SANTA MONICA, Calif.—Despite Americans’ growing attention to preserving the environment, consumers’ attraction to electric and hybrid vehicles is apparently waning—at least as long as gas prices remain low.
But one hybrid category is doing well.
A new report indicates that only 27.5% of all hybrid and electric vehicle trade-ins in 2016 have been applied to the purchase of another hybrid or electric vehicle (EV).
The study from Edmunds.com. shows the rate is a precipitous drop from the 38.5% of hybrid and EV trade-ins in 2015, and the findings reinforce a trend identified last year by Edmunds that owners of alt-fuel vehicles are returning to traditional gasoline-powered vehicles in greater numbers than ever before.
But the trend back toward traditional vehicles is not having the negative effect on the environment, Edmunds stated. According to the University of Michigan Transportation Research Institute, the average fuel economy of cars sold in the U.S. in March was 25.3 mpg, up 25% from when the institute started tracking this number in October 2007.
Nothing To Do With Car Quality
“This trend is not an indictment of the quality of these cars – hybrid and electric vehicles tend to be equipped with some of the most sought-after technology on the market today,” said Edmunds.com Director of Industry Analysis Jessica Caldwell. “This is an economics trend, since today’s low cost of gas no longer makes it worth paying the price premium of hybrids and EVs. And there are so many fuel-efficient vehicles on the market today that environmental concerns weigh less than they might have in years past. When you’re buying a vehicle that can get over 30 mpg, you can still say you’re doing your part to help the environment.”
Jessica Caldwell, Edmunds.com
A detailed analysis of Edmunds’ vehicle trade-in data tells a story of many hybrid and EV owners jumping from one extreme to another. In fact, Edmunds found that a hybrid or electric trade-in is more likely to go toward the purchase of a SUV (33.8%) than another hybrid or EV. The trend is even more apparent when looking only at EV trade-ins – 25.7% of EV trade-ins went toward the purchase of a SUV, compared to just 4.8% that went toward another EV.
“The overwhelming popularity of SUVs trumps just about any other trend in today’s market,” said Caldwell. “SUV sales are up 22% in the last five years, and almost every other segment has suffered as a result. It’s especially true for hybrids and EVs, which generally don’t offer the size that today’s shoppers crave.”
Compact Crossovers Popular
Most of those making the switch from alt-fuel vehicles to SUVs are opting for the most fuel-efficient sub-segment of compact crossover SUVs. Edmunds found that 16.4% of hybrid and EV trade-ins this year went toward compact crossovers. By comparison, only about 1.4% went toward a gas-guzzling purchase of a large SUV or crossover SUV.
Edmunds’ trade-in analysis comes at a time when overall electric and hybrid sales have struggled. The alt-fuel category saw a 10% drop from Q1 2015 to Q1 2016, while the overall industry saw a 3.3% lift during that time.
“There is, however, one shining segment within the green car category: plug-in hybrids,” the company explained. “A successful redesign of the Chevrolet Volt and the introduction of some new models like the Audi A3 Sportback e-tron and the Hyundai Sonata Plug-in have helped the segment’s sales jump more than 40%, from 7,652 sales in Q1 2015 to 10,932 sales in Q1 2016.”