The EPA’s fuel economy labels on new cars are likely ineffective in pointing out the total savings of hybrid and plug-in cars over legacy vehicles, according to a new study by two University of Kansas professors.
The research team conducted a 2013 online survey of 3,200 respondents in 32 US cities, and published their findings in the journal Transportation Research Part A. They found that consumers would be more likely to choose a hybrid or plug-in if they knew the total cost of ownership instead of just a fuel cost comparison.
“The information of total cost of ownership is not yet included on the EPA fuel economy labels, but seems to trigger consumer interest in hybrid and plug-in vehicles based on our analysis,” wrote KU Assistant Professors Bradley Lane and Rachel Krause. “We find that when total cost of ownership information is disclosed to respondents interested in small- to midsized cars, the likelihood of ranking a conventional hybrid, plug-in hybrid and battery electric vehicle more favorably increases and is statistically significant.”
“Upfront premiums in purchase price can be very hard to overcome. People have high personal discount rates, meaning that savings often need to be perceived as rather large and quickly accumulated to be considered ‘worth’ a more expensive upfront investment,” Krause said. “In this study we find that showing savings from fuel-efficient vehicles compared with regular vehicles in terms of total cost of ownership increases the perception of their value – although, of course, their actual savings remains the same.”
For example, a mid-sized gasoline vehicle had an annual fuel cost of $1,845 compared with $1,272 for a hybrid. That difference was not enough to make buyers choose the hybrid – but when the EPA label was changed to show that the total monthly cost of ownership for a gasoline vehicle was $460 compared with $448 for a hybrid, it gave a boost to consumers’ preference for hybrids. The difference was even more significant for EVs.
“The results indicate to me that, for all that people claim or attempt to make decisions about vehicle purchase based on rational factors like cost, fuel efficiency and safety,” Lane said, “there are quite a few other emotional factors – like brand and body style – and use factors – like size and carrying capacity – that usually trump those others, even though it costs them thousands of dollars over the life of the time they have the vehicle.”
Source: University of Kansas via Phys.org