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					Plug-in Hybrid Success
                                                    Table of Contents


Executive Summary.........................................................................................3
Research Purpose and Objectives..................................................................4
Research Design...............................................................................................5
Hypothesis........................................................................................................6
Data Collection Methodology.........................................................................7
Boundaries/Limitations..................................................................................8
Benefits to Users..............................................................................................8
Statistical Method...........................................................................................9
Outcome…………..........................................................................................10


Introduction.....................................................................................................11
Research Results.............................................................................................12
           Primary Data.......................................................................................12
           Secondary Data...................................................................................31
Recommendations..........................................................................................35
Conclusion.......................................................................................................36




                                                                                                                      2
                                   Executive Summary
        Over the last three to four years gas prices have increased 71%, even more in
some parts of the world. Over the last five to six years the hybrid automobile has come
to the forefront of America’s auto-buying public. These cars have low emissions and
better performance than many of the lower-priced, gas-only conventional automobiles.
The primary reason for the increased interest in hybrid vehicles is because of this flare-up
in fuel costs.
        With all the interest for the appealing factors that make up a hybrid vehicle, we
want to see whether or not plug-in hybrid vehicles would exceed those appealing factors.
A plug-in hybrid electric vehicle (PHEV) is a hybrid which has additional battery
capacity and the ability to be recharged from an external electrical outlet. In addition,
modifications are made to the vehicle's control software. The vehicle can be used for
short trips of moderate speed without needing the internal combustion engine (ICE)
component of the vehicle, thereby saving fuel costs. In this mode of operation the
vehicle operates as a pure battery electric vehicle with a weight penalty (the ICE). The
long range and additional power of the ICE power train is available when needed. We
also want to compute the relationship between age, income and hybrid sales success.




                                                                                            3
                            Research Purpose and Objectives
       The purpose of the study is to analyze why current consumers purchase hybrid
vehicles. We also wanted to see if plug-in hybrids would penetrate that segment with its
similarities or would be classified as another segment. Therefore discovered the possible
market segment and whether or not a plug-in hybrid would be a viable commercial
venture. We wanted to discover the market segments of college students and
potential/current hybrid buyers for plug-in hybrids. Factors include consumers’ potential
demand and the ability of producers to meet those demands while incurring a profit.
Specifically, the research objectives are to:
              Discover the relationship between age and hybrid vehicles
              Compare the differences between plug-in and traditional hybrids
              Determine the type of vehicle consumers are looking for; an SUV, Hybrid,
               Convertible, Luxury, Sport, etc.
              Determine the budget of possible PHEV consumers
              Provide a demographic profile of possible hybrid consumers
              Investigate if the hybrid was at a lower price would this cause growth in
               sales
              Determine if gas were to increase would the plug in hybrid sales increase


       We hypothesize that the older and more educated the potential customer the more
likely they will buy a plug-in hybrid vehicle. We will compare the relationship between
the age, education and PHEV owners.




                                                                                           4
                                      Research Design
       We used both primary and secondary research data to conduct our project. For
primary research we utilized Survey Monkey, which is a web-based survey program, as
well as surveys conducted on campus. We conducted 75 surveys on Survey Monkey and
81 on campus.
       Our secondary research was retrieved from the vast databases available at Cal
State Los Angeles. The databases include Factiva, Business Source Premier, Lexus
Nexus, ABI/INFORM Global and PsycInfo.
       Our statistical analysis is a simple correlation coefficient method describing the
relationship between plug-in hybrid vehicles and age of possible consumers.
This report answers the following problem:
       We wanted to answer the question: with the existing technology in the early part
of 2007, is there an opportunity to market a PHEV profitably in the target segments of
current hybrid buyers, potential hybrid buyers and college students. What is the
relationship between age, education, income and hybrid owners?
       Therefore, the factors include consumers’ potential demand in the segments and
the ability of producers to meet those demands while incurring a profit.
       The purpose of the study is to analyze why current consumers purchase hybrid
vehicles and see if plug-in hybrids would penetrate that segment with its similarities or
would be classified as another segment. Therefore we discovered the market segment
and whether or not a plug-in hybrid would be a viable commercial venture. We
discovered the market segments of college students and potential/current hybrid buyers
for plug-in hybrids. Our objectives in list form:
               We wanted to discover if there is a correlation between the older
                correspondent and the likelihood that they will buy or have bought a
                hybrid vehicle
               We assumed the younger correspondents would choose a sportier,
                attractive vehicle: Convertible, Sport, etc.
               We assumed the bigger budget of possible automotive consumers, the
                more likely they are to buy a hybrid




                                                                                            5
                 Discover if the plug-in hybrid was at a lower price this cause growth in
                  sales


                                                Hypothesis
           For the purpose of our research we have formed these hypotheses:


H1: There is a relationship between age and vehicle selection; PHEV, Hybrid,
Traditional Vehicle.


