Year-on-year sales figures are valuable for sales managers but for the purposes of this forum, a 12-month rolling average would perhaps be more informative.

Using ye olde mk 1 eyeball, it looks like US hybrid sales are currently averaging ~18,000 a month total, or ~210,000 units annually. This represents 1-1.5% of total vehicle sales. It may be a hot segment but let's not lose sight of the fact that at current mark-ups, it's still very much a niche. Diesels make up ~50% of new vehicle registrations in the EU, which adds up to rather more fuel saved in total.

The niche character of hybrids is underlined by the fact that even for those models that are available with either conventional or hybrid drivetrains (e.g Camry), hybrids only account for ~10% of sales. The Prius is an exception, and popular in part because it is instantly recognized as a hybrid, which tends to reflect well on the owner (eco bragging rights).

For hybrids to become mainstream in terms of actual sales, as opposed to column inches in trade rags, the economics have toi change. Either the price of batteries has to come down substantially, or the price of fuel has to go up substantially.

Personally, I'd prefer not to cross my fingers hoping for cheaper batteries. Higher fuel taxes and lower income taxes would ensure fuel efficient technologies (hybridization is but one of many) make more economic sense and really do become ubiquitous in the LDV fleet over the next decade. The environmental and national energy security gains from 10-20% improvement across the board would be much more significant than a select few vehicles with superlative fuel economy (cp. PHEVs).

Wow, Rafeal the tax hound at it agian. Growth of 20% ain't too shabby considering the US makers are down about 6%. Premiums can be cut by the Japanees and drive up sales but they prob can't get a whole lot more batteries right now anyway. Hmm wanna venture a guess on a good investment right now in the get off oil segment?

I would vote for a carbon tax any day. Unfortunately I realize that my attitude is held only by a minority, especially here in the taxaphobic US...

Instead of taxing, promote hybrids, develop alt fuels, and raise CAFE standards.

That said, there has been talk about lithium ion batteries replacing the Nimh batteries currently used by hybrids. Are the lithium ions any cheaper?

Commercial hydraulic hubrids will send this chart much higher during 2007-2009 timeframe.

Mark -

oil prices will come down again as soon as supply once again outstrips demand. This has always happened in the past, as producers ramp up capacity and one major OECD economy or another hits the skids. Perhaps this time will be different, or it might just take longer for us to get there.

In any case, when oil prices do drop, you will see why tax policy is a neccessary part of sustaining demand for the alternative technologies you are advocating. In the 70s and early 80s, engineers were working on all kinds of fuel economy projects. They were all quickly shelved once oil became cheap again. Consumers went back to buying ever-bigger cars and SUVs. If you want to break the "addiction to oil", you've got to make sure the dope is and stays expensive. Ain't no other way.

Rafael:

There's strong evidence that worldwide oil production will peak sometime in the next ten years, if it hasn't already. Therefore I doubt oil prices will ever come down again.

We're out of $20 oil. Possibly even $40 oil.

Even if the producers can expand their capacity, we have swiftly growing economies in Asia that will likely keep prices high. We didn't have that the last couple times oil prices dropped again.

Ergo, fuel taxes will not be needed.

Oil is currently about $1.27 per gallon based upon $70 per barrel oil. If oil doubled to $140 per barrel, that would only increase gas prices by $1.27 or 42%. That is a smaller percentage increase than the increase from $2.00 to $3 per gallon. We have not seen a decrease in overall gas use since that increase. Even with $140 per barrel oil, I don't think we would see much of a change in behavior. And that assumes we would see that price relatively soon.

Waiting for oil prices to do their magic is futile. That's why we need to start a certain road to much higher taxes starting now. The market will send signals, but they will be too late.

Also, we have to consider other sources of CO2 than just cars. Even if peak oil occurs, without a carbon tax why would coal based energy suppliers have incentive to reduce emissions?

t may be right. Most of us will not buy more efficient hybrid vehicles until we are convinced that $3+/gal gas is here to stay.

