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Why are "green" vehicle sales withering on the vine?

Toyota (TM) promoted its 2016 Prius, the fourth generation of its popular hybrid vehicle, in Las Vegas this week by playing up the car's stylish look and feel. What it played down is the Prius' fuel efficiency.

Toyota and other makers of hybrid and electric vehicles have seen sales of their cars slide as a global glut in oil keeps gas prices low. AAA reports that over the Labor Day holiday weekend national gas prices were at their lowest levels in over a decade.

And it's not just Toyota that's having to cope with this new normal. Sales of the General Motors (GM) Chevrolet Volt were down by nearly 50 percent as of April, compared to the same time in 2014. According to, sales of fully electric vehicles, or EVs, were down significantly in August compared to a year ago. The Nissan Leaf, for example, sold less than 1,400 units this past month, compared to nearly 3,200 in August of 2014.

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One electric car player bucking the trend is Tesla Motors (TSLA), whose sales in 2015 are up more than 50 percent over the year-ago period. The company's high-end Model S, recently awarded Consumer Reports' highest ever rating, could break the EV sales record this year. The company also plans to debut an its Model X SUV later this year.

Still, as notes, sales of hybrid vehicles last month were down nearly 22 percent compared to August of 2014. And as of June, according to, overall sales of so-called "green" cars were down 17 percent compared to a year ago.

Carmakers are feeling the pinch. Earlier this year, Ford (F) announced plans to lay off 700 workers at the Wayne, Michigan, plant where the company's C-Max and other hybrid vehicles are built. And in April Honda (HMC) said it would move production of its Accord hybrid and Accord plug-in from Ohio to Japan in a cost-cutting move.

Karl Brauer, a senior analyst at Kelley Blue Book's, said that sales of nearly every category of vehicle has grown over the past five years -- with the notable exception of hybrid and alternative fuel vehicles.

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Toyota's Prius, he added, has always been the dominant vehicle in its class, rising from just over 15,500 in sales after debuting in 2001 to nearly 237,000 in 2012. But to date in 2015 only some 90,000 Prius cars have been sold.

"That means when Prius demand falters the entire segment falters, which is what has happened over the past two years as gas prices dropped and other, non-hybrid vehicles have increased their fuel efficiency," Brauer said.

Another reason green vehicle sales are down is that gas-powered cars have closed the gap in fuel efficiency. The Prius' 50 MPG was impressive 1o years ago, but since then automakers have dramatically improved the mileage of gas-powered cars. Dozens of standard vehicles now approach or top 40 MPG, while even some smaller SUVs get more than 30 MPG.

"Unless a consumer wants to show off an environmental image, they can opt for non-hybrid instead of the Prius and get close to the same fuel economy," said Autotrader senior analyst Michelle Krebs. "Lower gas prices, estimated to be putting an extra $700 back into household budgets, just makes the decision for a non-hybrid a little bit easier."

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