H2: There is a relationship between possible PHEV consumers, and budget


H3: There is a relationship with vehicle price and possible PHEV sales


H4: There is a direct relationship with plug in hybrid sales and gas price

                                              Profile Analysis
                                   For example, H1 could be seen as:

                                            Age Vs Vehicle Type


                 Traditional
                                                                      CSULA Respodents
  Vehicle Type




                                                                      (Majority 19-24 years)
                     Hybrid
                                                                      Survey Monkey
                                                                      Respodents (Majority
                                                                      40+ years)
                     PHEV


                               0       20       40     60        80
                                   Percentage of Respodents




                                                                                               6
                               Data Collection Methodology
        We used both primary and secondary research data to conduct our project.
        Our secondary research was retrieved from the vast databases available at Cal
State Los Angeles. The databases include Factiva, Business Source Premier, Lexus
Nexus, ABI/INFORM Global and PsycInfo.
        Primary research was mainly used to determine the potential demand of PHEVs
while secondary research was mainly used to determine the feasibility of manufacturers
to produce PHEVs.
        Primary research includes one survey conducted on two different target
populations. The two populations vastly increased our understanding of the diversity of
market segments. The extra work involved in conducting two surveys to two different
populations was well worth the effort because of the contrasting information we attained.
Furthermore, we have also learned a lot of differences about the two segments.
        One population represents a segment of current and potential hybrid buyers found
on hybrid enthusiast forums. This population will be referred to as “Survey Monkey
Respondents.” Because of limitations, we assume that enough current hybrid owners are
seriously considering buying a PHEV, which will lead to the success of PHEVs if the
automotive industry targets this segment. However, if the opposite occurs, then one
would have to find another segment.
        Also adding to our primary research, we conducted two cross-tabulations in an
effort to discover trends and patterns in our primary research. These cross-tabulations
involved specific questions and responses from the data and we noted any relationships
that could be found. The first cross-tabulation involved question five, what style of
vehicle, and question three, the time plan in purchasing a vehicle. The second cross-
tabulation involved question three, the time until the next vehicle purchase and question
five, the type of next vehicle purchase, i.e. hybrid, traditional, etc.


This report answers the following problem:
        With the existing technology in late 2006, is there an opportunity to market a
PHEV profitably in the target segments of current hybrid buyers, potential hybrid buyers
and college students.



                                                                                            7
        Therefore, the factors include consumers’ potential demand in the segments and
the ability of producers to meet those demands while incurring a profit.




                                  Boundaries/Limitations
        There are vast limitations that include, but are not limited to, time, willing
participants, and resources. Only nine weeks were allocated in formulating, conducting
surveys, creating primary research, gathering secondary research, creating a PowerPoint,
and finally creating the final report.
        The limitation on time forced us to focus our research to only be relevant to the
current year and the end of last year 2006. The location was limited to the United States,
more specifically, the Los Angles area. Willing participants were hard to find, especially
the Survey Monkey.




                                         Benefits to Users
        Those who can benefit from our research are those unaware of hybrids, students
who want to help the environment, consumers that want to save money on gas, and car
company’s understanding their target market.
        This report will help bring an understanding to all of those who are unaware to the
benefits and disadvantages to owning a plug-in hybrid. Students who take the survey and
read the report may develop an awareness of the options of vehicles for their next
purchase. As stated in the report, The United States is continuing to search for alternative
fuel sources for vehicles. This report will help build consciousness to one alternative
source of fuel. Consumers looking for a new vehicle will have another option to choose
from. Car companies will have a better understanding of what the possible consumer is
seeking out when thinking of buying a new car. They will also discover what it is that
current consumers are enjoying from their hybrid vehicle.




                                                                                            8
                                    Statistical Method
        Our first strategy for our data analysis was to tabulate our data. This technique
allowed us to organize the number/type of response for each question and put them into
categories. This step aided us in establishing a frequency distribution for the variables
that we are testing and allow us to easily calculate the percentages and mean.
There are several statistical methods that we are planning to use for our study. To get a
general understanding of our data we will use descriptive statistics. This step will help us
summarize the frequency table. For this study the statistical package that we will be
using is SPSS.
        There are four other statistical methods that we used that will allowed us to
determine if there is a relationship between the variables we researched. Once we
understood how strong of a relationship there is between for example, income and the
number of hybrid owners, we were then able to clearly answer our research question and
fulfill our objectives.


The four methods are as follows:
       Correlation analysis
       Regression analysis
       T-test
       Cross tabulations


        We used correlation analysis because we wanted to see if there were any
associations between two or more variables in our research. Not only did we want to see
if there was any associations between the variables but we also wanted to see the strength
of their relationships. We measured the degree to which there is a linear association
between different variables, and one of the primary charts that we used was a Scatter
chart. We believe that a Scatter chart will be beneficial because it allows us to see the
relationship between variables and the direction of change. This relates directly to our
profile analysis. We will select a pair of data collected that correspond directly to our
problems at hand. Also because the groups mean values can be computed for each object
on each scale it allows more powerful methods of analysis to be used.


