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Electric And Hybrid Vehicles Industry In United States

The electric and hybrid vehicles in the United States is the second largest in the world after Japan. Since their inception in 1999, a total of 3,540,199 hybrid electric automobiles and SUVs have been sold in the country through December 2014.

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Definition / Scope

A hybrid electric vehicle is a type of hybrid vehicle and electric vehicle that combines a conventional internal combustion engine propulsion system with the electric propulsion system. The presence of the electric powertrain is intended to achieve better fuel economy than a conventional vehicle or better performance. The most common form of hybrid electric vehicle is the hybrid electric car, although hybrid electric trucks and buses also exist.

Japan is the world’s largest hybrid market with over 4 million hybrid vehicles sold through December 2014,followed by United States with more than 3.5 million automobiles and SUVs sold.

Market Overview

  • The electric and hybrid vehicles in the United States is the second largest in the world after Japan. Since their inception in 1999, a total of 3,540,199 hybrid electric automobiles and SUVs have been sold in the country through December 2014.
  • The top selling hybrid electric vehicle in U.S. is the conventional Toyota Prius, which has sold 1,498,616 units since 2000 through December 2014, representing a 48.5% market share of all hybrids sold in the U.S.
  • Demand for hybrid and electric vehicles has remained as consumers become more environmentally conscious and fuel costs rose. The industry will remain strong in the coming years driven by the high oil prices and perceived environmental benefits.
  • So far the negatives of electric vehicles appear to outweigh the positives in the minds of individual consumers.
  • Electric vehicle market is still at a relatively early stage of development. However it is poised to reshape industries and communities the world over.

Key Metrics

Metrics Value Explanation
Base Year 2016 Researched through internet


Market Drivers

  • The United States is the largest electric car market in the world. Through November of 2014, 83,647 electric cars were sold in America. While this represents 26% increase over the number sold during the same period in 2013, it is a small percentage of the total U.S. market.
  • 55% of the electric cars sold in the U.S. are plug-in hybrid electric vehicles suggesting that consumers still do not trust the range of cars powered solely with electricity.
  • As per the research firm Edmunds.com, despite a booming U.S. auto market, sales of electric and hybrid cars have stalled in the year 2014, capturing 3.6% of the market through august, slightly down from 2013’s 3.7% share.
  • Many auto industry executives and analysts predicted that hybrid and electric car sales would continue to grow incrementally as car-makers expanded new offerings and public awareness increased.
  • As per hybridcars.com, for the year 2014, plug in vehicles and battery electrics saw growth ahead of the overall market, while hybrid and diesel products trailed. The overall market experienced exceptional results, with trucks (broadly defined to include crossovers, pickups, vans and SUVs) continuing to sell at a stronger pace than cars. This has been true for several months and is a key reason why many hybrid and electric vehicles have struggled since their product portfolio is oriented towards cars.
  • For the year 2014, plug-ins were at 0.34% which was in line with 2013. The volt remained the category leader, but sales remained down due to reduced production and marketing efforts by General Motors.
  • Battery electrics had a strong month on the backs of the category leaders, the Nissan Leaf, Tesla Model S and BMW i3. Their sales increased in December 2014, at a greater rate than the market as a whole, particularly with respect to December 2013.
  • In December 2014, hybrid volumes had a tough month, with the share of the market at 2.22% which is the lowest since October 2011. For the year, that share was 2.75%, also the lowest since 2011.
  • The Nissan Leaf accounted for 30% of the U.S. electric car market in 2014 and accounted for 38% of the U.S. market in December 2014.
  • Chevy Volt accounted for 19% of the U.S. electric car market in 2014 and 18% in December 2-14.
  • BMW i3 accounted for 12% of the electric car market in December 2014 and only 6% for the full year market share as it wasn’t on sale the whole year.
  • Toyota Prius held the 3rd largest market share for 2014 as a whole. However, Toyota Prius plug-in is pretty widely despised among electric vehicle advocates, as it only has 11 miles of electric only range and the gasoline engine kicks in itself for a variety of reasons.
  • The Ford Fusion Energi held 11% of the market in 2014, and Ford C-max Energi held 8%.
  • 100% electric car sales were up by 58% in 2014 and 79% in December 2014. Plug-in hybrids were up 13% in 2-14 and down 235 in December 2014. And the total of electric car sales were up by 29% in 2014 and down by 23% in December 2014.
  • Some of the main factors contributing to consumer purchases of hybrid vehicles are: lower fuel costs, a reduced environmental impact and the opportunity to use new technology. However, the appeal of each of these factors has been reduced due to improvements in engine efficiency, a change in consumer sentiment, and the commercialization of plug in vehicles, helping to explain why HEV sales have not met projections.
  • Additional mechanical components, including an electric motor and battery result in HEVs having a higher purchase price and lower fuel costs relative to internal combustion engine vehicles.
  • In addition to financial aspects such as purchase price and fuel savings, there are other reasons why individuals have purchased HEVs. Research shows that some consumers have historically been willing to pay a premium for HEVs because the automobiles were good for the environment and also seen as being innovative.
  • One factor which has adversely affected HEV market share is the rise of plug in electric vehicles. Even though these automobiles have limitations such as higher purchase price, long charging time, and limited charging infrastructure, they also trump many important elements of the HEV value proposition. Relative to hybrids, plug-in vehicles are more environmentally friendly, have lower fuel costs and better represent latest technology. Plug-in cars are frequently depicted as next generation hybrid vehicles and their innovative appeal to consumers increases since they only recently became available for purchase.