Many more of us would buy efficient hybrids and even higher priced PHEVs if we knew that gas price would not only stay at current high price but would go up to $6+/gal (or average European price) with a combination of higher OIL price + a progressive carbon tax.

A carbon tax of a one to three cents per month per gallon would do it and give us enough time to change our behavior.

I’m not so quick to write off hybrids or raise taxes. Looking at the US Hybrid Sales 2004-2006 graph, it is a pretty good increase from 04 to 06 ("growth of 20% ain't too shabby").

Further, I believe that much of the lack of sales is due to erring on the side of horsepower rather than mpg. Compare the Toyota Camry sales in June 06 of 4,268 vs. Honda Accord sale of 396. To me the problem with the Accord hybrid is clearly combined mpg of 29 vs. Camry hybrid combined mpg. of 40 mpg.

The Toyota Prius is very well designed and fun to drive. Some people say, they haven’t enjoyed driving a car so much since they were a teen. That and 55 mpg combined for a midsize car, gets Toyota a 4 to 6 month backlog while selling cars at or near full price!

Regarding PHEV’s, I believe that if manufacturers begin to offer 100+ mpg. E85 Ethanol plug-in hybrid capability, and the customer has a choice of buying a 25 mpg. car or the 100+ mpg. PHEV, my guess is, they won’t be able to crank them out fast enough.

Yes, there will be learning curve objections, as there are with today’s hybrids. I still occasionally get the question, “How long will the battery last?”. My answer is that Toyota warrantees it for 8 years, and I believe it will last longer but I plan to trade the car before that, to take advantage of advancing automotive technology. And that’s one reason we haven’t associated with US automobiles in quite a while.

t:

On principle, I am against any tax whose sole purpose is to alter individual behavior. We have enough market distortions already without adding more.

Besides, how could you counter the huge inflationary effects that such taxes would cause? We're having big problems with that now and you want to tack on another $3 per gallon. Not only would you be taking more money out of my pocket at the pump, but in the prices of the food I eat, among other things. We're already starting to tip into a recession because of oil prices, if you haven't noticed.

Not to mention that the effects of such an arbitrary tax are strongly regressive. Because poor people do own cars. How can I emphasize this enough? There are vast areas of this country where mass transit simply isn't possible. I just spent my vacation in northern New England, where this fact stood out starkly. You won't really hurt the wealthy with this, but the poor and the middle class would be seriously harmed by this tax.

Even the Democrats won't dare do anything to further raise prices with taxes. They have, in fact, proposed that current gas taxes be lowered and blame the Bush Administration for the current high prices.

For the record, I am not against fuel taxes for the specific purpose of paying for roads.

t:

Gas is not $1.27 based on $70 barrels. Gas is $3 around gallon based on $70 barrels as we all know. I assume you took $70 and divided it by 55 gallons because thats exactly how your numbers add up. Many people think there are 55 gallons in a barrel but in the oil industry its 42 gallons. Secondly not all of that becomes gas, some of it becomes diesel, jet fuel, wax, all kinds of stuff.

If oil doubled to $140 a barrel gas might not be $6 but it certainly wont be $4.27 You would see something like $5 to $5.50 as the only part that does not increase with the price of crude is the taxes. The refinaries and distributors seem to make price increases almost in line with cruise price increases.

Cervus, it sounds like you are a global warming skeptic. Is that correct? That's the only way I can make sense of your obection on priniciple. Or, do you have another suggestion that may hasten CO2 reductions?

Rafael has good points in observing that hybrid volume of sale is still very insignificant, and that improvement in mpg across the spectrum of cars will contribute to fuel saving much faster. Indeed, we do see that sales of non-hybrid fuel misers such as the Honda Fit, Toyota Yaris, Kia ______, and Chevy Aveo are taking off like hot cakes! These are much more cost-effective than hybrids, including the Prius, with some increase in internal volume but at much heftier markup that is disproportional to the increase in size. But, any cars can benefit from hybrid technology, and this technology will be cheaper and cheaper with time and will trickle down to even to the smallest and cheapest cars, and we will really see how high fuel efficiency can get someday.