                                                                                            9
         The cross-tabulations involved specific questions and responses from the data and
we noted any relationships that could be found.


                                         Outcome
         Following the collection and organizing of our data our group was able to see and
find the reasons for people purchasing and or not purchasing a hybrid or PHEV. We
found that the higher the income, the more likely it will be that the respondent will buy a
hybrid. We believe that people don’t buy a PHEV because they would rather save money
up front and purchase a more sporty regular gasoline vehicle. We also believe that they
don’t purchase a PHEV because it is priced too high for people between the ages of 18-
24. Not only do we believe that these factors influence people whether they purchase a
PHEV or not but, we believe that education, age, and gas price are huge factors in PHEV
sales.
         Two of our hypotheses were accepted and two are still inconclusive. This study
will be beneficial to the students at Cal State Los Angeles as well as those who are in the
position to make decision on purchasing their next vehicle. The information that this
study will prove could potentially improve Hybrid sales, awareness of alternative
vehicles, and the wants and needs of potential consumers.
         The outcome shows that the older and more educated the potential customer the
more likely they will buy a plug-in hybrid vehicle. The Survey Monkey correspondents
were older and more interested in purchasing a plug-in hybrid.




                                                                                          10
                                     INTRODUCTION
          Currently, the emphasis on hybrid vehicles by both manufacturers and consumers
are quite profound. The first hybrid electric model in the U.S. market was the Honda
Insight (61 mpg cit, 70 mpg highway) in 1999. Toyota then followed with the
introduction of the Prius in 2002. Since then, the interest only has been rising and more
car manufactures are following Honda and Toyota’s lead. This can be perceived by the
flurry of different hybrid vehicles created by an ever-increasing amount of different
manufacturers such as Chevrolet and Ford. Another major thrust to the development of
fuel saving vehicles, such as a hybrid, is that over the last four years, the price of gasoline
has moved upward beyond 71%, and in some markets, such as most of the world, even
higher.
          Government interest has also increased in support for hybrid vehicles. In George
W. Bush’s State of the Union address of 2006, he stressed that, “Alternative energy
vehicles are an important economic and environmental component that will help reduce
the United States’ consumption of fuel and green house gases…”
          With the growing success and interests of hybrid vehicles established, one may be
able to ascertain whether a vehicle would be more successful when it not only has all the
characteristics that make hybrids a success, but has emphasized those characteristics even
more. Therefore, a plug-in hybrid vehicle, otherwise known as a PHEV, might be able to
meet the needs of the consumers today. A plug-in hybrid electric vehicle (PHEV) is a
hybrid which has additional battery capacity and the ability to be recharged from an
external electrical outlet. In addition, modifications are made to the vehicle’s control
software. The vehicle can be used for short trips of moderate speed without needing the
internal combustion engine (ICE) component of the vehicle, thereby saving fuel costs. In
this mode of operation, the vehicle operates as a pure electric vehicle with a weight
penalty- the ICE. The long range and additional power of the ICE power train is
available when needed.




                                                                                            11
                                RESEARCH RESULTS
                                      Primary Data
       The following are the results of our survey on two target populations. One will
perceive that the college students are represented by CSULA and Survey Monkey
represents potential and current hybrid buyers. Graphs and tables will help in
comprehending the following information as well as brief summaries of each question.



                                 Survey Type:

                              Survey Responses
                                        48% Survey
                                          Monkey




                                        52% CSULA

                              CSULA          SurveyMonkey



                                        Findings
       As demonstrated in the graph and chart, 75 Survey Monkey surveys were given
and collected. The Survey Monkey population comprised 48.1% of our total
respondents. In addition, 81 Cal State Los Angeles students made up 51.9% of our total
respondents.




                                                                                         12
                                    Question 1:
                                 What is your age?


                                         Age

            70
            60
            50                                               CSULA
            40
            30
                                                             Survey
            20                                               Monkey
            10                                               Respondents
             0
                 16-18 19-24 25-40            40+



                                      Findings:
       As you can see, our expected outcome is true; survey monkey respondents are
older in age than that of Cal State Los Angeles students. Over 60% of the survey monkey
respondents are over the age of 50. The majority with over 50% of CSULA respondents
are between the ages of 19-24.




                                                                                     13
                                   Question 2:
                               What is your gender?


                                   Gender
                        78.7
          80
                                 60.5
          60
                 39.5
          40
                                        21.3
          20

            0
                  Male          Female

                        CSULA           Survey Monkey



                                     Findings:
      The research shows that 78.7% of the Survey Monkey respondents were female
and 39.5% were male. The CSULA respondents were 60.5% male and 21.3% female.




