It's always about economics
Here's something that everyone (including me) who's a product evangelist needs to keep in mind - the actual economics end up mattering. The link is to RealTechNews, where they examine the decision making process for hybrid cars (like the Prius):
“White first looked at trading in his Subaru for a Prius, and found that at roughly $3 per gallon for gas, he wouldn’t recover his financing costs. Joe figured that at his annual mileage, he’d save about $746 a year in fuel costs, but it would take too long to recover the premium he’d pay for the hybrid.
“Next he looked at the hypothetical situation of someone without a car looking to buy either a Honda Civic or the Prius. In this case, the fuel savings were roughly $506 per year, versus a purchase price difference of about $8,000. Without even considering cost-of-money issues, it would take nearly 16 years just to break even.” Source: Autoblog
Costs/Benefits analysis is something we all do implicitly. We don't always get the facts right (leading to seemingly odd decisions), but we still do it. In the example above, we see that hybrids aren't going to sell well until fuel gets a lot more expensive, or the premium goes down.
There's a lesson there for a lot of us.
Comments
If money is all you want
[ Troy Brumley] October 3, 2005 10:05:27.734
Comment by Troy Brumley
This is true, and I agree in principle, but some people will take the money hit to be more environmentally friendly. Money is just one motive. When dealing with businesses, especially publicly heald businesses, money may be a primary factor in decisions, but is it always the only factor?
car-pool lane
[keith ray] October 3, 2005 10:30:12.729
When the CA law that allows certain hybrid cars to drive in the car-pool lane with only one person in the case too effect, a whole different group of buyers appeared at the car dealerships.... those looking to conveniently speed up their commute.
It's always about economics
[ Alan Knight] October 3, 2005 10:35:21.237
Comment by Alan Knight
One thing that people also forget about is statistics, and their (ab)use. I find it interesting that for the Subaru case (which I'd guess is more comparable to a Prius than a basic Honda Civic), we aren't told what the premium is or how long it would take to pay back. From the phrase "wouldn't recover his financing costs", it sounds like he actually would have made the principal of the premium back, just not the interest. And of course that's highly sensitive to parameters like how long you plan to keep the car. One might, for example, guess that people who are into preserving the environment would be more inclined to trade in their cars less frequently than someone who writes about cars for a living. The fundamental point may still be valid, but the way it's quoted makes it sound very suspicious.
It depends
[ James Robertson] October 3, 2005 10:38:37.964
Comment by James Robertson
Money may not be the only factor Troy, but most people - myself included - will not accept a 16 year ROI (especially if the expected lifetime of the product is less than that ROI period).
How many cars last 16 years, or are in use by the same owner for 16 years? Not many. Meaning, this example is a good one, IMHO.
a-Counting
[Patrick Logan] October 3, 2005 13:59:30.980
This example also betrays the difference between personal accounting and societal accounting. The actual cost of petroleum to society as a whole is much greater than $3 per gallon.
So my personal accounting may tell me I have no advantage to becoming more fuel efficient under these conditions. But if I were responsible for my total share of what society pays in total for a gallon of oil then I would the numbers may add up different. If we were each aware of the true cost, then we might even make different decisions at a societal level.
Petroleum is far from a truly free market.