six years. To continue growing market share, hybrids must be purchased for financial reasons as well as altruistic ones.
Pipas is the manager of sales analysis at Ford and spoke Tuesday afternoon at the regular meeting of the Motor Press Guild, an organization of automotive writers on the West Coast. Although the topic of his presentation was the changing SUV market, he did share a few thoughts on hybrids with AutoblogGreen.
Pipas admits incentives on gas vehicles do not play a supporting role in promoting hybrids. He gave the example of the Ford Escape Hybrid that was introduced at a cost of $3,000 over the gas model. But when Ford offered zero-percent financing and other incentives to the gas versions, the cost difference was "too great to pass up" for many consumers.
For those who denounce large SUVs, Pipas offered encouraging words. He said the sales volume of smaller, more fuel-efficient crossover utility vehicles has surpassed the numbers of traditional body-on-frame SUVs. The traditional market is still significant and there will be increased competition for market share between Ford and GM. But even with heavy incentives the fullsize SUV market will never return to its glory days because of changing demographics and more choices in CUVs. He said by the end of the decade there will be 70 different CUV models on the market. Considering there was only one just 10 years ago, this growing popularity means that the CUV will be the most dominant segment in the industry by the end of the decade.
Reader Comments (Page 1 of 1)
Howard Lee Harkness 10:11AM (9/06/2006)
"To continue growing market share, hybrids must be purchased for financial reasons as well as altruistic ones."
DOH!
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Tony Belding 11:01AM (9/06/2006)
I'm sure if a hard-nosed assessment of dollars paid per miles travelled was the only factor people considered in buying a car, then he would be right. But then Ford would never have made the GT40, would they? Or even the Mustang, for that matter. Or most of their giant pickup trucks and SUVs. People buy cars for many reasons that are neither "financial" or "altruistic".
Car companies have gone out of their way to make hybrids *just* *like* gasoline-powered cars, except for cost and efficiency -- a big mistake, IMHO. If they made unique electrics or plug-in hybrids that emphasize the strengths of those technologies, people would happily pay more for them because they would be *better* than conventional gasoline-powered cars, at least in some ways. They'd have a chance to find their niche.
A prime example is the Tesla Roadster, which nobody is going to shell out $100K for just to save a few bucks at the gas pump. They'll buy it because it looks like the most fun car in the world to drive. They'll buy it for the raw speed and power, the smooth and quiet cruising, the convenience of plugging in (as opposed to stopping at the gas station), and the reduced maintenance hassles (compared with cranky high-performance sports cars). And some will buy it for status, because being seen driving a "green" car is way cool -- at least in certain circles. That's not really altruism.
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Charles S 1:24PM (9/06/2006)
It's the same bias over and over.
When it comes to hybrids, pennies are counted to the mile. Yet, accessories like alloy wheels, spoiler, NAV, premium audio system; such items are priced so ridiculously high, I don't see anyone bashing it as factors that would affect sales. Why buy a Civic LX?!? Does any of these accessories save you any money?
It's all about misplaced values, and has NOTHING to do with cost of hybrid parts.
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rj 2:26PM (9/06/2006)
Charles,
Just because others do not have the same values as you does not make them misplaced, you could be the one who is "wrong".
Say you have the option of buying two otherwise identical vehicles and one gets better mpg but costs more, the magnitude of the diferences will factor into your decision. If it is only .000000001 mpg better and costs $999999999 more then the choice is easy. You buy the cheaper model as that extra $999999999 can be better spent. You can buy seedling trees for $2 a pop.
In the above example the car that gets worse mpg is better for the environment if even a fraction of the $ "saved" by purchasing the cheaper model is used to plant a tree or any number of other worthy causes.
Every choice is at the expense of something else, a hybrid may be "better" for the environment but at current prices it may not be the "best" bargin in terms of environmental gain for $ spent.
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subsonica 3:49PM (9/06/2006)
¿Altruistic reasons? What? Is the future of our children, our health and the environment's survival and our own's "altruism"?
The problem with you, corporate m*r*ns, is that you cannot see any benefit beyond money and stock value!
Problem, you know, is money is not breathable!
So benefits of (P)HEVS are not limited to money savings.
Mr. Pipas, do your company a BIG favor (and the rest of the world by the way) and begin contribute to reduce pollution, oil dependence, oil wars...:START MANUFACTURING PHEVS NOW!(I promise to buy one -and campaing for my relatives to do so- even if they are far more expensive than oil-guzzlers!)
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Charles S 3:48PM (9/06/2006)
rj,
The tree example is really not related to this discussion, but I will accept the challenge.
The reason why the $2 tree example is irrelevent is because you can also just give up driving and ride the bus. Why buy hybrid, diesel, or any car at all, if all we are talking about is cost and the environment.
If one is going to buy a car regardless, then turn his nose to hybrid because of cost, but willing to spend $2000 for leather seats, then why are we not bashing that!? How about buying an SUV instead of a minivan? A minivan gets better gas mileage, cost less for same amount of space, and the parts are cheaper, yet NO ONE dare to say that buying an SUV is costing people more money per mile! What would be cheaper is not to buy a new car at all! How about that!
The point is, upfront cost is a poor arguement. Unless we live in a world where no one ever buy a premium vehicle or after market accessories, then all that's left is bias and poor judgement in values.
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Jay 2:53AM (9/15/2006)
Now if only more Ford hybrids will be included in their 0% financing deals.
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