                                                                                   14
                                          Question 3:
      Do you plan to purchase a car anytime within the next (Pick one):




                                    Plan to Purchase
                               CSULA          Survey Monkey
            60


            50


            40
Percent
            30


            20


            10


             0
                 Within 6 m onths   7-12 m onths    1-2 years   3-4 years


                                             Time




                                            Findings:
       Although the research shows that the Survey Monkey correspondents have a
higher percentage within the six month period, both groups have a high percentage in the
3-4 year bracket. This suggests that the majority of both groups are planning on
purchasing a vehicle in three to four years.




                                                                                      15
                                            Question 4:
               What is your planned budget for your next vehicle purchase?



                                  Budget: Next Vehicle Purchase


                                      CSULA         Survey Monkey




                 $40,000+

            $35,000-39,999

            $25,000-34,000
  Dollars




            $20,000-24,999

            $15,000-19,999

            $10,000-14,999

             $5,000-$9,999

                  $0-4,999

                             0   10    20      30       40     50   60    70

                                        Number of Respondents




                                              Findings:
              This graph shows a huge difference between the Survey Monkey respondents and
the CSULA respondents. 61 Survey Monkey respondents out of 75 marked $25,000-
34,000 dollars in planning for their next budget to buy a car. You can see that the Cal
State LA respondents are more or less evenly spread with the majority being in the same
large bracket, however there is an obvious choice by the Survey Monkey respondents.




                                                                                          16
                                            Question 5:
                          What type of vehicle are you looking for?



                          Looking to Purchase This Type of Vehicle

                                    CSULA Students   Surveym onkey



          Com pact



             Truck



             Sedan



            Luxury
 Type




               SUV



        Convertible



          Mini-Van



            Coupe



            Sporty


                      0         5              10            15      20            25

                                           Number of Respondents




                                              Findings:
           This research has shown that the most common type of vehicle that both groups
desire is the sporty type. This shows that both groups would much rather have sporty
vehicles than mini-vans. On this particular question there was little difference in the two
groups.




                                                                                           17
                                                Question 6:
                      Are you considering buying (please check one):


                               Type of Vehicle They Are Considering To Buy




          Plug-in Hybrid
   Type




                 Hybrid




             Traditional



                           0       10    20      30    40     50      60     70   80

                                              Number of Respondents

                                  CSULA Respondents   Survey Monkey Respondents




                                                  Findings:
           This graph demonstrates the type of vehicle respondents would buy between a
traditional, regular hybrid and a plug-in hybrid. As you can see, the respondents are
almost mirroring each other. Survey Monkey respondents are interested in plug-in
hybrids, approximately 67 of their respondents stated that they are planning on buying a
type of plug-in hybrid. CSULA respondents are the exact opposite; it shows that
approximately 63 respondents are more interested in a traditional vehicle.




                                                                                         18
                                       Question 7:
 How likely would you buy a plug-in hybrid as your next vehicle purchase?

                     CSULA Respondents: Next Vehicle Purchase is a PEHV




                                    1.2        9.9
           28.4
                                                                               Very likely
                                                                               Somewhat likely
                                                                               Not sure
                                                                               Unlikely
                                                                               Very unlikely
              28.4                                          32.1




                                          Findings:
         According to the chart above, it shows an unlikely outcome for CSULA
respondents in buying a plug-in hybrid. The data also shows a high percentage of
CSULA respondents that are not sure how likely they would by a plug-in hybrid. This is
possibly due to the fact that the plug-in hybrid is a new technology and is not well-
known.




                                                                                          19
                               Question 8:
               Do you know anyone who owns a regular hybrid?


                Knows Owner of a Regular Hybrid

                                                   ye s    No



    100%                                    1.3


     90%


     80%


     70%
                    64.2

     60%


     50%                                   98.7


     40%


     30%


     20%
                    35.8

     10%


      0%
                   CSULA             Surve y Monk e y
               Re s ponde nts         Re s ponde nts




                                       Findings:
       It is obvious to see from the chart above that Survey Monkey respondents know
more regular hybrid owners than that of CSULA respondents. This is probably due to
age and experience. Respondents from CSULA are predominantly students that associate
with other students, which have a smaller income therefore do not own a hybrid.



                                                                                       20
                                       Question 9:
               Do you know anyone who owns a plug-in hybrid?



                      Know s Ow ne r of a Plug-in Hybrid


                                      ye s    no



               100

                90

                80

                70

                60          93.8%              93.3%

                50

                40

                30

                20

                10
                                    6.2%               6.7%
                  0
                          CSULA            Surve y
                      Re s ponde nts      M onk e y
                                       Re s ponde nts




                                        Findings:
       This chart gives similar detail to question 8; however, you can see that there are
very few respondents that know of any plug-in hybrid owners. It is fair to say that the
plug-in hybrid is such a new technological advancement in vehicles that there are very
few people that own one.




