Do hybrid incentives really work? -

Do hybrid incentives really work?

They steer people from small cars to hybrids, but don’t reduce SUVs


Do hybrid incentives really work?Ambarish Chandra is a professor at Sauder School of Business at the University of British Columbia. He drives a Jetta. Hal Hamill of Surrey, B.C., owns AAA Auto and Truck Scrap Pickup. He drives a tow truck. His job is hauling aging clunkers off the roads, while Chandra and his research team try to do the same thing, academically. From different perspectives, the two have reached a similar conclusion: government incentives to get old gas guzzlers off the road may prime the economy, but their impact on the environment isn’t as green as advertised.

Chandra is co-author of a study that found Canadian and U.S. incentives to buy hybrid vehicles are largely a waste of money, if their aim is reducing emissions. “There is a long history in economics of programs designed to sway consumers to do one thing having unintended consequences,” says Chandra. In this case, most consumers using government incentives (as much as $10,000 in Ontario) toward the purchase of hybrids would buy them anyway, he says. Hybrid incentives may steer some from fuel-efficient smaller conventional cars, but they have no impact on reducing demand for SUVs, vans or trucks.

Canadian incentives cost as much 43 cents for every litre of gas a new vehicle will burn over its lifespan. “It doesn’t seem to us that’s a good environmental program,” says Chandra. “It’s probably a pretty effective stimulus program, but we should call it as such.”

Hamill agrees: carmakers and dealers are the real winners. Meanwhile, he questions related programs in Canada and the U.S. that pay owners to scrap their old clunkers. They are paid a few thousand toward a cleaner-burning replacement, “forcing people into more debt,” Hamill says. The older vehicles must be recycled as scrap, meaning working engines and most other parts can’t be resold and reused. How green is that? he wonders. “By building new cars,” notes Hamill, “they’re actually increasing emissions.”


Do hybrid incentives really work?

  1. "Hamill agrees: carmakers and dealers are the real winners."

    You forgot to mention that people who wanted to buy a hybrid, and received free taxpayer money, were also winners.

    So environmentalists and car industry were the big winners while the common taxpayer gets the bill. This is perfect example of Bruce Yandle's 'Baptists and bootleggers' economic theory.

    • Friendly amendment: The common taxpayer OF TOMORROW gets the bill. Recall that we are currently spending money we don't have.

      • Party pooper
        The real question is who is going to get stuck with the bill for disposing of all these batteries in a few years.


    Later in the year he affirms that keeping old cars on the road is more environmentally friendly. I agree, as long as you maintain them. So instead of scrapage deal the government should be offering a retrofit and maintenance subsidy like the EcoEnergy program; give some money out to people who makes maintenance on their cars that reduces pollutants and carbon emissions.

    I'm sure that per $ of investment you'd get more economic stimulus returns that way.

    • True that. A coupon for some maintenance at the nearest garage would be a lot more cost effective than thousands to buy a new hybrid. What I really wonder about is how they're going to recycle all those old batteries in five years. The resale value of hybrids is crap precisely because no one really knows how long the batteries are going to last. Replacing a regular car battery is no big deal. Maybe $120. Replacing the massive battery in a hybrid? I don't even want to think about it.

      • I don't know how it is now but it used to be 10,000$ every 10,000 miles.

  3. A hybrid is not for everyone. I would love to buy a hybrid to drive around town.
    However, we need a vehicle for highway driving. Also, when you are aging and have arthritis a small low sitting vehicle exacerbates your physical condition.
    When hybrid engineering is perfected and used for all types of vehicles, including SUVs, minivans and trucks, it may work for us.

  4. Hybrids are the biggest scam to come down the pipe in a long time. A compact hybrid of today (like a Civic or Prius) gets no better mileage than some ICE compacts that were being manufactured 15-20 years ago. Its just a marketing ploy. There's no reason car companies can't produce a compact car that gets 100 mpg, and that's just using a conventional ICE and drive train with technology they already have.

    • Yes there is a reason; regulations and market demand. To prevent passenger injury in crashes regulations demand more cabin space, stiffer roll cages, beefier side impact beams, increased chassis compatibility (that's the energy transfer points being compatible with that of other cars), and more airbags. All of these mean added weight, easily 500 lbs in small cars and 1000 lbs in large cars or SUVs.

      Market demand though thinks 0-100 in less than 10 seconds is unacceptable and wants to be able to overtake Porsches in their Yaris on the freeway. So small engines are not option.

  5. hybrid incentives are not enough. we need FULLY electric vehicles that plug in. most canadians only travel less than 40 miles per day, and that's perfect for plug-ins. any vehicle with gasoline power is short-sighted these days.

    • "any vehicle with gasoline power is short-sighted these day"

      Oh you didn't…