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Hybrid car buyers labeled ‘irrational’

University of California researcher Dr Tom Turrentine says optimists are more likely to buy hybrid and electric cars.

No one buys a frugal car to save on fuel costs, academic says

General News logo5 Mar 2013

HYBRID and electric car sales owe more to a buyer’s state of mind than their ability to save on fuel, a leading academic says.

Dr Tom Turrentine, an anthropologist and the director of the Plug-In Hybrid Electric and Vehicle Research Centre at the University of California’s Institute of Transportation Studies, is a guest speaker at this month’s Cars of Tomorrow conference in Melbourne.

He says while car-makers will try and show buyers how quickly they can expect fuel savings to recoup on the extra purchase cost of a hybrid or electric vehicle, there are more basic factors at work.

“You know what? Nobody does those pay-back sums, according to my research,” Dr Turrentine said.

“Economists always talk about people making rational decisions. When I go out and do my anthropology and talk to households, nobody knows very well what they spent on gasoline last year. Economists assume they do.” Dr Turrentine said people were more familiar with how much they had spent on the last time they filled a car’s tank, or what they spent on fuel on their last holiday.

80 center imageLeft: Cars of Tomorrow keynote speaker Dr Tom Turrentine

He said because no one knew how much fuel would cost in the future, a decision to buy a hybrid or electric car could not be a rational one.

“Nobody knows what the price of gasoline will be in the future. How am I going to do a pay-back calculation?” Dr Turrentine said.

“Then you throw on top of that electricity prices and the variation there. Electricity could be free if I recharge at work and it could cost $3. Nobody knows.

“It can’t be a rational decision. It has got to be on faith,” Dr Turrentine said.

“People are either going to be optimistic or pessimistic. If they’re pessimistic, they’re thinking it’s not going to be a good deal, the batteries are going to be expensive, or they’ll run out of charge.

“And the optimists are thinking: ‘This is going to be great’.” Dr Turrentine said there was another factor that minimised the importance of the generally higher purchase price of hybrids and electric vehicles.

Also of note, he says, is that while alternative technology vehicles are expensive compared with vehicles of the same size, his research shows that buyers are not comparing them with similar-sized conventionally engined cars.

“I always hear the analysts say “Why didn’t they pick a Toyota Corolla?” he said.

“None of the people I talk to who have bought a (Toyota) Prius ever considered a Corolla as an option.

“You would expect the extra cost of a double drivetrain to sway buyers, but we saw something interesting with the Prius.” He said Toyota had done a good job of projecting the Prius as a technological advancement.

“What you saw in California was people interested in technology or the environment or politics be prepared to pay a little bit more.

“What they normally drove was a BMW 3-Series, so for them, it wasn’t a step up in expense. They were willing to take the risk, willing to move to this vehicle as the BMW was seen as old technology and this was seen as new technology.” Dr Turrentine said the strategy was working well in California, the most populous state in the US, with 38 million people. But he was quick to add that there were great regional variations across the US.

“Things are very different in other parts of the US. California is a different market, with a heavy presence of Asian vehicles.

“Toyota has a 24 per cent market share and the best-selling vehicle last year was the Prius. There were twice as many Priuses sold as F150 pick-up trucks.” Dr Turrentine is the keynote speaker at the Cars of Tomorrow conference at Melbourne Park on March 14.

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