Saturday, August 26, 2006

Consumers lukewarm on E85 cars

Chicago Tribune
Published Friday, August 25, 2006

CHICAGO - More than a third of all consumers would consider buying a vehicle that runs on E85, the ethanol and gasoline blend, when they purchase their next new machine.

That’s the finding of a survey of potential buyers’ attitudes by Synovate, a global market research company.

General Motors, Ford and Chrysler Group couldn’t get better news as they gear up to produce more E85 cars and trucks.

Regular unleaded is 90 percent gasoline and 10 percent alcohol, but E85 is 15 percent gas and 85 percent alcohol produced from a Midwest staple - corn. Not a pleasant thought for Mideast oil sheiks.

But consumers are fickle.

Going green is one thing. Spending their hard-earned green to do so is another. More than a third of those folks who said they would consider buying an E85 vehicle put their hands down when told to expect 20 to 30 percent less mileage than with regular unleaded. So E85 will have to cost substantially less than gasoline "to have any impact on consumption," said Scott Miller, CEO of Synovate.


Everyone can agree that using less foreign oil is a good thing - until it comes to digging into pocket or purse to do so. Then it’s the same old story: Consumers would rather their neighbors make the sacrifice.

"Buying an alternative-fuel vehicle is an emotional response about doing the right thing, but the decision is based on whether it costs more or less per mile," Miller said. "Consumers told us they’d expect E85 to be 50 to 55 cents a gallon cheaper than unleaded gas to offset the disappointment in mileage."

Yet E85 prices depend on whether states offer subsidies or incentives to hold them down.

"We found E85 substantially more expensive than unleaded gas in some states, less expensive in others. So it’s a great idea in some states, a bad idea in others," Miller said.

The study of more than 1,200 consumers nationwide intending to buy a new vehicle within three years also found awareness of gas/electric vehicles has grown to about 50 percent from 30 percent when they entered the market in 2001.

"It means a broader universe of the population to sell to," Miller said while pointing out the population has become more cautious about hybrids. "We don’t see the euphoria we once did. Early adopters excited about the technology went out and bought one. Now we’re waiting to see if the mainstream masses do."

Many people believe hybrids don’t get the mileage advertised or that the cost to replace the batteries will run thousands of dollars and ruin resale values.

"There are those who favor the technology but aren’t going to spend the $5,000 premium to get one," he said, referring to the cost of the gas/electric versions of the vehicles as compared to the gas-only.

The biggest surprise in the survey was that 49 percent said they’d consider buying a "plug-in" hybrid.

Like current hybrids, plug-ins combine gas engines with battery packs. But, unlike them, the batteries aren’t recharged while driving. So they have a range of 50 miles or less before having to plug the car into a socket for a recharge.

"They’d be ideal for those who drive only 15 to 20 miles a day," Miller said, because you wouldn’t have to call on the gas engine at all.

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