Green Car Sales Drop Way, Way Down

Tue Jun 7, 2011 1:40am EDT

by Nino Marchetti

Is the green car industry pushing forward with unbridled optimism at the moment despite lackluster sales? Perhaps, as Tesla Motors has priced its follow on stock offering and Saab is building a concept fleet of electric cars even as word comes today that sales of hybrid and plug in electric vehicles fell to a 16 month low in May.

Edmunds' AutoObserver.com, in noting the huge slump in green car sales, highlighted a variety of reasons this could be happening. These include the Japanese earthquake and associated production disruptions as well as competition from usually less expensive, fuel efficient vehicles that aren't technically considered hybrids or electric cars.

It is said sales last month of hybrid and electric-drive vehicles were off 35.8 percent from a year earlier, lead by dramatic declines in sales of Toyota and Honda models. Overall, according to Edmunds, Toyota and Lexus hybrids dropped 45.1 percent for the month.

Leading the slide among specific Toyota models was the Prius, which saw a total of just under 7,000 cars sold in May. This is down 51 percent from the same month a year ago. Low supply and higher prices have reportedly made the hybrid less interesting to consumers. A pricing analysis done by Edmunds found that the "effective cost" of a new Prius was $2,500 more than just three months ago.

What will be more of a long term challenge for makers of green cars like Toyota is a growing number of inexpensive alternatives that are gasoline powered but still manage to eek out at least 40 miles per gallon without the more pricey tech installed. Though there are only a small number of models in that MPG range at the moment, just beyond them is an even larger number of cars and SUVs that earn a combined city/highway rating of 30 miles per gallon.

For those pinching pennies or seeking to stay in larger cars that are a bit more fuel efficient, the extra 10 miles per gallon or so may not be enough of a factor for them to consider switching to a greener car.

Reprinted with permission from EarthTechling