                                                                                            21
                                    Question 10:
                             Are you a hybrid owner?




                                Hybrid Owne r


                         No, 98.80%
     100.00%

      90.00%                                      No, 81.30%
      80.00%

      70.00%

      60.00%

      50.00%

      40.00%

      30.00%
                                      ye s , 18.70%
      20.00%

      10.00%     ye s , 1.20%
       0.00%
                      CSULA               Surve y M onk e y
                  Re s ponde nts           Rs ponde nts

                                   ye s      No




                                       Findings:
       This graph shows that almost 99% of CSULA respondents and 81% of Survey
Monkey’s respondents are not a hybrid owner. This shows that the majority of our
sample size does not own a hybrid vehicle.




                                                                                   22
                                    Question 11:
                         Are you a plug-in hybrid owner?



                             Plug-in Hybrid Owner

                                   Ye s     No



          100
                     No, 100              No, 98.7

           90

           80

           70

           60

           50

           40

           30

           20

           10
                  Ye s , 0          Ye s , 1.3

             0
                     CSULA           Surve y M onk e y
                 Re s ponde nts       Rs ponde nts




                                       Findings:
       Again this graph shows that there are very few owners of a plug-in hybrid vehicle.
Almost 100% of both groups do not know of any plug-in hybrid owners.




                                                                                      23
                                       Question 12:
 Currently, the price of a plug-in hybrid can be up to ten thousand dollars
more than a traditional, gasoline powered vehicle. Do you think that paying
   more for a hybrid now will be beneficial to you sometime in the future?


         Will it Be Beneficial in the Future?

                               Ye s      No


           80                                   Ye s , 74.7


           70            Ye s , 61.7

           60

           50
                                 No, 38.3
           40

           30                                              No, 25.3


           20

           10

             0
                          CSULA                   Survey
                                                  Monkey




                                        Findings:
       This graph shows the majority of both groups of respondents believe it will be
beneficial to pay more now for a plug-in hybrid and benefit in the future. This is
excellent information for automobile makers to know and capitalize on. Now that we
know possible consumers believe it is beneficial to own a plug-in hybrid, the next
possible opportunity is to make a more sporty, luxury or more affordable plug-in hybrid
to receive more sales.




                                                                                        24
                                                              Question 13:
            If you saw someone driving a plug-in hybrid, your first thought would be
                                                               (pick one):


                             First Thought: When Seeing Someone Drive A PHEV


                     other       12.3              0


   hybrids are too trendy 1.2          2.7

yeah, but how fast does it
           go?
                                       13.6                   9.3


     w here can I buy one?       4.9                                                          46.7


              it looks cool 1.2                8


              I'm jealous!             14.8                            14.7

the ow ner obviously cares
                                                              51.9                                               18.7
  about the environm ent


                             0                10         20           30        40       50          60     70           80

                                                       CSULA Respondents        Survey Monkey Respondents



                                                                    Findings:
                  The chart above shows in great detail the first thoughts of respondents when they
         see a plug-in hybrid car owner. About 52% of CSULA respondents first think that owner
         obviously cares about the environment. Where as about 48% of Survey Monkey
         respondents think, where can I buy one? This shows an obvious desire and liking of
         Survey Monkey respondents of plug-in hybrids.




                                                                                                                        25
                                    Cross Tabulations



                                            Bar Chart


          10
                                                                          5. What style of vehicle
                                                                           are you looking for?
                                                                                 sporty
                                                                                 coupe
           8                                                                     Mini-van
                                                                                 Convertible
                                                                                 SUV
                                                                                 Luxury
Count      6
                                                                                 Sedan
                                                                                 Truck
                                                                                 Compact
           4




           2




           0
                  6 months      7 months      1-2 years     3-4 years

               3. Do you plan to purchase a car anytime within the next...



According to our data, consumers are willing to buy a luxury vehicle in 1-2 years.
Followed by those who are willing to buy a compact or a Sedan. This is an interesting
finding, according to public opinion; single consumers are willing to buy a small car.
This cross tabulation shows that the most desirable style of vehicle is a luxury car within
the next 1-2 years.




                                                                                            26
                                          Bar Chart


         25
                                                                       4. What is your planned
                                                                         budget for your next
                                                                          vehicle purchase?
                                                                            4,999or less
         20
                                                                            $5,000-$9,999
                                                                            10,000-$14,999
                                                                            15,000-19,999
                                                                            20,000-24,999
Count    15
                                                                            25,000 or more



         10




          5




          0
                 6 months     7 months      1-2 years     3-4 years

              3. Do you plan to purchase a car anytime within the next...

                                         Findings:


Consumers are willing to spend more than $25,000 to acquire their Hybrid. They are
willing to buy it in the next 1-2 years. But we have more concentration in the area of 3-4
years.




