Automakers trying to market alternative powertrains are finding fuel-efficient internal combustion engines to be stiff competition.
In particular, the new breed of compacts and subcompacts with highway fuel-economy ratings reaching 40 mpg are attracting price-conscious buyers. Apart from miles per gallon, the key selling point is a price several thousand dollars below hybrids, plug-ins and EVs.
"Buyers, particularly younger buyers, love it when they can get this affordable car with 40 mpg," says John Krafcik, CEO of Hyundai Motor America, whose company breaks out sales of vehicles with 40 mpg highway fuel economy ratings.
Through October, Hyundai says it sold 177,323 such vehicles -- one third of its U.S. sales. Hyundai models getting 40 mpg include the Sonata hybrid, but Krafcik says its volume lags far behind that of gasoline-powered vehicles such as the Elantra sedan, Accent and Veloster.
"The way for the industry to close the gap on fuel economy isn't hybrid powertrains," Krafcik adds. "They're expensive, complicated and they create a challenge with margins and profit."
Sales of EVs and plug-ins are still in their infancy. But even traditional hybrids, which have been on sale for more than a decade, have stayed in the 2 percent market share range, notes John Viera, director of sustainable business strategies at Ford Motor Co.
"It does get down to the value proposition," Viera says. "At the end of the day, these vehicles from a value perspective are better than a hybrid."