Why is the market for hybrid electric vehicles (HEVs) moving slowly?

Hybrid electric vehicles (HEVs) could be a good short term option to help achieve global targets regarding road transport greenhouse gas emissions. Several common and country-specific public policies based on price or tax rebates are established in order to encourage the adoption of HEVs. The present research empirically assesses market preferences for HEVs in Spain, looking at the role of subsidies. An interactive internet-based survey was conducted in a representative sample (N = 1,200) of Spanish drivers. Drivers are willing to pay an extra amount of €1,645 for a HEV model compared to a conventional vehicle, premium which is well below the price markup for these cars. Therefore, current levels of economic subsidies applied in isolation to promote these types of vehicles may have a quite limited effect in extending their use. Overall, it is found that drivers have clear misconceptions about HEVs, which affect their purchasing choices and perceptions. Therefore, a policy mix of various incentives (including informational campaigns) may be required in order to stimulate the demand for HEVs.