If the Toyota Prius is in trouble, can other green cars take advantage?
Safety concerns may tarnish the reputation of the Toyota Prius. But its replacement isn't clear yet.
As the proud owner of a 2008 Toyota Avalon and as a researcher who likes to make maps of where are the communities with lots of Prius vehicles (i.e Berkeley), I have been in deep thought about the "green" competition for auto market share. The NY Times wrote a thought provoking piece on this topic.
Will Toyota Prius buyers maintain brand loyalty? Or, will safety concerns lead them to take a new look at alternative hybrids and electric vehicles? Interesting product competition issues will break out, if Prius competitors anticipate that the Prius is vulnerable then they should price aggressively to lure them away. Anticipating this, will Toyota deeply discount the price of their next Prius fleet in order to not lose market share?
There is also the issue of "objective reality". How do we rank these different vehicles to determine how green they really are? Does the truth matter? Here is the EPA's Green Vehicle guide. Do you trust them?
How does Al Gore choose what vehicle to drive? My wife and I only drive 1,000 miles a year so our logic is that it doesn't really matter what our vehicle's MPG is. The Avalon is not a Prius but for our mileage --- it is good enough for us to go to heaven.
So, given that I will be spending 10 days soon in Berkeley --- I'm thinking of doing some field research and asking the natives there whether they have soured on the Prius. If "yes", what will they substitute to? The designers for the competitor vehicles should be thinking about what designs are distinctive (not the hybrid Civic) so that Prius buyers who like "green cache" can gain the same buzz from their vehicle. There is also the issue of network externalities. If Matt Kahn motors makes a green vehicle but nobody knows this, does my mom gain any "green status" in Berkeley if she drives one of these out on the streets? If the answer is no, then the little car makers (regardless of how green their vehicles objectively are) will not gain market share at Prius' expense.
Mathew is an economics professor at UCLA and has written three books: Green Cities (Brookings Institution Press); Heroes and Cowards (Princeton University Press, jointly with Dora L. Costa); and in fall 2010, Climatopolis: How Our Cities Will Thrive in the Hotter World (Basic Books).
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