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U of Michigan Study Finds Costs of Plug-in Cars Primary Key to Broad Consumer Acceptance

Probabilities at different price points for at lest some chance of purchase. Source: Curtin et al. (2009) Click to enlarge.

A newly released University of Michigan study found widespread consumer interest in buying plug-in hybrid electric vehicles; however, the cost of the cars is much more influential than environmental and other non-economic factors as a predictor of purchase probabilities.

The survey of a nationally representative sample of 2,513 adults age 18 and over was conducted between July and November 2008 by the U-M Institute for Social Research as part of the Reuters/University of Michigan Surveys of Consumers. The findings were released at The Business of Plugging In conference in Detroit today.

The data provide strong evidence that a combination of economic and social incentives may be most effective in successfully introducing these vehicles.

—Richard Curtin, director of the Reuters/University of Michigan Survey of Consumers

Distribution of purchase probabilities at different price points. Source: Curtin et al. (2009) Click to enlarge.

The purpose of this study was to examine the conditions under which consumers would purchase a PHEV. Rather than focus on “first adopters,” the research focused on the potential pool of purchasers in the first several years after the introduction of PHEVs.

Consumers were asked to consider two key factors: the savings achievable on fuel costs and the added cost premium to purchase the vehicle. The questions were based on estimates of the likely fuel savings and cost premiums for the PHEVs in five to ten years (in today’s dollars). The costs premiums were $2,500, $5,000, and $10,000; and the fuel savings was estimated at 75% compared with a conventional gasoline engine.

  • When given no cost or fuel-savings estimates, 42% of those surveyed said there was at least some chance that they would buy a PHEV sometime in the future.

  • Under the three different cost scenarios, the probability of purchase fell by 16 percentage points with each successive doubling of the price of PHEVs:

    • 46% said there was a chance of purchase at $2,500 more;
    • 30% said there was a chance of purchase at $5,000 more; and
    • 14% said there was a chance of purchase at $10,000 more.

The relationship between cost and purchase probabilities was clearly indicated by the proportions who said there was zero chance of buying or 100% chance of buying at the three different cost premiums presented.

Indeed, 56% of all consumers responded that there was no chance that they would buy a PHEV at the top premium. The proportion indicating a zero probability of purchase moves from nearly one-in-four at $2,500 to one-in-three at $5,000, to more than one-in-two at an added cost of $10,000. At the other extreme, those who said they were 100% certain that they would buy a PHEV reached a high of just 10% for the lowest added cost and fell to just 1% for the highest added cost.

—Richard Curtin

The researchers also investigated three general sets of factors to gain a better understanding of how consumers judged the potential purchase of a plug-in hybrid electric vehicle.

  • The characteristics of the vehicle that consumers currently own and how the vehicles were driven, determining the cost implications of vehicle purchase decisions.

  • The socio-economic characteristics of the household, its geographic location, and recharging capabilities.

  • Environmental and other non-economic attitudes that may be related to preferences for hybrid vehicles.

It should be no surprise that vehicle purchases,typically the second largest purchase households make, would be very sensitive to price, Curtin says. But although consumer acceptance of PHEVs was not determined solely by cost issues, the role of environmental considerations played a smaller role in consumer attitudes about PHEVs than had been anticipated.

Half of all consumer reported that showing a committment to the environment through the purchase of a PHEV was “very important” to them. This kind of over demonstration of a commitment to buying environmentally friendly products —known as badging—has long been recognized as a powerful influence on purchases of many different green products, Curtin says.

But when asked what they through was the main advantage of a PHEV—reducing money spent on fuel, reducing vehicle emissions or reducing dependence on foreign oil—54% reported that reducing dependence on foreign oil was the main advantage.

Reducing vehicle emissions was by far the least frequently cited advantage. Just 15% of all consumers cited that as the main advantage.

—Richard Curtin

Only 31% thought reducing money spent on fuel was the main advantage, even though the price of gas was high during the time the survey was conducted. When the survey started in July 2008, gas prices were near their all-time peak ($4.28 per gallon) and then fell sharply during the period of data collection. But the researchers found no relationship between PHEV purchase probabilities and the price of gas.