                                                                                           27
                             Cor relations

                                                             6. are you
                                              1. w hat is   considering
                                              your age?        buying
  1. w hat is your age? Pearson Correlation             1            .035
                        Sig. (2-tailed)                              .754
                        N                             81               81
  6. are you            Pearson Correlation         .035                1
  considering buy ing   Sig. (2-tailed)             .754
                        N                             81              81



We are measuring the strength between the age and the considering of buying the hybrid.
Are there any relationship between age and considering buying hybrid?
Our answer is: NO.
As shown in this table, the correlation index for the relationship between age and
considering buying a hybrid is .035<.01.




                                                                                     28
                            1.8
   2.what is your gender?




                            1.5




                            1.2




                                  0   2             4             6              8         10

                                      5. what type of vehicle are you looking for?



As we can see there is no relationship between gender preferences of a vehicle. We also
know that male and female have different taste when it comes to car selection.




                                                                                      29
                                                           Paired Sam ples Te st

                                                          Paired Dif f erences
                                                                                  95% Conf idence
                                                                                   Interval of the
                                                                 Std. Error          Dif f erence
                                       Mean     Std. Deviation     Mean          Low er        Upper      t       df        Sig. (2-tailed)
  Pair   2.w hat is your gender?
  1      - 5. w hat type of v ehicle   -2.988           2.676         .297        -3.579       -2.396   -10.047        80            .000
         are y ou looking for?




The observed means difference is -2.988. Since the value of “t” is -10.047 at p<.001 the
means difference (-2.988) between gender and type of vehicle consumers are looking for
is statistically significant.
Therefore, we can conclude that there is a relationship between gender and car
preference.




                                                                                                                  30
                                    RESEARCH RESULTS
                                       Secondary Research
        There are currently PHEVs that have the ability to have miles per gallon (MPG)
of over 100. 1 The technology is available; however, the cost will be the main concern.
There are many estimates of cost in various peer-reviewed journals. Some estimation is
as high as $20,000 extra to a comparable internal combustion car in performance,2 while
other estimates are as low as $2,000 above a comparable regular hybrid car due to
economies of scale. 3 Currently, the cost to convert any 2004-2007 Prius into a PHEV is
$10,000 to $12,000 according to the one and only commercial conversion service in the
United States, EDrive Systems LLC. A precise consensus is hard to find on the premium
it would be from manufacturers and calculations vary depending on the methods used by
each researcher. Therefore, a broad range of 10-20% ($2,000-3,000) premium on a
comparable regular hybrid for a sedan is estimated and $5,000 extra for a SUV. 4
Therefore, the lowest priced plug-in would be around $30,000.
        Many benefits might increase demand on the use of PHEVs. The first benefit is
the decreased cost of operating a PHEV. A driver would pay 81-94 cents to the power
company to drive 30 miles on plug-in power. To drive the same distance in the average
U.S. car would cost $2.58 at the pump.5 Price can be further decreased by the fact that
PHEVs are meant to plug-in at night. Which in many areas of the country is the off peak
pricing of electricity. Furthermore, if a driver is driving local, they are more likely to
never have to buy gas, because data shows that on average, people drive 29 miles. 6
Service costs will be reduced from vehicles that are mainly electric; however, with the
limited battery technology, the replacement of the batteries will surely occur before the
car has to be replaced.7



1
  Rodney Tanaka, “Technology gives cars 100mpg,” San Gabriel Valley Tribune, sec P.27, Mar. 7, 2005.
2
  Peter Huber and Mark P. Mills, “Dig More Coal, the Hybrids are Coming,” Forbes, 24 May 2004, 106.
3
  Fareed Zakaria, “Imagine: 500 Miles per Gallon,” Newsweek, 7 March 2005, 27-28.
4
  U.S. News & World Report 141, no. 13 (2006): 45-46.
5
  U.S. News & World Report 141, no. 13 (2006): 45-46.
6
  Sarh Connolly, Nile Malloy, and Nyack Fellowship, “Declaring Independence from Oil,” Nyack 72, no.
¾ (2006): 27.
7
  “Plug it In Plug it In,” Autoweek, 24 April 2006, 5.