Furthermore, only a reassurance by the government at stabilizing the price of retail petrol at today's prices or even higher, will we see continual purchase of fuel-efficient vehicles, and consequently, more effort by the automakers in developing fuel-efficiency technology.

Cervus,
Notice I did not mention the politically-dirty word TAXation. The government does not have to raise the gasoline tax now, while gasoline prices remain high. However, the government must re-assure the public that the price of gasoline will be stabilized at a point that will continue to promote fuel conservation. This is not an act of punishment to the poor, but a salvation to our economy, which has been running a huge and growing trade deficit, and petroleum importation is a big percentage of this trade deficit. Pretty soon, we will run out of money to import petroleum, and the economic bubble will collapse, with catatrophic consequences to the poor, of course, while the rich will manage better to survive hard times. Cervus, are you among the poors, who can't afford any more taxes, or among the more greedy and apathetic affluents who just don't want to contribute anymore to our national causes? Anyhow, it does not matter what economic class u r in, you will benefit from the stabilization of retail price of petrol.

Just a note regarding poor people and cars. A carbon tax could be offset in all kinds of ways, for instance a reduction in payroll tax. It could also be used to fund better publick transport options and can be introduced quite gradually. Lastly the overall tax burden in the US is relatively mild (especially for rich people) so I can't really see that this kind of objection holds much weight.

Marcus: My stance on global warming is immaterial in this case. It's very simple. I believe in individual freedom and the power of the marketplace. The money I make is mine first. I did the work and earned it. Ergo, the government has no automatic right to it.

Roger: Cervus, are you among the poors, who can't afford any more taxes, or among the more greedy and apathetic affluents who just don't want to contribute anymore to our national causes?

If I want to contribute, I can choose to invest my money into venture capital firms or buy stock in companies involved in developing products that have lower impacts on the environment. It's a pity GreenFuel Tech is still a private firm, else I'd invest! I think algae holds great promise as a total replacement for transportation fuels. But if the government must help things along, I prefer tax credits or abatements to make the initial capital costs lower, rather than imposing more gasoline taxes on the other end.

The fact is that I don't want the government involved more than is necessary. Especially when they want to take more of the money I earned out of my pocket. Because when you involve taxpayers rather than keeping the risks with a few isolated investors, you not only make how the money is spent a political issue, you also put the taxpayers at risk should the venture fail.

And now I've drifted this way off topic. Oh well.

At any rate, just looking at the state of increasing hybrid sales and the still-dropping sales of large pickups and SUVs, I'd say the market is working well enough anyway.

Rafael at al:

I have very strong impression that your passionate call for carbon/fuel taxes in US is fruitless. See, US society and way to govern it varies significantly from what is common in European countries. As a nation US was build on the idea of personal freedom, and first of all from oppressive government, first of all its own. That’s why ability of central government is notoriously limited to provide some essential services, not to force some ideology, way of life on the people. Taxes are supposed to pay for essential services, not to merely modulate people’s behavior (with some exemption to “sin taxation” of gambling, smoking, or drinking). All legal and federation systems is built on this idea. American legal system alone would not allow to impose carbon/fuel taxes significant enough to be qualified as behavior modulating, let alone voters, who are very government-suspicious (down to the origins of Second Amendment). Government can ban something (like leaded gasoline), it could promote something (HEV incentives), but it could not to discourage something which is not prohibited as illegal (driving SUVs).

For better or worth, this personal freedom of choice emphasis of US socio-political fabric (and Canadian, Australian, and New Zealand’s to that matter) helped to avoid such behavior-alerting government-driven extremities as fascism, nazism, communism; America never saw any kind of dictator, let alone totalitarian state.

Sure thing, some adjustment to fuel taxation could take place to reflect hidden cost of motoring, help develop public transportation, and alike, but this would be not nearly enough to “get peoples out of their cars”.

Happy 4-th of July to all our American friends.

