Plug-in electrified vehicles are projected to begin outselling hybrids in the U.S. but it may not be as soon as some people think.
Quantity of selection is not however the same as quality of sales. That is, the U.S. “take rate,” or market share percentage, is about half as much for the 34 plug-in vehicles versus the 30 hybrids on offer. Hybrids, down from the lower 3 percent range are now in the 2 percent range, and plug-in electrified vehicles (PEVs), some with limited availability, are just over 1 percent.
With all the headlines for electric cars with 200-plus miles priced below $40,000, and plug-in hybrids on the horizon too, the feeling in cyberspace has been electric cars are due for a runaway success, perhaps even relegating hybrids to extinction.
Tesla chief Elon Musk has said hybrids and even plug-in hybrids are “amphibians” – neither well adapted to one environment or another, and an evolutionary species on the way toward the end goal which is pure battery vehicles.
So, with Tesla’s Model 3 projected to sell over 100,000 units next year, and other EVs and PHEVs on their way too, one might think the slogan the “future is electric” could happen as soon as 2018.
There is such a wide array of exuberant feelings in the air, one commenter on an article this week suggested even conventional gasoline engines may be extinct by 2019 too, let alone hybrids.
“If they wait till 2019, gasoline might be dead as well as diesel,” said a commenter about Mazda’s latest non-plug-in engine tech delaying pure EVs.
This person is not alone, and all sorts of optimistic feelings have been expressed by people hinting we’re on the edge of an electric revolution. Such feelings might also be explained in that media have turned their gaze overwhelmingly to the edge of the envelope – what’s happening with plug-in cars, and regular hybrids have gotten less attention – though not entirely.
Not Before 2020
So when will PEV market share match that of hybrids? This won’t be until 2021, according to Michigan-based analyst Alan Baum.
In that year, he projects, the take rate will be 3.79 percent for regular hybrids, and 3.79 percent for PEVs for less than 8 percnt of the total U.S. market.
After that, PEVs are projected to begin pulling away, and this shift is being driven by many fundamental reasons.
Baum crunches numbers and facts beyond headline news and the feeling on the street. He weighs things including known automaker product plans, regulatory requirements, market facts, and more.
While the EV market driven by Tesla is projected to significantly increase in volume and share, hybrids also are not dead, or due to die, he said.
Why? Automakers do what they do for a host of reasons. Included in these are regulatory requirements. For consumers, hybrids are generally cheaper before incentives, have no “range anxiety,” and automakers are committed to them.
The moving ship that is the hybrid market legacy began in 1997 in Japan, and 2000 in the U.S., and will not likely stop on a dime. It’s now a pervasive global market, and presently Toyota is the king of hybrid sales.
Toyota’s U.S. market share has slipped from around 70 percent or more to as low as the 50-percent range, but it remains strong in other markets, and other automakers are actually jumping into the fray.
Baum observes Hyundai and Kia, which have a goal of being second behind Toyota’s ranking in green car sales by decade’s end, have introduced high-mpg, reasonably priced hybrids like the Hyundai Ioniq and Kia Niro, with plans for more. They’ve also gone a step beyond to plug-in variants to try to enhance their brand perception next to Toyota and other perceptive leaders.
The goal for Hyundai/Kia, as evidenced also by the upscale Genesis brand broken off from Hyundai last year, is to ultimately be able to command higher prices once it achieves a sharper image in the public eye.
Far from abandoning hybrids therefore, the Korean automakers are in hot pursuit in an “all of the above” approach, and they are not the only ones.
Several major automakers are keeping hybrid products alive, and planning more as these help them meet regulations. Automakers are judged by their fleet average mpg and CO2 emissions. Though not as clean and green as EVs, hybrids are better than conventional vehicles, and play a part in a diversified portfolio.
Another help for hybrids has been a shift by automakers toward converting popular gas models to hybrid variants. Presently there is a shortage of hybrid SUVs and crossover models at mainstream prices. The Toyota RAV4 Hybrid introduced last year put the first dent in that, and it has climbed the hybrid sales chart taking share from more-fuel-efficient Toyota Prius c and Prius v variants, and other hybrids.
Baum observes the RAV4’s competitor, the Nissan Rogue Hybrid, could see a similar performance, and Honda’s CR-V Hybrid – which has not been announced for the U.S, but has for China – is another potential AWD crossover that could help hybrids stay relevant.
Also helping things is hybrids tend to sticker for less, there is no question of qualifying for and applying and waiting got subsidies or tax credits, and they require no new behaviors. EV advocates say plugging in at home is a benefit, but consumers accustomed to not plugging in need learn no new tricks.
Operation of a hybrid, in short, is utterly indistinguishable from any conventional car, and is the lowest barrier to entry. Resale values may also be better in many cases for the more established cars, and independent repair shops are familiar with them.
For the above reasons and more, automakers are still committed to them, and consumers are still buying them.
But What About The Electric Revolution?
Let’s look again at some numbers where we left off.
Last year the take rate was PEVs: 0.93 percent, hybrids: 1.99 percent. This year it is projected to finish at PEVs: 1.3 percent; hybrids: 2.44 percent.
What about after that? 2018: PEVs: 2.15 percent; hybrids: 3.01 percent. For 2019: PEVs: 2.7 percent; hybrids: 3.56 percent. In 2020: PEVs: 3.4 percent; hybrids: 3.72 percent.
And, as noted, in 2021, Baum pegs an even heat at 3.79 percent for PEVs and hybrids, after which PEVs will pull away, led mostly by Tesla.
Part of the issue is despite hype for new PEV makes and models pending, such as by VW Group trying to clear the diesel scandal smoke from the air, and several others, sales volume may be another question.
As is the case today, there will be a few leading sellers among new models, and more will be lower volume sellers. Some of this state of affairs will be as per normal. That is, upscale brands Mercedes, Porsche, Audi, and BMW are splicing in plug-in hybrids and EVs, but even in gas form, these brands sell in lower volume.
What about more mainstream efforts such as by GM and its Chevy Bolt, and Nissan and its new Leaf? These are projected to sell at a steady rate each year this decade at around 25,000 for the Bolt, and 27,000 give or take for the Leaf.
Despite the efforts of startups like Faraday Future and other Chinese backed companies making noises, it appears home-grown Tesla is the one that will drive the market into next decade, but maybe not as fast as Tesla has suggested.
Baum projects 15,000 Model 3 sales in 2017, 105,000 in 2018, but is conservative into next decade. By the year 2021, the California automaker is projected to be selling 270,000 units annually in the U.S.
These projection could shift with new developments, and are lower than Tesla is telling investors, but this is what it is by an analyst who in 2014 estimated Tesla’s sales to within 13 units of their eventually reported number.
Under consideration now are U.S. fuel economy rules for 2022-2025, and these, settled by the Obama administration were brought back to review under the current president.
How quickly automakers roll out PEVs will be affected by whether these standards are weakened or maintained, and gas prices and other variables stand to shape the picture as well. A more significant driver is California rules adhered to by about 30 percent of the market.
Under U.S. rules, actually, no PEVs are required, but automakers, catering also to global and California concerns, are making them. They do help in either case lower their fleet greenhouse gas average.
How fast PEVs will pull away from hybrids after 2021 is thus open to analysis. That they will pull away is not being contested, but with fuel cells still being worked on, and advanced batteries also in the running, too many variables are in place to precisely predict.
Of course people are always free to guess, and other analyses – which are really just educated guesses – have been made. The safest stance is to wait and see, but less than 4 percent PEVs by 2021 is not a sea change and so not only are hybrids not going away, gas-powered cars in 2021 are projected to still be holding over 90 percent U.S. market share.