                                                                                                   31
        PHEVs are also cleaner even when they need coal operated electric plants. 8 This
is because battery electric vehicles emit at least 67% lower greenhouse gases than
gasoline cars. Furthermore, the advances in electric production are so profound that year
by year the producers are finding ways to creating cleaner electricity.
        PHEV will decrease our dependence on foreign oil, especially the currently
troubled region of the Middle East. This is because most electricity is produced
domestically in the United States from domestic coal. The nationwide electrical grid is
only 3% petroleum-fueled, whereas transportation is almost completely powered by oil
and 60% of which comes form foreign sources and growing.9 Adoption of plug-in
hybrids will transfer the overwhelming majority of our miles driven to nearly oil-free
electricity. If all vehicles were plug-in hybrids we would cut our oil needs by 55% nearly
enough to eliminate foreign sources altogether.10 This has a broad appeal to many
political parties.
        Many disadvantages in owning a PHEV exist as well. The increased cost is not
the only major factor. There are some that claim the battery will increase the weight of
the vehicle.11 While other experts have claimed that, the reduction of mechanical parts
such as the transmission, water pump, alternator, and fan belt will mitigate the problem.12
Furthermore, the driving pattern will be very crucial in determining the advantages of
owning a PHEV. For example, if a person has to be on the road driving for more than 16
hours, then that style of driving will not take advantage of PHEV because the batteries
will no longer offer an advantage from being charged. They will be at a disadvantage
from being essentially dead weight.
        According to an article from Technology Review, major automakers and the
Department of Energy are pouring money into research on plug-in hybrid vehicles. These
cars promise to cut petroleum consumption by allowing commuters to drive to work
using primarily electricity--stored on board in batteries--rather than gas. Although critics
have warned that the vehicles could put too much pressure on an already strained

8
  Promoting Plug-in Hybrids and Saving Sea Sponges,” Environmental Magazine, May 2006, 64.
9
  Don Oldenburg, “Big companies Plug Big Causes for Big Gains,” Business and Society Review 43, no.
83 (2005):22-24.
10
   “Plug and Play Vehicle Technology,” The Economist, 28 January 2006, 90.
11
   “Plug and Play Vehicle Technology,” The Economist, 28 January 2006, 90.
12
   “Plug and Play Vehicle Technology,” The Economist, 28 January 2006, 90.


                                                                                                  32
electrical grid, experts are now arguing that rather than being a strain on the grid, plug-in
hybrids may actually help prevent brownouts, cut the cost of electricity, and increase the
use of renewable energy.13
           During a survey conducted for the United States Government, they found that if
gas prices continue to be around $2.50 per gallon, the 37% of the respondents would
consider buying a hybrid version:
           6 Q2.2.7: Assuming that prices for regular gasoline remain near $2.50 per gallon,
for your next new vehicle purchase, would you …………. (aided question)


Table 2.2.7. Gas Prices Near $2.50 a Gallon and Amount Willing to Pay for New
Vehicle (May 2005)


Type of Vehicle                                                                        Percent
Pay an additional $2,500 to buy a hybrid version of your vehicle that reduced
your gasoline use by 30%                                                               37
Pay an additional $4,000 to buy a plug-in hybrid version of your vehicle that
could reduce your gasoline use by 45% if you traveled about 20 miles per day
on its battery only                                                                    14
Neither                                                                                44
Don’t know                                                                             4
Total                                                                                  99


Source: ORC for NREL (2005a), N = 1,012
           Another interesting fact that was found is that if gas decline to around $1.50 per
gallon, still 34% would spend money on a hybrid for their next purchase:
Q2.2.8: Assuming that prices for regular gasoline decline to and remain at about $1.50
per gallon, for your next new vehicle purchase, would you …………. (aided question)
Table 2.2.8. Gas Prices at $1.50 a Gallon and Amount Willing to Pay for New Vehicle
(May 2005)


13
     Bullis, http://www.technologyreview.com/Energy/17930.


                                                                                                33
              Type of Vehicle                                                  Percent
              Pay an additional $2,500 to buy a hybrid version of your
              vehicle that reduced your gasoline use by 30%                    34
              Pay an additional $4,000 to buy a plug-in hybrid version of
              your vehicle that could reduce your gasoline use by 45% if you
              traveled about 20 miles per day on its battery only              10
              Neither                                                          51
              Don’t know                                                       5
              Total                                                            100
Source: ORC for NREL (2005a), N = 1,012
(Kubik, http://www.nrel.gov/docs/fy06osti/39047.pdf)




                                                                                     34
                                RECOMMENDATIONS
               With the current technology, car companies are not able to meet the
consumers’ expectation on cost, which seems to be the major issue for both the college
students and hybrid enthusiasts. Furthermore, the calculations on overall savings by
using a plug-in hybrid are inconclusive from secondary research. The estimates have
varied depending on the usage of the PHEV and the expected technological
advancements. Therefore, advertising the return on investment of a PHEV might not be
feasible.
        However, letting go of such an opportunity would not be our recommendation as
many big automakers are recently researching and developing in the area of PHEV.
Nevertheless, this timeframe could be a possible opportunity for the automotive industry
to make improvements to PHEVs by finding ways to cut costs, improve vehicle
performance, and improve general consumer perceptions and expectations of plug-in
hybrids. Therefore, we suggest a “hedging” idea. This means that one should not
completely ignore the fact that PHEVs are a viable future means of transportation, nor
should one invest all their efforts in them. We believe automakers should invest their
resources sparingly into the development of PHEVs depending on further research. To
not invest at all would be a grave mistake, as it might put one far behind the competition
if technology improves dramatically.
        Finally, there are many factors in determining the cost of producing a PHEV and
quantifying demand. Most of which could not be studied due to limitations. Therefore,
we suggest further funding for research to be conducted not only for this fact but also to
periodically gauge the development of technology.




