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Why It's Bad News that New Cars Are Better Than Ever

Crude oil futures hit a seventeen-month high yesterday and the gas station down the street where I live (in San Francisco), a gallon of unleaded is back up to $3 per gallon. The evidence from the past few years is pretty clear: a functioning economy translates into higher prices at the pump. Driving will be an expensive pursuit both individually and as a nation. That cost will continue to rise, until, of course, we make the switch to electric cars.

The cars are coming. According to a new report from the consulting company KPMG, an overwhelming majority of top car execs feel that hybrids and electric cars are going to drive the market in the next five years. The market is here too. Another recent survey, this one from Pike research, found that 48% of Americans rated themselves as "very interested" or "extremely" interested in buying a plug-in electric car. But the real question is: How soon until the entire American fleet turns over? How soon until the gas cap is just an automotive memory: Like a hand crank on a engine? A fin on a fender? An ashtray in an armrest?

Well, I have some bad news. According to this graph, the transition to electric is going to take longer than any comparable transition in automotive history. Why? Because car quality is the best it has ever been, and people are holding on to their cars longer and longer and longer.

The numbers are striking: ten years ago, an average new car owner owned his vehicle for 47 months, now its up to 60 months and climbing. That's a 28% increase in average length-of-ownership times over a decade. Bottom line: the average American keeps a new car for five years! What's more, numbers for used cars are just as striking and show an even more pronounced trend: a 56% increase in length of ownership!

On some leve, this is good news. It means that cars are higher quality, more reliable, and more durable. But behind every silver cloud is a dark lining. The high quality today's cars has a perverse side effect: it pushes the electric future is farther off than ever, as we have fewer and fewer reasons to swap out our old cars for new ones.