+ Gas prices, hybrids, investments, oh my! An interview with Kiplinger's Mark Solheim

Mark Solheim is a senior editor and the automotive writer for Kiplinger's Personal Finance magazine. He's not only the brains behind Kiplinger's hybrid car calculator, but a great thinker on all things automotive and sustainable. He was kind enough to answer a few questions for us below:

Your hybrid comparison calculator is a fantastic tool. Can you tell us a bit about the process of creating it, and what lead you to the idea in the first place?
Thank you. The idea was first suggested by a colleague at Kiplinger's Personal Finance. I liked the idea and had already been planning to write a Drive Time column on how more hybrids make financial sense now that gasoline costs nearly $4 a gallon. So we decided to pair the column with the online tool. I met with the online team to brainstorm the approach and developer John King took the ball and ran, with input from me along the way. We used data supplied by a Vincentric, a Michigan automotive research firm that we have a long relationship with. 

As our research confirms, high gas prices can justify the premium you pay for hybrids because you're likely earn your money back in savings at the pump.

In the past, sustainable products and services were usually marketed by imploring consumers to "do the right thing." More recently, it seems like they're becoming more cost-competitive and marketing messages are focusing on cost savings and efficiency. What are your thoughts on this phenomenon?
No doubt that consumer interest is much higher now. Just a few years ago, hybrids were sold mainly to the environmentally conscious and early adopters because you couldn't guarantee payback for the several thousand dollar premium you paid. As our research confirms, high gas prices can justify the premium you pay for hybrids because you're likely earn your money back in savings at the pump. A year ago, after the tax credit for buying clean-energy vehicles from Toyota phased out, Toyota even offered a $2,000 cash rebate for the Prius to stimulate sales. Of course, after gas prices began their precipitous rise, no incentives were needed.

Hybrids are one stepping stone on the way to sustainability. This is a fascinating time in the auto industry because you see so many technologies evolving.

 As your calculator shows, hybrids and many other sustainable products are only cost-competitive when fuel and/or commodity costs are high. With oil prices down at the moment, will consumers simply go back to their old habits until prices rise again, or have they made permanent changes to their lifestyles?
That is the question of the year. As gas prices rose steeply this past spring and summer, any number of automotive industry executives conceded that the American public had made a permanent shift from gas guzzlers to fuel-efficient cars. Of course, they were responding to huge drops in sales of pickups and SUVs and figuring out how to shut down production of trucks and shift to small cars to meet the increased demand. But in my view, many American consumers are driven by short-term effects on their wallet and, once gas prices retreat, will be willing to buy a gas guzzler again. It's not an always an uninformed choice: Many Americans, who haul trailers or boats on vacation or run car pools or work in construction, need a truck or SUV. Even so, there's going to be a larger group of car buyers who stick to a smaller car or a midsize car with a four-cylinder engine. And carmakers are going to give them more choices. There are plans now to turn more econoboxes into nicely appointed small premium cars, for example. 

Are hybrids merely a stepping stone on the way to something else, or are they here to stay? What's next for auto efficiency and sustainability?
Hybrids are one stepping stone on the way to sustainability. This is a fascinating time in the auto industry because you see so many technologies evolving. Diesels are now being sold that meet the same California emission standards as gasoline engines. Electric cars for the masses are around the corner. So are diesel-electric hybrids. Ethanol holds promise once we have a cost-effective way to manufacture cellulosic ethanol. The long-term goal in automotive sustainability is hydrogen fuel-cell vehicles, but until there's a strong public-private partnership to create the infrastructure to deliver hydrogen to filling stations, that will technology will sputter.

What can auto manufacturers do to accelerate adoption of hybrids and other efficient vehicles? What are the barriers that are keeping consumers from completely migrating to hybrids?
Consumers need more choices in hybrids and other vehicles. That's coming, but often at too steep a price. For example, the Chevrolet Tahoe/GMC Yukon hybrids are nearly $10,000 more than the comparable gas-engine models. With diesels, the only non-SUV sold in all 50 states is the Volkswagen Jetta. Electric cars hold promise, but the lithium-ion battery technology is still being perfected, and the cost is still prohibitive. And my readers keep reminding me that they're wary of the reliability of the nickel-hydride batteries in hybrids, even though carmakers offer long-term warranties for the batteries. Time for these new technologies to prove themselves is another piece that will lead to greater acceptance. 

Thanks for your time! Is there anything you'd like to add?
In my opinion, there should be even greater government inducement, such as more-generous tax breaks, to promote clean-energy cars. That would take care of perhaps the number one barrier--higher price.