                                                                                         35
                                     CONCLUSION
       The complexities of marketing such an advanced technology can be seen
throughout this report. Both quantifiable data and qualifiable research are found
throughout the course of study.
       From qualifiable research, there seemed to be many advantages one would have
in owning a PHEV. These include the savings in gas at current prices, less dependence
on foreign oil, environmentalism, and the availability of hybrid vehicles. We have also
determined the feasibility of manufacturing a PHEV and its estimated cost of being 10-
20% higher than a comparable regular hybrid.
       From the quantifiable research on the surveys, we found that the best price range
to include the maximum amount of customers for both hybrid enthusiasts and college
students would be in the range of $22,000 to $28,000. Of course, the current technology
would not be able to meet the expectation of cost for those people. Being that the lowest
priced PHEV would be around $30,000. It would seem that PHEV would only be in the
price brackets for 23.5% of the total participants of both surveys. The pool of likely
buyers is further limited by the increase in demand for both trucks and mini-vans from
Survey Monkey participants and sporty (43.9%) for CSULA students. All three of which
are harder for PHEV to achieve. While there was a high response in the interest of
purchasing a PHEV (61.7% at CSULA and 74.7% at Survey Monkey) they are most
likely not aware of the disadvantages of a PHEV.
       We conclude that an alternative source of oil is needed in the United States today.
A plug-in hybrid vehicle is an excellent start; however the market segments are very low.
Further research development on newer technology, sportier, more luxurious bodies are
required to have successful hybrid sales.
       We discovered that there is a correlation between the older correspondent and the
likelihood that they will buy or have bought a hybrid vehicle, depending on what chart
you look at. We were correct in assuming that the younger correspondents would choose
a sportier, attractive vehicle: Convertible, Sport. We assumed correctly that the bigger
budget of possible automotive consumers; the more likely they are to buy a hybrid




                                                                                           36
       One point we did not discover wholly is if the plug-in hybrid was at a lower price
this cause growth in sales, but we still assume this is true due to the fact that respondents
with a lower budget were still very interested in buying a plug-in hybrid.


                                        Hypotheses
       H1: There is a relationship between age and vehicle selection; PHEV, Hybrid,
       Traditional Vehicle.
       Inconclusive; raw data shows H1 is accepted, correlation coefficient rejects H1


       H2: There is a relationship between possible PHEV consumers, and budget
       We accept H2


       H3: There is a relationship with vehicle price and possible PHEV sales
       We reject H3


       H4: There is a direct relationship with plug in hybrid sales and gas price
       Undiscovered- more research is necessary to prove H4




                                                                                           37
                                      Bibliography


Bullis, Kevin. “How Plug-In Hybrids Will Save the Grid.”
        http://www.technologyreview.com/Energy/17930. 21 December 2006

Burns, Alvin C and Ronald F. Bush. Marketing Research. 5 ed. Englewood Cliffs, NJ:
       Prentice Hall, 2006.

Connolly, Sarah, Mile Malloy, and Nyack Fellowship. “Declaring Independence from
      Oil.” Nyack 72, no. ¾ (2006): 27.

Huber, Peter and Mark P. Mills. “Dig More Coal, the Hybrids are Coming.” Forbes, 24
       May 2004, 106.

Kubik, M. “Consumer Views on Transportation and Energy.”
       http://www.nrel.gov/docs/fy06osti/39047.pdf January 2006.

Oldenburg, Don. “Big Companies Plug Big Causes for Big Gains.” Business and
      Society Review 43, no. 83 (2005): 22-24.

“Plug and Play Vehicle Technology.” The Economist, 28 January 2006, 90.

“Plug it in, Plug it in.” Autoweek, 24 April 2006, 5.

“Pomoting Plug-in Hybrids and Saving Sea Sponges.” Environmental Magazine, May
      2006, 64.

Tanaka, Rodney. “Technology Gives Cars 100 mpg.” San Gabriel Valley Tribune, 7
       March 2005, sec. P.27.

U.S. News & World Report 141, no. 13 (2006): 45-46.

Zakaria, Fareed. “Imagine: 500 Miles Per Gallon.” Newsweek, 7 March 2005, 27-28.




                                                                                     38

				
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