“Failed” PEVs Outpace Hybrid Launch

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.

Article by John Gartner, appearing courtesy the Matter Network.