Andrey -

"[...] some adjustment to fuel taxation could take place to reflect hidden cost of motoring [...]"

This is precisely my point. The way you externalize the hidden costs (military protection of access to oil, global warming, urban sprawl etc.) is by making fuel more expensive. This should be compensated for by reducing marginal income taxes, especially for the poor, precisely to avoid a more regressive situation. That way, you can EARN yourself a net tax cut by using less fuel than the average Joe.

I realize that US citizens are deeply sceptical of government, esp. the federal one. Many feel they have no control whatsoever over any money that goes to Washington. It was not always so: up to the early 60s there was still a much higher level of trust in public institutions.

What changed? TV advertising drove the costs of political campaigning into the stratosphere and broke up party discipline. By now, members of Congress are noteworthy mostly for their ability to gerrymander district boundaries and raise money for their re-election (98% incumbency rate). Thus, there is now a huge discrepancy between the ideals enshrined in the Constitution and political reality. Voters are staying away in droves, leaving extremist ideologues on both sides to dominate the agenda and completely ignore the general public in-between elections.

And that is why, unfortunately, it is so difficult even on a forum such as this, to advocate a simple measure designed to promote alternative technologies and help the US wean itself of its addiction to oil - without anyone getting a free ride.

The government's role is to guide the society for the common good (at least on a good day). The US is 6% of the world population and emits over 30% of the world's CO2. If you believe that global warming is detrimental to society, as I do, the government ought to have policies to reduce global warming.

The US light duty vehicles emit 10% of the world's CO2. Coal burning in the US for power generation emits another 10%. A carbon tax (if set at the right level) would influence LDV purchase decisions and new power generation decisions.

A carbon tax is highly regressive (disproportionately affects the poor). One possible remedy would be to evenly and directly distribute the carbon tax revenue among the citizenry.

Bill,

your figures seem wrong:

US light duty vehicles are less than 5% of worldwide fossil CO2 emissions.

http://www.environmentaldefense.org/documents/5301_Globalwarmingontheroad.pdf

And US CO2 emissions were around 23% of worldwide CO2 emissions in 2003:

http://www.eia.doe.gov/oiaf/ieo/pdf/ieoreftab_10.pdf

Cervus writes:

I believe in individual freedom and the power of the marketplace. The money I make is mine first. I did the work and earned it. Ergo, the government has no automatic right to it.

Cervus, a proper Libertarian is for self-responsibility, not playing the role of the grasshopper to the ant.  You demand rights without taking on any of the burdens, and that's both wrong and counter-productive.

It's my own small-l libertarian tendencies which force me to support more fuel taxes, to the tune of several dollars per gallon (I'd go for another $3 over the next 5 years).  You can call it social engineering if you want; I call it taking personal responsibility and waging economic warfare against the hostile petro-states.

Hampden. My bad. Ok. $70 divided by 42 is $1.66. Don't know why I was thinking 55. Obviously, the refiners will increase their prices on gas sold to distributors because of the oil increase. But you are implying that they will pass on a price that represents the percentage, not the gross price of oil. Do you have documentation for that? I'm not saying it's not true, it's just that I am interested in seeing the reference.

Even with your estimate of $5 to $5.50, we're still talking about a doubling of oil prices. The point still stands, I think, that we need the certainty that prices will rise to a very high level and stay that way.

Maybe oil prices will triple, for all I know, in the next couple of years. The problem, however, is that there are still a lot of people that think that the current oil prices are merely a spike or a bubble if you will. While I believe in the long term validity of peak oil, I can see that we could still have temporary reductions in oil prices assuming that part of the high price now has to do with transient factors beyond the inability to pump more oil.

Cervus and Audrey,

it is interesting that your attitude is what I and many other people think is really right at the core of the whole current crises (as Rafael points out). I wonder whether you would mind partaking in a little more discussion of it (not trying to sound offensive or confrontational here). For instance could you explain how laws that the government make are different to taxes designed to alter behavior - (especially if the money taken is given back in other ways)? Also, when one person's freedom impinges on another who should win? Should Americans have the freedom to cause global catastrophie? Lastly why do you believe in this principle and do you think holding on to this principle is more important than stopping global warming?