The data provide strong evidence that a combination of economic and social incentives may be most effective for the successful introduction of PHEVs. The survey also sowed the significant influence of hybrid vehicles in signalling people’s commitment to a clean environment.

Nonetheless, consumer attitudes toward the environment are less compelling than economic criteria in explaining hybrid purchase probabilities. Presumably, if PHEVs are priced so that consumers can recoup their initial investments over a reasonable time period, consumers would find ample economic justification for their purchase. The critical role of environmental and other on-economic attitudes may be to provide the initial burst of interests and sales to propel the appeal of PHEVs to the mass market.

—Richard Curtin

The analysis also examined how vehicle usage patterns and currently owned vehicle choices, as well as demographic characteristics such as age, income, education and gender, are connected to preferences for PHEVs. Additional correlates of purchase probabilities,s including location and availability of outlets for recharging, and preferences for news technologies,are also analyzed in the report.

...the long term success of these vehicles in the marketplace will depend on whether this technology can provide a higher value to consumers when compared with alternative technologies. Providing greater consumer value includes the reliability, durability, and convenience of the new technology as well as fuel savings and the purchase price of the vehicle. These are complex judgments that cannot be fully captured in population surveys before the vehicles have been actually produced.

The data provide strong evidence that a combination of economic and social incentives may be the most effective for the successful introduction of PHEVs. Indeed, social forces play an important role in most purchases, including vehicles. The survey documented the significant influence of hybrid vehicles in signaling people’s commitment to a clean environment. Nonetheless, the importance of the attitudes toward the environment in explaining hybrid purchase probabilities provides less compelling evidence of the underlying demand than if preferences for hybrids were mostly based on economic criteria. The presumption is that following the introduction of PHEVs, if the vehicle is priced so that consumers can recoup their initial investments over a reasonable time period, consumers would find ample economic justification for the purchase of a PHEV. The critical role of environmental and other non]economic attitudes is to provide the initial burst of interest and sales to propel PHEV’s appeal to the mass market.

—Curtin et al.

The study was supported by funds from the Pacific Northwest national Laboratory and the U-M Transportation Research Institute (UMTRI).


  • Surveys of Consumers. Richard Curtin, Yevgeny Shrago, and Jamie Mikkelsen (2009)Plug-in Hybrid Electric Vehicles



More "research" whose findings state the obvious.


Problem with this kind of research is that choosing a car is 90% emotion. This research only covers the 10% logic.

Why is the SUV such a success? It is more expensive than a normal car, and in most cases provides no benefit to the user that weighs up to the extra cost. It is the 90% emotion at work. Peer group pressure.

Why was the Gen II Prius such a success? Because it was cheaper to run than a non-hybrid? No, because it was something different and was recognizable as such and became fashionable. That is the 90% emotion at work.

Why would people buy a PHEV? Because they want to. If they really want to, money issues and other logic is put aside.


"U of Michigan Study Finds Costs of Plug-in Cars Primary Key to Broad Consumer Acceptance"

What else did these Egg Heads expect?


I think that we (GCC posters) tend to assume everybody else is simple and unenlightened (which is not true) and so this study, which would seem to state the extremely obvious (as ejj says) may actually serve some purpose.

People seem to readily adopt logical current philosophies when they make big purchases such as:
Hybrids are not yet cost effective (Logic), even though the mpg is very attractive (emotion).
A Mercedes Benz has snob appeal but is much less cost effective (Logic)
SUVs are very handy (emotion; trendy, still, sort of) but mpg (Logic) has hurt sales.

Buying a big screen TVs is emotional, an new auto purchase a bit less so and the choice of type, less so again. No where near 0% emotional but not 90% either.


PHEVs are likely to be so expensive that a simple financial argument won't wash - certainly at current gas prices. Even if you look at the situation in Europe, where gas is currently ~ E5/ US Gallon, we still have no PHEVs worth speaking of.

