Thursday, January 26, 2012

Diffusion of Innovation - Prius Edition

Last week I got in a taxi at Union Station here in Washington, DC and was surprised that it was a Toyota Prius.  Though I like the efficiency of the Prius, what I really appreciate is the ride - so much better than the rickety old jalopies typically lying in wait for passengers at the station.

I asked the driver whether he liked the car, and he replied immediately "Love it. Just love it."  I asked him about gas mileage, and he said that he gets good mileage in the winter, but he takes a hit in the summer.  "What does that mean exactly?" I asked.  "Well, in the winter I get about 52 miles a gallon, but in the summer it goes down to 47 or 48."

When I expressed my amazement, he told me that he saves $1,000 per month in fuel costs alone compared to the old beat-up sedan he used to drive. "Good lord, if that's the case, then why don't all drivers use hybrid cars?" I asked. "Two reasons," he replied.  "First, most people believe that hybrid cars break down a lot and are expensive to maintain.  And second, they can buy a beat up car for $700, whereas this one costs $24,000 new."

"Actually," he went on, "this car has needed nothing but oil changes in the two years since I have had it.  My old car was in the shop for expensive repairs every month or two - and I couldn't drive it during that period.  So this car is actually cheaper.  With the fuel savings alone, I can pay off the car in two years, and that doesn't even count the repair costs I avoided.  And even after my car is paid off, it is still worth $10,000 or more."

I sat there with my economist's hat on, wondering why all taxis in Washington weren't hybrids.

"They'll come," said the driver, reading my mind.  "It just takes time for people to realize what a good deal they are."