The principle I am talking about is that taxes should not be designed to alter people's behavior.

Thanks for any comments.

Lots of good comments. Here's a quick twist, yes we need to cut down on CO2. How come nobody talks about the deforestion of the tropics? I mean trees and plants breath CO2 a exhale oxygen..........

This is great discussion but on confounding issues. Let me take a stab at a couple.

1. Taxes do not cause inflation. It is merely a transfer of funds. Money supply changes could impact inflation, and will, when foreign dollars stop flowing into the US. So, while the price of oil will go up with peaking, it will go up more in the US due to the relative value of the dollar. Behavior will change with or without the taxes.
2. We have always used taxes to affect behavior -- earned income tax credits, special lower rates for capital gains, investment tax credits. You are dreaming if you think we don't. Besides, that is the tool Government has to achieve it's essential purpose, which by the way, is not the same as the purpose of corporations.
3. A carbon tax may be regressive, but so is a high oil price. So what is the difference?
4. While I would support a tax to sustain high gas prices, or a carbon tax, extreme swings in gas prices will force auto companies to introduce high-efficiency vehicles if nothing more than as a hedge against yo-yo sales. Then people will make choices, and if equivalent vehicles are available with better gas mileage -- people will buy them -- not all people, but enough.
5. Wild swings in gas prices will still encourage technological development, which will result in lower prices for fuel efficient vehicles, if the governemnt does not regulate them out of existence.

The issues of Peak Oil and Global Warming are intertwined, but not identical, and need to be addressed as such.

Rings true for me. Since many of the solutions for peak oil also reduce GHG, peak oil might just save us from global warming. Lets just hope that the cure isn't worse than the disease.

Rafael:
Yes, I agree, political extremities from both sides are just sickening. But at least neither side could win decisive majority among people. Sadly, not the case in Europe, or at least it seems this way from this side of the pond (probably people does not care what their politicians-activists are doing? Except for referendum for European Constitution…). Looks like concepts that thief is entitled to steal (UN), barbarian have a right to ravage (Africa), terrorist is a freedom fighter (Palestine), slavery is untouchable national tradition (women in Islam), nobody have a right to defend themselves (S. Africa, Israel), and it is better to be a victim, not a victor (everywhere) become a core values of European politics. Personally I add to this list end-of-the-world hysteria for global warming and peak oil. This is the main reason why I am against all drastic and potentially disruptive measures widely discussed on this forum.

Oil prices will come down. I'm in the industry and I can tell you we practically invented the phrase boom and bust. Americans are addicted to oil because it has always been and remains dirt cheap. We and the Europeans basically stole the oil from the middle east for 50 years now they are starting to wise up. We'll see oil under $50 bbl in a couple years maybe under $40. A couple hundred thousand hybrids is exponentially better than the failed electric experiment by GM in the nineties. Though fuel is less of our GDP than it was 30 years ago, I'm investing in alternative to help pave the path forward.

You want to waste your time in a monumental fashion? Argue with a tone-deaf libertarian.

While a 20% gain in hybrid sales sounds impressive, let us not pat ourselves on the back for hybrid segment sales of 1.54% is only a blip above zero.

What's the difference in sin between emitting carbon dioxide, smoking cigarettes, drinking alcohol? There should be a tax on all of the above, they all claim the lives of others/future generations.

"I'm in the industry and I can tell you we practically invented the phrase boom and bust." - inventing phrases does not validate your prophecy - in 1775 Patrick Henry said "give me liberty or give me death", in 1799 he died.

Wow what a half backed retort.
Please compare 1.5% 250,000 units to previous electric units.
Also observe the number of car makers coming out with new hybrids. Already 10% of Camry's sales are hybrids and that is only 2 months after the launch. I think Bank of america is throwing an extra $3,000 to employees and more are sure to follow.
Also please actually do some checking, look and see what happened every time there was a huge spike in the price of oil.
We all die sonny so will your turbo-lib dream of higher gas taxes.

