On a personal note, I was recently told of a limousene company that's converting to all hybrid cars. They're replacing all their current vehicles right now, and raising their rates from about $47 to $77 US (64%). We'll see how well that goes over. I know my driver wasn't happy, as they're having to take large salary cuts if they dump their personally owned vehicles and stay on with the company. At least that's the story I was told. -bbq

http://www.hybridcars.com/oil-dependence/confronting-slow-rate-auto-technology-change-25831.html

Published on Hybrid Cars (http://www.hybridcars.com)

Confronting Slow Rate of Auto Technology Change

Confronting Slow Rate of Auto Technology Change

Published May 28, 2009

There’s little doubt that a new era of advanced technology fuel-efficient cars has begun. Automakers are responding to the combined forces of fluctuating energy markets and increased climate regulations by introducing hybrid gas-electric cars and other efficient technologies—and planning to roll out plug-in models in the coming years. But industry analysts are beginning to acknowledge the most significant constraint on deploying these vehicles: the slow rate of turning over the fleet of existing cars.

Hybrid cars have been on the US market for nearly 10 years. Sales have grown to about 2.5 percent of the new market, and are expected to double in the next five years. Yet, there are fewer than 2 million hybrids in a US fleet of approximately 230 million vehicles.

The rate of growth for hybrids, advanced fuel-efficient gas-powered cars, clean diesel vehicles, and plug-in cars could significantly increase as a result of new higher fuel-efficiency standards [2] just established by the Obama Administration, and by higher gas prices—resulting from carbon taxes and jittery energy markets. According to the Energy Information Administration's 2009 outlook report released today, oil prices will return to $110 per barrel in 2015 and could go up to $200 per barrel in 2030. Forecasting is a tricky business, but most analysts (and many consumers) are expecting to see a return of $4 gas prices well before 2015.

Measure Progress in Decades, Not Years

“If history is a guide, it would take roughly thirty years for hybridization/electrification to dominate road transportation.” Saurin Shah vice president, Neuberger Berman

But the new technologies—which could help consumers cope with these prices—are unlikely to arrive in large numbers in time for the next oil spike. According to the authors of “The Impact of Plug-in Hybrids on U.S. Oil Use and Greenhouse Gas Emissions,” a chapter in the new book Plug-in Electric Vehicles: What Role for Washington, published by the Brookings Institution, cars are durable goods that last well over a decade. “The transformation of the light-vehicle fleet to new internal combustion technologies or to hybrid and plug-in hybrid technologies will take decades from the time such vehicles are widely available at competitive prices,” according to the authors, Alan Madian, Lisa Walsh and Kim Simpkins, researchers at consulting firm LECG. They believe it could take another decade from now until the new technologies compete on a price basis, and begin the process of replacing current fleets.

In another chapter of the Brookings book, Saurin Shah, a vice-president at investment firm Neuberger Berman, traces the history of penetration rates of other auto technologies, such as air conditioning, airbags, front wheel drives, and disk brakes. These technologies, less expensive than hybrid and plug-in technologies, took an average 8 years to reach 20 percent of the market; 11 years to reach 50 percent; and almost 17 years to reach 80 percent of the market. Few analysts expect the same growth rate for hybrids.

Gradual Improvements

Government programs designed to scrap gas-guzzling vehicles on the road today, and replace them with more fuel-efficient new models, could accelerate the process. But current “Cash for Clunkers” proposals are targeting only slight improvements in fuel efficiency, and max out at 1 million vehicles. The downturn in the US auto market—in which new car sales have dropped from about 17 million vehicles two years ago to about 10 million this year—represent a more dramatic slowdown in turning over the vehicle fleet. At the current level of new vehicle sales, it will take approximately 25 years to turn over the fleet—and the current mix of vehicles is still weighted toward SUVs and large trucks.

The introduction of hybrids, and the coming roll out of plug-in hybrids, is cause for celebration. At the same time, Madian, Walsh and Simpkins warn that we will need to wage a broad battle to truly curtail our fossil fuel use and greenhouse gas emissions. “Plug-in hybrids can make a significant contribution, but it is important to realize that they can do so only gradually,” they write. “It is important that we do not assume a solution that cannot be achieved.”