They mentioned badging, which is where people associate with a product (in this case, a green product).
My question is - are the existing HEV Prius's "good enough" green products - or would people pay $10K extra to drive a "super-green" PHEV car?

Both would say "Green", but how many people would pay the extra, or respect those who did.

If you look at performance cars, you can see that people do pay a lot more for higher performance ("bigger numbers" in terms of BMW and Merc model ranges). The car manufacturers have been able to sell the idea of speed and power, although the extremes of acceleration and max speed are pointless, and are mere "numbers", but they still sell.
[ A man with a BMW 530 can look down on a man with a BMW 525, based on the number alone ]

With some deft marketing, they should be able to sell PHEV performance to a new set of customers, selling either EV miles, or average mpg as the magic number.

It remains to be seen if they can create a market for "super-green" cars, but I would hope so, as there would be loads of useful trickle down technology if they did.


The two most expensive and complex components of an ICE vehicle are the engine and transmission. The equivalent devices in an EV are much simpler and should thus be cheaper to build.

Once the initial development costs are absorbed EV's should be cheaper than ICE V's. Battery tech is improving daily and costs should come down too.

As long as EV's are acceptably stylish they should be eagerly accepted. The Volt is not too shabby looking.


"social forces play an important role in most purchases"

This may be true, but cleaner air, lower fuel costs and less imported oil come into play. The observation that leather and a sun roof do not have a payback period is a good one. People buy those for their own reasons without an expectation that their car will be worth much more when they sell it.

For many people, this is not something that they enjoy every time that they get into the car. Most people just drive the car and do not care all that much how it goes, as long as it goes. This is the problem with HEVs and PHEVs, you are paying twice for what makes the car go, for the engine/tranmission and the motor/batteries. They will sell, but not in the huge numbers to make a big difference in air, fuel and imported oil.


HEVs are complicated high tech kluges.


The resistance to change is incredible and almost implausible. It must be 100 miles thick, because:

1) 49% would not buy a 50 mpg HEV even at no extra cost.

2) 58% would not buy a 200+ mpg PHEV even at no extra cost.

Is that the distorted mentality created by decades of cheap fuel?


Car manufactures will easily sell out the few PHEVs they will produce in the next few years. These are all emotional buys.

In the long run however, the wider market will need cost justification. That is where this study makes sense.

Cost will fall over time as productions grow. Gas prices will not sit still either. Both these factors will affect the percentages.


The problem is that people only have Prius type hybrids to go by, which really don't offer much value for money. How could they? All their energy still comes from gasoline! People still don't really understand the plugin SERIES hybrid concept and automatically assume hybrids are always going to be more complicated and therefore more expensive.

Obviously, PHEV's will be significantly less expensive than the Prius because the Prius is way MORE complicated than a regular ICE car (it is parallel drive -- it needs everything an ICE car has, plus all the electrics). A SERIES plugin is way LESS complicated than a regular ICE car (no transmission and a very much reduced ICE used only to charge the batteries). Therefore, series hybrids should be cheaper or about the same price as ICE cars when mass produced, which is indeed the case if they were to use NIMH batteries. It will also soon be possible to achieve this with lithium ion batteries when their cost comes down a bit more.


in reply to Mark BC: Extended-range EVs (like the Volt) could be designed more simply than the Prius, but because the Prius already has the advantages of being fairly far down the cost curve (after being on the market for more than a decade), the Prius still wins out on cost. The $10K premium that I paid to convert mine to a plug-in puts the price way below what the Volt is expected to be selling for. If Toyota can come up with a decent battery configuration for less than a $3K premium over the standard model, they'll have a winner. Detroit would have to be willing to initially take big losses to be able to catch up to Toyota's lead.


Harvey you didnt read it right it wasnt no cost it was no cost data given as in they werent told what it would cost.

The fact of the matter is people are used to MARKETING and as such when they see the usual lies about the benifits they will get from a plug in they automaticaly use thier filters to filter it down to USEFUL info.

The plug in is a SLIGHTLY better car that is alot more expensive and has a very spendy part that inevitably will break when you dont have money.