I am really excited about hybrid sales. The market forces are at work by selecting the better of the models available. It seems to me the only thing holding back larger growth is availability of the more sucessful ones. If GM would jump on board they could lead the way but since they won't they will be headed for Ford's future. Bankrupcy.

"Also please actually do some checking, look and see what happened every time there was a huge spike in the price of oil."

In clever hindsight you can call something a spike, in your long-term ignorance you can't see a trend..

dipstick co2 tool,
I told you I'm in the industry. Are you? I've seen this for 25years.
And yes there is a trend and it is up, here's the real problem if the price goes down significantly before the alternatives really sink root then the next time it spikes it'll make 3 gallon look like a picnic and you can bank on that junior.

Richard, Robert Rapier is also in the industry, and his analyses carry a lot more weight than your unsupported word.

hey here's what i still never got from all this discussion, gas taxes, carbon taxes, etc. rafael, why are you against hybrids becoming cheaper? what's the point? as cervus points out, don't forget the poor. the reason i say this is that the poor are the ones driving the 20-year-old clunkers on the freeway, with emissions and fuel economy going through the roof! slap on a tax on them, and they'll just buy shittier and cheaper cars, that's the only thing it will do. these people want to LIVE, they aren't going to stop driving just because of some lame tax.

seriously, the thing we need is for hybrids to cost the SAME or CHEAPER than current, gasoline-only variants. only then will we see an increase. what also needs to happen is Toyota needs to RAMP UP production capacity and FULLY PHASE OUT non-hybrid models. i.e. imagine if the camry was available ONLY as a hybrid. THESE solutions will globally solve the problem of emissions and fuel consumption, not some whizzo taxes.

cheers.

p.s. Mike, in the future, can you include the GS 450h sales as a percentage of the entire GS line, i.e. in the text writeup as well as the charts? Thanks!

Sorry about that. GS450h sales for June = 55% of total GS 430/450h sales (420).

lol Mike, I also meant the GS 300, i.e. all the GS models. thanks though.

Throwing my hat into the gas tax arena:

A HUGE amount of revenue can be generated by even a small increas in the federal gas tax. The current gas tax is 18.3 cents/gallon. If it were to double, that would generate approximately 20 billion more dollars in taxes. I'm sorry that I can't back up that value right now, but I did the calculations a few months ago based on total gallons used in the ground transportation sector.

Anyway, that tax increase would be enought to slowly impact driving habits, but at the same time not wallop the lower class. Keep in mind not everyone can go out and replace their car. I see a lot of people driving 10-15 year old vehicles. I'm sure every one of them woulde LOVE to go out and buy a nice shiny new hybrid, but there unfortunatly are an awful lot of poor people in this nation that can ill afford to spend an extra dollar or more per gallon.

Now what to do with that 20 billion? Keep in mind that in 2006 dollars, the Apollo Project cost a bit over $10 billion dollars per year, peaking at approximately 20 billion during it's most expensive year. We would be able to use the same equivalent amount of money to start a new Apollo Project based on energy efficiency across the entire breadth of the energy sector, not just transportation.

This would have a tremendous impact on not only the environment, but would reduce energy costs across the entire US economy, making business more efficient, reduce their operating expenses, and increase competitavness. It would decrease, if not eliminate our dependence on foriegn oil, allowing us to extricate ourselves from some pretty nasty places in the world. It would create energy tecnologies that we would be able to sell to the developing world, both generating trade and having a positive effect on the worldwide environment.

Instituting a program like that would be the best "middle ground" between the do nothings and the extreme taxers.

Peace,
Cosmo

I would have expected a more significant jump in June hybrid sales as price of crude is still around $75.

I think we should all buy SUV's and remove every last drop of oil to really get people moving on biking, hybrids and thinking about the environment. If we run out of oil we have to find alternatives. Might as well start pretending there is no oil left now because there definately isn't going to be in 100 years with China entering into the automotive market....

Mark