Frost & Sullivan, a global market research firm, believes the pace of growth for China’s hybrid and electric car market has been exaggerated. “While we believe hybrids have a good future, the sales in China’s future market have been overhyped,” wrote Tristin Lin, senior consultant of automation & transportation, Frost & Sullivan China, in an email to HybridCars.com. “Hybrid development in China will not change over one night considering the sales were only 2,100 units in total [last year]. It takes time.”
According to Lin, hybrid sales in China will be below 100,000 units in 2015, and electric car sales will remain below 1 percent of the Chinese market as late as 2020.
That’s not the impression you would get from the media, which has been sounding an alarm that China will quickly take over world markets for hybrids and electric cars. The New York Times last month reported that the Chinese government wants to boost its annual production of electric and hybrid cars to 500,000 in the next two years, and warned that “Detroit’s Big Three, already struggling to stay alive, will face even stiffer foreign competition [from China] on the next field of automotive technology than they do today.” As we pointed out in our coverage of The New York Times article, safety and cost issues stand in the way of China reaching its goals.
In a press release issued last week, Frost & Sullivan addressed the promise and the hype associated with China’s green car plans. The release, “Frost & Sullivan Sees China Heading Toward ‘Green’ Cars,” was picked up by major media including CNBC and CNNMoney. The coverage gave short shrift to Frost & Sullivan’s concerns about hyping China’s hybrid market, and instead emphasized the threat. CNN wrote that China “could dominate the emerging EV market,” and that “hybrid cars will be truly mass-market in China by 2011 or 2012.”
“It’s not a favorable thing if ‘green’ cars just become more rhetoric put out by OEMs’ public relations departments, or little green lipstick OEMs put on it,” warns Frost & Sullivan in the press release. “A lot of issues need to be addressed like battery technology, recharging infrastructure construction, and governmental subsidy, etc., to realize the dream of ‘green’ cars.”
Frost & Sullivan China estimates that total sales of hybrids will be 11,000 units in 2010, growing to 30,000 units in 2012 when public perception of the technology expands and costs decrease. The firm estimates 95,000 hybrid units, or 0.9% of the total market for passenger cars, in 2015.
The forecast for electric cars is more conservative. “For EVs, it’s at infant stage,” writes Lin in her email to HybridCars.com. “We estimate it will start off from 13 pilot cities. By 2011, there will be 600 units. We see 1 percent penetration in total passenger cars sales by 2020.”
Back in the USA
Frost & Sullivan’s track record of forecasting US hybrid sales has been solid. In 2003, the firm forecast US hybrid sales at 2.7 percent of the market in 2010, growing to 8 – 10 percent by 2015. Given actual sales numbers through 2008, as well as product announcements from major carmakers, those forecasts appear to be on track—six years after they were made.
Last year, Frost & Sullivan forecast US plug-in hybrid electric vehicle sales at 130,000 by 2015, which looks conservative but is fairly accurate given everything known about the first introductions of plug-in hybrids in late 2010, and the likely rate of ramp-up—despite President Obama’s goal of putting 1 million hybrids on US roads by 2015.
The firm’s 2006 forecast that nearly all European automakers would hybridize their vehicles to some degree—mostly with micro-hybrid stop-start systems—by 2010 appears to be optimistic. The firm saw that rate of growth in hybrids in Europe as a result of new stringent emission requirements combined with increasing fuel prices, neither of which fully materialized.