Navigant Research Blog

“Failed” PEVs Outpace Hybrid Launch

— April 4, 2012

The failure to reach the sales targets for the Chevrolet Volt and Nissan Leaf has led to considerable finger pointing about so-far disappointing attempts to mass market plug-in electric vehicles (PEVs).  PEVs have increasingly become fodder for politics as every misstep reinforces what opponents call their inevitable failure.

But the real problem was in the original lofty expectations for PEV penetration by both the auto makers and the government, which were unreachable given the cost of the vehicles.  As we’ve said all long, the government’s projection of 1 million PEVs on US roads by 2015 was too aggressive given the short timeframe to get new vehicles to market and the nascent state of the technology .  (You can listen to the reasons why in this recorded webinar.)

The automakers failed to consult their history and economics textbooks when projecting how many PEVs they could sell during the first few years of production.  Hybrid vehicles are the closest recent precursors of today’s PEVs, and they didn’t sell in close to the numbers that auto manufacturers hoped to achieve.

The below chart shows the actual sales figures for hybrid sales in the US from 2000 to 2006, compared with the actual sales of PEVs in 2011 and then Pike Research’s projected sales through 2017.  As we can see in the chart, during the first full year of US sales of the Toyota Prius and the Honda Insight 9,350 hybrids were sold, while PEV sales in 2011 were near double that.  When you consider that PEVs cost much more than a hybrid and require significant changes in consumer education and behavior (e.g.,understanding the charging of the vehicles), the PEV launch can be viewed as a relative success.  Lest we forget, the US light duty vehicle market was actually smaller in 2011 (13.7 million) than it was during the 2000s, which makes the PEV launch that much more impressive.

Pike Research forecasts that during their respective first seven years on the market, PEVs will outsell hybrids (in the corresponding years of their launch) every year, and by a whopping 90 percent in total units sold throughout the seven year period.  Despite a higher price tag (that must and will come down), PEVs have many advantage over the hybrids from more than a decade ago: Gasoline cost about half as much in the early 2000s as it does now, and it’s unlikely that we’ll ever see $1.30 gas again.  Thus, the potential for saving money by plugging-in is much greater than was switching to a hybrid during the previous decade.

  • The twin motivators of national energy security (for both military and economic reasons) and reducing global greenhouse gas emissions are much stronger now for governments around the globe.
  • The selection of vehicle models and number of automakers participating will be much greater for PEVs than it was for hybrids.
  • PEVs have the potential to benefit the grid by helping to offset the variability of renewable energy generation, and business models that pay for that benefit will evolve.

All of these reasons add up to PEVs successfully taking hold in the market, while not reaching the stratospheric sales originally envisioned.


EV Industry Makes Room for the Big Guys

— January 27, 2012

Electric and hybrid vehicles are often derided for their petite size, hefty purchase prices, and lack of range.  Recent improvements have made these cars more appealing to individual consumers, but like their size, their deployment globally has so far been relatively small.  Recent reports show that more than 17,000 plug-in vehicles were sold in the United States in 2011, mostly first year models of the Nissan Leaf and the GM Volt ().

Though lower than the ambitious targets set by Nissan and GM, sales of both the Leaf and Volt outpaced the first year sales of the popular hybrid vehicles Toyota Prius and Honda Insight when they were launched more than a decade ago.  Furthermore, nearly every major auto-manufacturer in the world has declared it has some type of plug-in model in the works.  Despite these indicators though, Pike Research estimates that the U.S. market share for plug-in vehicles will not breach the 1% mark before 2017.

Countering the subcompact image of EVs, though, is a growing number of medium to heavy duty electric and hybrid vehicles that stand to make a significant impact in electrified transportation.  While these vehicles also tend to carry high initial purchase prices, models are being developed and deployed for almost every transportation related purpose, from garbage trucks to school buses.  The cost reductions are greater, and range concerns fewer, for fleet managers deploying these vehicles than for individuals buying new passenger plug in models.

Plug-in vehicles can significantly reduce costs tied to vehicle maintenance and transportation fuel, an appealing element for fleet managers who have few conventional alternatives for cutting operating costs.  Fleet vehicles often run predictable routes and distances, so that the limited ranges of electric vehicles do not pose the same concerns for fleet managers as they do for individual consumers.

The Electric Drive Transportation Association (EDTA) reports fleet managers are willing to pay 10-14% more for electric vehicles based on operating costs reductions, and 73% of government fleet managers are willing to consider deployment of these vehicles in their own fleets.  In accordance with these findings, Pike Research estimates that by 2017 sales of plug in and hybrid medium/heavy duty vehicles will gain increasing market shares in major world markets, from 6% in the United States to 22% in the United Kingdom.  All which indicates that while sleek sports cars and subcompacts may get most of the publicity, the transition to electrified transportation will likely be exemplified by boxy delivery trucks as well.


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