• EV
  • Plug-In EVs
  • Battery Electric Vehicles
  • Automakers

The Plug-In Hybrids Are Coming, But Will the Market Buy?

Sam Abuelsamid
Dec 26, 2019

EVs 5

The bulk of new product introductions focused on electrification at the 2019 Los Angeles Auto Show, not surprising given that California is the largest market for plug-in EVs (PEVs) in the US. However, while there were multiple new battery EVs (BEVs) shown, there also seems to be a resurgence of plug-in hybrid (PHEVs) as we head into the 2020s. 

BEV introductions included the Ford Mustang Mach-E, Mini SE, Audi e-tron Sportback, Volkswagen ID Space Vizzion, and an upgraded Hyundai Ioniq. But multiple automakers still seem to believe that there is a substantial market for PHEVs. 

Multiple Companies Debut PHEVs for 2020

BMW group is upgrading the electric driving range of PHEV variants of the 5 series, 7 series, and X5, as well as adding others. Ford has already launched the Lincoln Aviator Grand Touring and is expected to add the smaller Corsair Grand Touring and the Ford Escape PHEV by mid-2020. Toyota debuted a PHEV version of its popular RAV4 crossover with 39 miles of all-electric range and Hyundai showed its Vision T concept that previews the next generation Tucson with a PHEV powertrain. Additional PHEVs from Fiat Chrysler and Ford are anticipated in 2020, as well as possible entries from Honda and others.  

Challenges in Selling

The big challenge for all of these manufacturers is in selling these products. A PHEV theoretically offers the best of all worlds with the ability to complete most daily driving on electricity alone. When the battery is depleted, there is no range anxiety because the vehicle can continue operating on gasoline in normal hybrid mode. At the same time, the larger battery adds significant cost and mass to a vehicle that is already carrying two power sources. 

Fewer than 150,000 PHEVs were sold in North America in 2018 out of approximately 614,000 sold globally. Market Data: EV Market Forecast, a report from Navigant Research, a Guidehouse company, anticipates a compound annual growth rate of about 17% for PHEV sales over the next decade compared more than 26% growth for BEVs in that same period. GM—which was an early leader in PHEVs with the Chevrolet Volt—has now discontinued all of its offerings to focus entirely on BEVs. 

Even customers that do buy PHEVs rarely get much of the benefit. Despite it being easy to plug in at home, one OEM acknowledged that telemetry data from PHEVs shows only one-third of owners plug in every day, with another third charging occasionally and the final third never plugging in. In the UK, where drivers have been incentivized to buy PEVs to avoid congestion charges in London, up to 90% don’t charge. 

The Push for PHEVs

Automakers are trying a variety of strategies to get consumers to buy. Premium brands are emphasizing efficient performance in hopes of enticing customers to pay the cost premium. Volvo’s Polestar 1 coupe is expected to be the brand’s quickest entry yet, while Lincoln has tuned the PHEV Aviator to be its most powerful production model ever. The 39-mile electric range of the new RAV4 Prime should meet most driver’s commuting needs without gas. The same is true for the Chrysler Pacifica Hybrid, not branded as a PHEV, to keep things simple for customers.

Demand for PHEV architecture is still far from proven, but manufacturers are making an enormous investment in it. If manufacturers can generate enough sales, they can boost fleet efficiency and emissions averages enough to offset the growing popularity of trucks and utilities in all major markets (until BEVs really take hold for brands other than Tesla).