I can risk going deep into debt for this or I can just do nothing buy nothing and risk nothing.


Like wintermain says.

And when batteries become affordable, Volt and Leaf types will be everywhere.

If such cars were available, magically tomorrow, word would get out in "hours" and they would flood the streets.

The Prius costs less than the Volt ALSO because it has fewer batteries.

Carlos Fandango

I don't doubt the study is an accurate representation of todays attitudes. There are many people not interested in buying a plug-in car. It would requires a major shift in their world view.

I am thinking of a caricature like Jeremy Clarkson. He's in love with the sound of a V8, doesn't believe in AGW, doesn't like environmental groups and has 40 years of petroleum fuelled wet dreams. He is not in any hurry to buy a plug-in. He would probably spend more money NOT to buy a plug-in.

I hope attitudes will change with time. A wider variety of decent EV products will hit the market soon. Positive EV experiences could cause exponential change.

It's still early days. 2012 will be the first time most people will talk to someone who has purchased or driven an EV. Further growth will depend on the 2012 experiences. From what I read about the EV grin in modern design cars .... it maybe quite fast.


Carlos the simply problem is jeremey is right.

Remember they arnt buying cars just to get to work they are spending FAR more money to ENTERTAIN themvsevles. But if they cant find a car that entertains them they wont spend the money. And the car industry will spiral down.

Oh and before you spout nonsense prattle about them being a fringe group that doesnt matter.... For every one of them you would need about 500-1000 of us to make up the difference.



Have we gone that far down?

Romans had also acquired rather odd enterainment taste in the latter part of the empire.

Will we go as far as they did?


Demonizing the simple pleasures of anouther person while idiolizing ones own is a sure sign ones mama needs to spank you to high heck.


Harvey's numbers for people not buying tell us that as Anne points out it is an emotional decision. Knowing this, it is less an engineering exercise and more a psychology exercise.

When I started driving a Prius, other Prii owners would exchange a wave with me. Like saying "Hi brother/sister - nice to see someone cares."

Once the public begins to wrap their heads around operating a vehicle with a 40 mile range for only 80 cents - compared to $3-4.00+ gas - they're gonna bite. And just as they bit on the Prius because it was at first cool new tech with a political buzz - they'll bite on the EVs. For millions of conscious consumers it may be worth the extra bucks to be driving a ride that shows you care...


The Prius and all the other hybrids enjoy marginal sales because the thrill of the technology is usually more than offset by the total cost.

I would love to buy a Volt or a Prius except the pain of knowing that I paid too much and that others will know this also, blunts it.

Sure there are people that buy BMWs, MBs and Corvettes.
And there are people that buy Priuses.

What we are talking about here is the majority - they await affordable batteries (and $5/g gas) to make EVs what the smart money buys.


I see you still dont quite get it.

The car market was inflated for years by a fairly large group of people buying new cars every year and anouther group buying cars every other year. There was even a large group getting new cars every 6 months.

Alot of that was corprate perks and the rest was just car buffs with money to burn and cars they actauly wanted to buy.

But that all went to heck in a handbasket and its not comming back. It most certainly wont come back for a plug in or a short range ev. It might not come back at all.


Something like $10/gal gas + $1/lb per year vehicle registration fees may convince many to look for entertainment somewhere else. Of course, application would have to be progressive over at least 10 years to give everbody a chance to change their acquired entertainment taste.

To make the acquired taste changing transistion faster and more convincing, some of the extra funds collected could be redistributed to those who have switched to lighter electrified cars. This could could be done with incentives towards the purchase of electrified vehicles and zero or even negative registration fees for e-vehicles under one tonne.

For many, the love of $$$ may be stronger than the love of driving a 9000 lbs Hummer (or similar vehicle) around.


Politicians like to get elected and reelected, so it is very unlikely that they will impose such restrictions. This is one of the flaws of democracy in America.


I only wish it was that simple

Implying that "politicians wanting to please the voters" is the problem, is like implying that "no one goes there because it is too crowded."

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