Yesterday J.D. Powers and Associates released a summary from a nationwide study examining consumer attitudes toward clean energy transportation choices.

Conducted in February, the 2011 U.S. Green Automotive Study queried a statistically significant 4,001 Americans in the market for a new vehicle, plus examined a year’s worth of relevant online social media conversations – 14.8 million in all, from forums, chat rooms, and other sources.

Its findings support the most optimistic auto industry forecasts for proliferation of electric vehicles, hybrids, and plug-in hybrids. The study states that by 2016 these will comprise around eight percent of the market, but opines this is not really all that much.

The Volt is one of many kinds of cars lumped into J.D. Powers' green-tech study. Individual models and brands were not surveyed.

Besides electric and hybrid variants, all alternative-tech solutions were surveyed as a category, and included clean diesel, compressed natural gas, and innovative twists on traditional internal combustion power.

The study gauged how much consumers would consider these powertrain types for their next new vehicle purchase. It also explored specific perceived benefits and concerns that factor into the decision-making process.

Leading off with the question, “Why Go Green,” a two-page Special Report plus a separate press release interpreted the study’s findings saying despite a tripling of models available in five years, electric and hybrid variant proliferation will be rather low.

J.D. Powers researchers pointed out that eight percent by 2016 represents just 1.4 million units sold out of a 16.7-million-unit total annual market.

The research firm further rhetorically asked why automakers are even bothering to invest so much for such a small piece of the pie.

Projected number of hybrid and plug-in models by year.

It answers its question by saying original equipment manufacturers (OEMs) stand to gain by:

•Easing consumer frustration with rising fuel prices in an era when driving times and distances are on the rise
•Improving their brand’s environmental footprint and nurturing a “green” brand reputation
•Contributing to the reduction of U.S. dependency on foreign fuel sources
•Addressing government mandates for fleet-wide fuel economy standards

“OEMs are also banking on a groundswell of advocacy, should technological advances lead to alternative powertrains that better align with consumer expectations and wallets,” said J.D. Powers, “The key for OEMs is for one of the technologies they offer to be the one most embraced by the masses, legislators, and ancillary industries and interest groups. While OEMs are touting and lobbying for their choice as the right one, there continues to be a great deal of confusion from the consumer perspective.”

Chevrolet has said its key strategy at this point is getting people involved, telling personal stories, making the Volt's value real to them.

In addition to higher initial price, factors barring the way for more pervasive proliferation include:

•Fuel availability and the fueling process (or insufficient infrastructure for plug-in vehicles)
•Maintenance costs and reliability
•Performance trade-offs (range, acceleration, top speed, etc.)
•Disbelief that the benefits in economy and emissions are worth the personal investment

Of consumers sampled, 75 percent who indicated they would consider a hybrid electric vehicle cite lower fuel costs as a main benefit. In contrast only 50 percent cite ‘better for the environment’ as a main benefit of these vehicles. At this point, most consumers said prices look too high, and the choices too confusing.

To learn more, we called J.D. Powers in Westlake, Calif., and spoke at length with Mike VanNieuwkuyk, executive director of global vehicle research.

Positive press helps too.
Much greater granularity of data beyond what the press got is available to paying clients, he said. Since he is knowledgeable of the whole study, we bounced our questions and thoughts off of him, and he confirmed what we had intuitively surmised.

The study is but a snapshot in time, he said. It represents consumer attitudes as of February, but variables stand to potentially shift projections radically.

We discussed three variables holding up greater consumer acceptance for electric vehicles, hybrids and plug-in hybrids. These are fuel prices that are not painful enough, insufficient consumer knowledge, and lack of a perceptibly clear-cut best technological choice.

We asked if the survey had inquired what consumers would do if gas consistently rose above $5 per gallon?

“We didn’t specifically put out there if it got to $5 would this change your opinion,” VanNieuwkuyk said, “What we did ask them is if they expected in the next two, and also the next four years out, where they thought gas prices would be.”

Formulating a marketing message as simple, clear, and compelling as a blue sky is needed J.D. Powers said.

He quoted the overall response.

“On average, the expected price for two years out was about 20-percent higher than it is today. That’s where consumers minds were back in February,” he said, “Now ask them today watching prices north of $4 again, maybe that changes a little.”

In other words, it’s an uncertain time in which consumer speculation – thus an opinion answered in a general survey – is subject to swing in response to subjective stimuli.

“Again this is a very fluid kind of a situation. Looking four years out the thought was we’d probably be about 35-percent higher than we are today. But there still was also the portion of the people who said it’s going to be over 50-percent higher than we are today,” VanNieuwkuyk said, “So, I think some consumers are very bullish and say ‘yeah, you know we’ve been through this before, it will be OK, it will level out.’ Others are not so sure. And depending on which way this goes can greatly change how consumers think of these particular alternatives.”

As for lack of consumer knowledge, we spoke to him about the study that showed many consumers really have no clue how alternative transportation even works in order to make an informed decision.

He said some respondents said there was not enough good information to make a decision, but conceded the fault may not only belong to marketers who failed to share their message.

Regardless, he said, the job still falls on those promoting alternative choices if they want to sell more cars.

He also commented on the perceived difficulty consumers have in calculating cost-for-benefit for higher-priced, advanced-tech vehicles.

What makes this car worth it is not always an easy calculation. Early adopters get it, but others have yet to fully embrace the message.

“That kind of is the what’s behind all of the lack of commitment by consumers – is that they see this price premium [for a plug-in car, for example] and they go ‘Wow. How does this actually work?’ You know, the math is very hard to do,” VanNieuwkuyk said. “So a lot of times it’s easier to just kind of stick with what you got, maybe pick an easier route.”

Spelling out the benefits is one of a few tasks of the decade for purveyors of electric cars, hybrids, and plug-ins, he said.

“As a marketing side of this, being able to express that equation in terms of how it matters for the consumer is important for them because they are not necessarily going to be able to consider all these elements,” VanNieuwkuyk said, "Whereas somebody on our end possibly could do that.”

There may not be enough public charging stations, and it may cost to install one at home – if that is even possible – but as fuel prices rise, the purportedly fuzzy plug-in selling proposition may become clearer.

At this stage, a tipping point has not been reached, VanNieuwkuyk said, but it could be as he portrayed one possible scenario:

“Where consumers will get over that issue is when psychologically it gets so stressful at the pump, it’s ‘I’ve gotta do something,’ and they just assume the math is OK,” he said, “But right now – at least leading up to this point – that equation isn’t apparent for consumers at all.”

In sum, there are three variables, any one of which could radically augment a shift in consumer buying preferences. While fuel prices are the most obvious factor, they are not the only one. Also fundamental is consumer knowledge and potentially game-changing technology.

If an obviously better technology came along that was not financially painful, that too would get peoples' attention, VanNieuwkuyk said, and J.D. Powers would be looking at new projections.

At this point, most consumers think of expenses they can understand, which are primarily sticker price and fuel costs, he said. The plethora of choices, and no clear perceived winner will mean slower sales for manufacturers and fighting over a limited pool of potential buyers until one, some, or all of the aforementioned variables change.