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TheStreet Open House

Has Interest in Hybrids Run Out of Gas?




By Phil LeBeau, CNBC Correspondent

NEW YORK ( CNBC) -- Strange how things have changed in the last four years.

Back in 2008 when gas prices spiked above $4 a gallon, the demand for hybrids was so great dealers charged more than the MSRP for some models and had waiting lists of buyers more than willing to pay up for a gas-electric car.

Compare that with the way people are looking at hybrids right now.

Even as gas moves close to $4 a gallon demand for gas-electric cars is modest at best. There has been a clear change of heart when it comes to hybrids in the U.S.

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What changed is the sudden and rapid development of new cars that get at least 40 MPG. What was once the kind of mileage you could only attain by driving a Prius or some other hybrid, is now almost common. In 2008, there were only two models getting over 40 MPG (Civic Hybrid and Prius). Today, there are 22 models and many are not hybrids.

In addition, the new wave of 4 cylinder cars that get 40 MPG have a far different feel when you drive them. These 40 MPG cars allow drivers to have their cake and eat it too.

This doesn't mean hybrid cars and SUV's are going away. They are here to stay. Look at the expanded line-up of Prius hybrids now offered by Toyota. The new Prius c has been a red-hot seller since its introduction last month. And as gas prices move higher, you can bet hybrid sales will likely increase.

But as we see more cars with internal combustion engines getting at least 40 MPG, the growth of hybrids will likely be limited. This year, just 2.4 % of all vehicles sold in the U.S. have been gas-electric models. A lower percentage than we saw four years ago.

Unless we see a surge in the average mileage achieved by hybrids (60 MPG becoming the norm) we may not see demand for gas-electric cars grow substantially.



--Written by Phil LeBeau at CNBC

CNBC is a world leader in business news, providing real-time financial market coverage and business information.

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