Industry Challenges

The demand for vehicles are increasing year by year and this can represent both a challenge and an opportunity to capitalize on new vehicle technologies. Traditional vehicle fuel is a limited resource and an investment on an alternate transportation fuel, which is electricity, a smart investment. Moreover the transformation of traditional fuel vehicles into electric and hybrid vehicles will not only generate demand for the existing jobs but also create new jobs and increase employment. The job growth in electric and hybrid vehicle industries will outweigh any gaps left behind by the reduction of traditional fuel vehicle industries.

With the advent of lithium-ion battery technology, the largest obstacle to widespread consumer adoption of electric vehicles will be cost. Moreover, a profitable business model for public charging points has not been reliably demonstrated. There are also concerns about the length of time a full charge will take and also about difficulty finding a charging station when away from home.

Although all major automakers are making electric vehicles, they must decide how to invest across hybrids, plug in hybrids and battery electric vehicles for future market. Automakers typically specialize in engine and transmission systems, while outsourcing other components. However, the more electric dependent a vehicle is, the more value the battery holds. Major automakers are now building in house expertise or partnering with specialized PEV and battery firms to differentiate their technology.

As electric vehicles take off, the battery industry is set to evolve. Battery technology is highly differentiated at the moment. Ultimately, battery makers that compete well on cost, safety and performance will rise as leaders. McKinsey and company foresees that battery companies may also be able to manufacture components for power and thermal management systems.

Fuel savings, environmental impact and government incentives are the three major factors that could motivate consumers to buy PHEV and EV, with fuel savings clearly the most important factor.

There are two possible exceptions that could result in increase in HEV market share. Firstly, dramatic improvements in the purchase price gap between HEVs and comparable ICEVs could lead to commensurate growth in hybrid sales. Secondly, if HEVs offer a more economical way for auto makers to meet fuel economy or emissions standards, then hybrid technology might be incorporated into cars by default.

Other Key Market Trends

Employment opportunities

It is difficult to estimate the total job creation potential of electric vehicles. More electric vehicles would likely lead to some job losses in the oil industry. However, the advent of electric and hybrid vehicles can drive job creation in a host of industries. Most of these jobs would be created in industrial sectors closely ties to auto manufacturing, advanced batteries and research and development.

Drivers who switch to electric vehicles will have more disposable income to spend in other sectors of the economy, such as housing and services. Spending in these sectors keeps more wealth moving within the local economies and will drive job creation in sectors not immediately connected to producing electric vehicles.

Direct jobs are created through increased production by firms that make electric and hybrid vehicles, components and electric and hybrid vehicle infrastructure. Indirect jobs are those ties to firms that supply to these direct producers. Further, higher employment in direct and indirect jobs leads to more spending in the broader economy. These creates induced jobs in industries like food, clothing and entertainment. 

Market Outlook

  • For electric cars to achieve wide scale deployment in the U.S., new battery service networks must be competitive with the existing gasoline fueling infrastructure in terms of price, range, and reliability.
  • For many major auto makers, sales volumes are declining as gas prices stabilize and more U.S. buyers return to buying large cars and sport utility vehicles. Wider adoption of electric and hybrid vehicles faces many hurdles, including heftier prices than gasoline powered rivals. Stable gas prices have a lot to do with it, but there’s also a possibility that the prestige of owning an electric vehicle or hybrid has died down.
  • HEV purchase prices will like continue to approach those of internal combustion engine vehicles as auto manufacturers introduce next generation hybrid models in the coming years.
  • Nevertheless, with several attractive electric cars hitting the market in 2015, and availability of several models expanding, 2015 is expected to be a good and exciting year.

References

https://en.wikipedia.org/wiki/Hybrid_electric_vehicle

https://en.wikipedia.org/wiki/Hybrid_electric_vehicles_in_the_United_States

http://www.forbes.com/sites/jackperkowski/2014/12/12/electric-cars-a-review-of-2014/

https://www.tekes.fi/globalassets/global/ohjelmat-ja-palvelut/ohjelmat/eve/selvitykset/finalusevmarketstudy1.pdf

http://www.iedconline.org/clientuploads/Downloads/edrp/IEDC_Electric_Vehicle_Industry.pdf

http://www.ey.com/Publication/vwLUAssets/EY-Gauging_interest_for_plug-in_hybrid_and_electric_vehicles_in_select_markets/$FILE/EY-Gauging_interest_for_plug-in_hybrid_and_electric_vehicles_in_select_markets.pdf

http://www.wsj.com/articles/electric-hybrid-car-demand-stalls-1409785123

http://evobsession.com/nissan-leaf-takes-30-non-tesla-us-electric-car-market-2014/

http://blogs.scientificamerican.com/plugged-in/explaining-stagnation-in-the-hybrid-electric-vehicle-market/

http://www.hybridcars.com/december-2014-dashboard/

http://www.idtechex.com/research/reports/electric-vehicle-forecasts-trends-and-opportunities-2015-2025-000412.asp


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