Hybrid Cars in 2007

Hybrid Car sales in 2007 are going to be determined by many factors. These include gas prices, federal and state tax credits, new models arriving, new clean diesel sales (as well as other alternative gas engine fuels), and finally, the continued reliability of the hybrid cars that are out there.

Gas prices and hybrid car sales tend to follow each other closely. Gas prices are expected to stay around what we've seen in the past year. Unless some other natural (or man-made) disaster occurs, what we see now is what we should expect to see with some fluctuation up and down (the EIA is projecting prices to go down slightly). This stabilization should keep a downward pressure on hybrid car sales.

Toyota has broken through the 60,000 units sold barrier for the federal tax credits. And so, since October, federal tax credits were halved on all Toyota hybrids sold. Toyota has publicly blamed the lack of an increase in hybrid sales on that reduction. But on the other half of that coin, Toyota is still selling three of the four most popular hybrid vehicles on the road.

Also, no other car maker is likely to break through that barrier in the next year. Despite a rash of new hybrid vehicles that will be coming out and will be eligible for the federal tax credit, Toyota seems to have taken a huge lead in hybrid image, with the Prius especially becoming synonymous with hybrid. So, I don't expect this to have a huge affect on hybrid car sales in the coming months, even after Toyotas credits get halved again in March.

Various states and cities are considering or are offering other incentives, from car pool lane preferences to tax credits to free parking. As more incentives are offered, more buyers will pull the trigger.

I do expect large increases in sales due to the new models coming out in 2007. Despite being disparaged as not a full hybrid, the Vue hybrid sold 700 units in October. As each new hybrid models get released, I expect corresponding big jumps in hybrid car sales. Especially when the Nissan Hybrid Altima comes out, even in its limited sales areas. Other new hybrids expected to hit the road in 2007 include the Saturn Aura, the Chevrolet Equinox, Malibu, Tahoe, GMC Yukon, and Chevy Silverado.

Other issues hybrid car sales will face is competition from other alternatives to the traditional internal combustion engine (ICE). These include new clean diesel engines and bio-fuels. Hybrids will fight back with better gas mileage (the next generation Prius will possible get 90+ mpg, for instance) and by plugging in. Also, you may see more mergers between the alternatives, as diesels become hybrids.

One other issue that may affect hybrid cars in 2007 is their continued reliability and the continued satisfaction hybrid car owners have. Despite being accused of smugness in 2006 (ie. South Park), hybrid car owners have shown very high satisfaction (consumer reports survey) with their choices and rightly so based on the reliability of hybrids so far. It will be hard to maintain such high ratings as new hybrid cars (from automakers with lower reliability ratings) enter the field, but we'll just have to wait and see what happens.