Invest in Green Vehicle Technology Now or Later?

| 4/3/2012 3:57:35 PM

Hybrid CarsI want to buy a hybrid or electric car, but would it be better to wait another couple of years for their prices to come down, their technology to improve and for more options to be available? 

Some think there will be a time in the future — within a few years — when green vehicle technology will pass a threshold concerning price, technology or options. At that point, they think, it will be feasible to buy that green car they’ve been dreaming about. In reality, advances in hybrid vehicle technology and electric vehicle technology are more evolutionary than revolutionary. If you need a new car and want one that uses little or no petroleum , there’s no reason to wait.

There is some distinction between hybrids and pure electric cars on this question. Gasoline-electric hybrids have been on the market in Japan since 1997 and in the United States since late 1999. This green vehicle technology is mature, with more than 30 models on the market. This number will grow, but there’s now a hybrid in nearly every segment and style of vehicle.

While batteries are the most expensive single component in a hybrid, the battery packs — usually in the range of 1 kilowatt-hour (kwh) — are relatively small, and won’t benefit that much from lower prices that will come with greater economies of scale.

On the other hand, pure electric cars (and plug-in hybrids) have larger lithium-ion battery packs that run between 5 and 35 kwh. As battery prices come down, so will the sticker price on electric cars. But that’s likely to be incremental over many years, and there are countervailing forces. For example, government incentives currently in place for electric cars will not be in place forever. Those incentives are designed to offset higher purchase prices. Incentives may be increased, maintained or eliminated in the future.

There are only a handful of plug-in cars currently available. Without a doubt, you’ll have more choice in coming years. But the current plug-in models — such as the Nissan Leaf and Chevrolet Volt — are racking up lots of awards for customer satisfaction, value and safety. They’re holding their value, too. The resale value of hybrids (and presumably plug-in models) is generally high but goes up as gas prices rise. Given the steady increase of gas prices in the past decade, hybrid resale values are expected to beat those for gasoline-only cars for years to come.

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