As you stroll through the automotive wonderland of the Canadian International Auto Show this week, you probably won’t be thinking about Horsepower Envy, Price Elasticity or The Mother-In-Law Effect. And yet they will be with you, shaping the car industry in ways that only Dr. Freud could truly understand.
Horsepower Envy is what makes you want a car with more power than you need. The Mother-In-Law Effect is the fear that an electric car won’t have enough range to make it to a relative’s house and back. And Price Elasticity is what determines how much extra you’ll pay.
These factors have determined the course of entire industries. And they’re not helping the green car, which has become the cod liver oil of the car world. Yes, we should buy hybrids and electrics because they’re good for us. But we don’t.
“This is what vehicle companies are pulling their hair out over,” says auto industry analyst Dennis DesRosier. “Everyone's talking about green cars, but consumers won't pay for them.”
I’ve been thinking about green cars a lot in the past few years. The world we knew is disappearing, replaced by a new reality of high-priced fuel and melting ice caps. It’s time for change. But what? I’m an efficiency guy, and I love the idea of finding a new energy paradigm that will leave internal combustion in the dust. But as I walk through the car show and consider the alternatives, I realize that the future isn’t here yet – and it’s mostly because of us.
Consumer psychology is the Maginot Line of car sales. Human beings love power. They love a bargain. And they love cars that project an image of who they would like to be – and who wants to be a small vehicle noted for its efficiency? And so we talk about the Nissan Leaf and the Chevy Volt, but we lust for Ferraris and ridiculous pickup trucks that conjure up fantasies of the open range. And when it comes to laying down our hard-earned cash, we won’t pay for green.
Toyota sold more than 59,526 internal-combustion Corolla, Yaris and Matrix models in Canada last year. Sales of the Prius hybrid, meanwhile, totalled just 2,134. Electric car sales were even lower. GM sold only 275 Volts in Canada. And Nissan sold just 170 copies of its pure-electric Leaf. Industry experts attribute the miserable sales to a number of factors, but the most important one is psychology.
“Every consumer wants a better life,” says DesRosier. “They want more performance. They want more luxury. They want to see a bigger, nicer car in their driveway, not a smaller, less-e-xciting one. The green car goes against who we are. That’s the reality.”
Ian Clifford, who once started an electric car company (Zenn Motors) says EVs and hybrids face nearly insurmountable competition from the gasoline-burning internal combustion vehicle.
“Internal combustion has been around for 100 years, and there's a gas station on every corner,” he says. “That’s hard to beat.”
Clifford’s failed bid to launch an electric car company in Canada left him convinced that the electric car has to overcome three key obstacles: high price, limited range and the poor energy capacity of chemical batteries.
“That’s the reality,” he says. “When you compare a battery to a gas tank, the battery loses. And capital cost is a huge stumbling block. Right now, you have to pay a lot more for a car that does less. And most consumers aren’t willing to do that.”
When it comes to assessing customer behaviour, a car show like Toronto’s is an excellent laboratory. And what you learn is that most buyers are still motivated by value, convenience and ego. You’ll find crowds ogling the dream cars, and when it comes down to spending actual money, you’ll find the serious buyers kicking the tires of unsexy but versatile cars that can be had for the lowest possible price.
Electrics and hybrids, meanwhile, draw much smaller crowds than their media hype would lead you to expect. The car show is where the rubber meets the road – saving the planet is a noble ambition, but not many are willing to pay extra for an abstract goal. For the consumer, the green car’s most tangible benefit is long-term fuel savings. But that isn’t enough.
“Fuel economy doesn’t sell,” says Desrosier. “Hybrids have been on the market for a while now, and hardly anyone buys them. Drivers think the upfront cost is too high. And if they won't buy a hybrid, how can you sell them an electric car that’s even more expensive and more compromised? The vehicle has to be better than what’s on the market right now – and at the moment, they're not.”
Clifford agrees: “People aren't buying electric cars as a primary vehicle. These are second, or even third cars. That really limits the market. There are too many barriers to entry – cost, range limits and concerns about the technology.”
When will this change? When the technology gets better and the price drops. Engineers are working to develop electrical storage devices called ultra-capacitors that will take a charge quickly and hold far more electrical energy than a chemical battery does. In theory, the ultra-capacitor could beat the gas tank in terms of fill time and range. But for now, it’s only a theory.
The cost of green cars can also change - higher volumes and mature technologies could make hybrids and EV’s competitive with internal combustion. But again, this is the theory, not a current reality.
Where it will all go remains to be seen. In the meantime, I’ll be down at the Canadian International Auto Show, which I prefer to think of as The Living Laboratory. This is where billions of dollars worth of engineering and marketing get their truest test – it’s all about Horsepower Envy and The Mother In Law Effect. And price is only so elastic.
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