The Freedonia Group, a Cleveland, Ohio-based market research firm, projects that worldwide demand for hybrid-electric vehicles (HEVs) will advance rapidly to 3.9 million units in 2015 and then to nearly double that number by 2020.
In a just-published study—World Hybrid-Electric Vehicles—the firm concludes that the primary markets for HEVs will remain the US, Western Europe and Japan, although it expects the rapidly growing Chinese market to experience relatively strong demand.
The study also projects that the cost disparities between HEVs and conventional light vehicles—currently between $1,000 and $3,000 per vehicle—will decline as production volumes increase.
Freedonia expects the US market to experience the highest levels of demand for HEVs, due to erratic fuel costs, the market’s unique Corporate Average Fuel Economy requirements, and the lack of significant demand for light vehicle diesels beyond the full-size truck and sport utility vehicle categories.
Despite being less cost-effective than internal combustion engine (ICE) vehicles, HEVs have carved out a niche in the US as a “carbon neutral” enabling technology. This niche in part appears to be animated by the extra cost associated with the vehicles, especially regarding HEVs that are both uniquely styled and focused on delivering superior fuel economy. On the other hand, recent attempts by some OEMs to position HEVs as high performance alternatives to pure ICEs stalled, due to unfavorable price/benefits levels.
The firm expects demand for hybrids in europe to be significantly lower than in the US, due to the penetration of light diesels (currently 50% of the total market). Demand in Japan will continue to grow, spurred by government incentive and regulation.
The report expects both China and South Korea are expected to be strong HEV markets, due to government interest in dealing with mobile emissions (China), and because local production is planned (both China and South Korea). Other regions of the world will experience lower HEV demand, according to the study.