If Gas Prices Are Up, Why Aren't Green Cars Booming?
As I was filling the gas tank of my Mini Cooper S the other day -- and watching the meter run up to $38 -- it occurred to me that Toyota Motor and General Motors may just be getting the help they need to come through on their latest push to appear green, energy-conscious, and technology-savvy.
Toyota (TM) has three gasoline-electric hybrids for sale and will soon launch two more -- the Lexus LS 600h luxury car and a hybrid-powered Camry family sedan. Serendipity smiles upon Toyota, making the brains in Nagoya seem just brilliant.
Looking considerably less brilliant but still somewhat in tune with how fuel is a real issue for America, General Motors (GM) has been aggressively pushing vehicles that can run on ethanol. About one-third of GM's 80 or so vehicles can burn the stuff.
There's one problem with both strategies. For the vast majority of Americans for whom cheap gasoline has been taken for granted as a birthright, neither of these options makes sense.
Gasoline prices have been climbing since February. But hybrid sales haven't really seen a huge boost. The Honda Civic hybrid is a hot item, but so is the gasoline Civic. So that's hardly conclusive. The Accord hybrid is dead in the water.
Ford Motor (F) says sales of its Escape hybrid went through the roof in April, but that's only after the company offered 0% financing deals on the SUV.
PREMIUM ON GREEN.
Here's why: When Ford launched the hybrid Escape, it was only $3,000 more than a regular Escape. But once the company needed $3,000 in discounts to clear out its Escape inventory, the hybrid version was suddenly $6,000 more expensive. Car buyers figured quickly that they could drive nine years before getting their money back even at $3 a gallon.
The 0% financing deal brings the hybrid premium on the Escape back down to $3,000. So it'll take the fuel-conscious just five years to get their money back. But the point is, Ford had to give what's essentially a price cut to make the Escape a value to buyers, even with higher prices at the pump.
Other hybrids, like the Lexus RX 400h, don't get the fuel economy that the government says they should get. Plus, they're so much more expensive than their stock gasoline models that they have become purely luxury items. People buy them to make a statement that their SUV is high-tech, or green. But forget about fending off the budget crunch of expensive gas.
And ethanol? A friend of mine just bought a Chevrolet Suburban to ferry around his four kids. As gas prices jumped last month, he told me how relieved he was to have a flex-fuel Suburban -- it burns gasoline and/or ethanol.
His relief was short-lived when I told him ethanol is worse. His Suburban gets 12 mpg on ethanol and 16 mpg with gasoline. Right now, ethanol costs more, with an average price of about $3 a gallon, compared with $2.91 a gallon for gasoline.
That means my poor friend Cheech will be paying almost $1,000 more to fill up his 37-gallon tank every week and drive 15,000 miles a year than he did with plain ol' gasoline.
The bottom line is that none of the new options being pumped by the car makers really relieves anyone from expensive gasoline. As prices rise and stay well above the $2 baseline that we all once thought was expensive, we'll all be spending more dough.
Oh, there's one other choice: diesel. A Mercedes-Benz E320 with a diesel engine gets 30 mpg and will cost you about $1,500 in gas in a year -- about $700 less than a comparable gasoline-powered Mercedes E350.
But there's a problem here, too. You can't buy them in California or several northeastern states -- including New York -- because of exhaust regulations. So diesel isn't the final word in fuel efficiency, either, though it should be.
My advice: Buy something smaller. Can I interest you in a Mini Cooper? I love mine.