Once again, the media is declaring the death of hybrid cars. It made for catchy headlines this week, like the Wall Street Journal’s “Hybrids Are Running Out of Gas,” and USA Today’s “As Sales Fall, Is the Hybrid Car Fad Over?” But it simply ain’t true. Global automakers are now preparing for their biggest push ever into gas-electric vehicles.
Yes, it’s true that this year’s hybrid sales are down by about 5% compared to last year. But a closer examination of the trends shows that hybrids got a big boost last year with the Cash for Clunkers program. In addition, the drop in hybrid sales is focused on specific models, like the Honda Civic Hybrid, which is down 72% for the year. Meanwhile, the Toyota Prius is up by 7%; the Honda Insight is up by 2%; The Lexus RX450h SUV is up more than 17%; and the Ford Fusion Hybrid is up 45%.
From Early Adopters to Mainstream Buyers
Yet, the media and other pundits dig up attention-seeking factoids, like the decline of new hybrid registrations in the San Francisco Bay Area, an historic hot spot for hybrid adoption. The Wall Street Journal points to data from R.L. Polk which shows new hybrid registrations in the San Francisco-Oakland-San Jose area making up 6.1% of the overall U.S. share last year, down from 7.8% in 2007 and 8.1% in 2006. Could the shift of the hybrid sales balance away from the Bay Area, known for its preponderance of high-tech early adopters, to the rest of the country indicate that hybrids are moving into a much larger mainstream market?
The signs point to yes, according to Toyota’s new production targets, reported yesterday by Reuters and others. After selling nearly 2.7 million hybrids globally in the past 13 years, Toyota yesterday reiterated its goal of selling 1 million hybrid cars annually and an accumulated 5 million units by the first half of this decade. To achieve these goals, the company will eventually introduce hybrids across its entire vehicle lineup, and will soon launch a family of Priuses, ranging from a compact model to a crossover SUV.
Who’s on the Hybrid Bandwagon? Everybody
Moreover, Toyota announced yesterday that it plans to improve its average fuel efficiency by 25% by 2015 compared with that of 2005. Why is Toyota setting that goal? The same reason that every major global auto manufacturer is aiming for unprecedented gains in fuel economy: to meet stricter government regulations. According to our discussions with regulators and environmental organizations, these tougher standards could require hybrids in as much as 40% of automobiles in the next 15 years. Early this month, Hyundai announced that its entire vehicle lineup will average a whopping 50 mpg by 2025—a target that lawmakers could very well establish for around 2020. Hyundai expects hybrids to make up 20% of its sales by that time.
Toyota and Hyundai are not alone. Honda is coming out with the CR-Z and Fit hybrids, and last month dedicated a Japanese factory to producing hybrids minivans and SUVs. Ford is making conventional hybrids the backbone of its electrification strategy, that could represent as much as 25% of its sales by 2020. Nissan, Volkswagen, General Motors—we could keep going down the list—are all heavily investing in hybrids.
The bottom line: Adding advanced lithium ion batteries and an electric motor to an internal combustion engine makes good sense—environmentally and economically. Costs will come down. The world needs to reduce its use of petroleum and the emissions of carbon. Plug-in cars will also play a key role, but they will augment, not detract from, the role of hybrids. So, when you read the next headline declaring the end of gas-electric technology, don’t believe the hype.