Skip to content

Automotive Forecasts are Confusing

February 14, 2011

Forecasts should separate hybrids, Plug-in hybrids (PHEVs) and pure electric vehicles (EVs), rather than combining them in a forecast.

For example, some forecasts show “hybrids” having substantial increases in sales by 2020, but these forecasts combine hybrids, PHEVs and EVs.

The Boston Consulting Group believes that hybrids and electric vehicles will capture 26% of the world automotive market for light vehicles.

PRTM, a management consulting firm, estimates the total market share for these vehicles will be around 30%.

Because of these, and other, bullish forecasts, there has developed a sense that PHEVs and EVs will have dramatic sales growth. Some groups have used this sense of destiny to promote government subsidies for PHEVs and EVs.

But there is a problem with any conclusion based on these forecasts – research firms are lumping apples and oranges together when they make their projections.

There are three distinctly different types of electric vehicles.

  • First, there is the hybrid that relies primarily on the internal combustion engine to power the vehicle. The battery comes into play for very short distances and to improve overall efficiency. The battery is NOT the primary means for powering the vehicle.
  • Next there is the PHEV, which uses the battery as the primary means for powering the vehicle for around forty miles, but then reverts to using the internal combustion engine as the primary means for powering the vehicle.
  • Finally there is the EV that relies entirely on the battery to power the vehicle.

These are important distinctions because each type uses gasoline in varying amounts.

The EV doesn’t use any gasoline, while the PHEV uses some gasoline and the hybrid uses gasoline for virtually every mile driven.

Forecasts lumping hybrids, such as the Prius, PHEVs, such as the Volt, and EVs, such as the Nissan Leaf, together, can result in distorted conclusions.

The real question is: What will sales be for of each type of vehicle?

Will the huge cost of PHEVs and EVs keep people from buying them?

  • Hybrids, such as the Prius, only cost slightly more than comparable Internal Combustion Engine (ICE) vehicles. Hybrids improve gasoline efficiency and, as a result, have achieved some market success.
  • Plug-in Hybrid Electric vehicles (PHEVs), such as the Volt, are going to cost at least $10,000 more than comparable ICE vehicles, and there is no certainty that people will be willing to pay such a large premium merely for the privilege of being “green”.
  • Pure electric vehicles (EVs), such as the Leaf, will cost even more and will only have a range of 100 miles before the battery is completely discharged.

ICEs, Hybrids and PHEVs have a range of around 350 to 400 miles before they need to be refueled, as opposed to the 100-mile range of EVs.

High first cost and, short range in the case of EVs, could keep buyers away.

More realistic forecasts are needed for PHEVs and EVs before anyone can conclude that PHEVs and EVs will capture large market shares.

Making decisions based on faulty forecasts that lump hybrids, PHEVs and EVs together will result in our wasting money on infrastructure that may not be needed. It may also result in the government trying to pick winners and losers and choosing the wrong automotive technology.

What’s needed are realistic forecasts, based on actual sales for each type of vehicle, to distinguish how each type of vehicle will fare in the market place.

Note: EVs are also referred to as BEVs.

*  *  *  *  *

[To find earlier articles, click on the name of the preceding month below the calendar to display a list of articles published in that month. Continue clicking on the name of the preceding month to display articles published in prior months.]

© Power America, 2010 – 2011. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Power America with appropriate and specific direction to the original content.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s