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Hybrid Electric Vehicles Slowly But Surely Gain Market Share in Europe

By Vijayendra Rao and Dr. Julia Saini, Frost & Sullivan

Hybrid electric vehicles (HEVs) have been a very niche market in Europe over the last few years, and 2006 was no different. Their penetration rate was less than 0.5%, with diesel vehicles still dominating the market. European vehicle manufacturers (VMs) are still not confident about introducing hybrid vehicles, with most VMs like Ford, Opel, and VW delaying their plans to launch HEVs in 2006.

Toyota with its full HEVs, PSA Group with its micro HEVs, and Honda with its mild HEVs were the only players in the European HEV market in 2006. The extra cost of full hybridization, which amounts to around €2,000 to €3,000, is deterring other VMs from introducing full HEVs in Europe.

Toyota Drives the Growth of Full-Hybrid Vehicles in Europe

Figure 1. Research Methodology for Frost & Sullivan End-User Study (Europe), 2006. Click to enlarge.

The European market for HEVs saw growth of 91% in 2006, mainly dominated by full HEVs. These accounted for around 78% of total HEV sales in Europe in 2006, while mild (13%) and micro (10%) HEV sales were negligible.

Toyota is the only VM to sell full HEVs in Europe and thus accounted for all sales of full HEVs in 2006. According to a Senior Engineer at Toyota, “Due to Toyota’s limited diesel vehicle offering in Europe, hybrid vehicles have been marketed aggressively, especially performance-oriented vehicles such as the Lexus RX400h and the Lexus GS450h.’

Figure 2. End-User Perceptions about Likely Purchase of Gasoline and Diesel Hybrids (Europe), 2006. Click to enlarge.

The Lexus RX 400h and the Lexus GS 450h accounted for more than 28% of total sales of Toyota HEVs in Europe. Germany has been at the forefront in adopting performance-oriented Lexus HEVs, with more than 50% of these being sold in that country. However, the Toyota Prius continued its dream run in Europe, with sales volumes of around 30,000 units in 2006, compared to around 20,000 units in 2005.

The UK has been leading the charge for the HEV market in Europe, as these are exempt from the London Congestion Charge, can park for free in Central London, and get a tax break of £1,000 when purchased. HEVs are driving UK customers to adopt full HEVs in a big way.

Figure 3. Cost Comparison: Gasoline Hybrids, Diesel Hybrids, and Conventional Diesels (Europe), 2007. Click to enlarge.

Frost & Sullivan recently conducted a study on “Customer Attitudes and Perception towards Powertrain and Hybrid Vehicle Technologies and Features,” interviewing more than 1,800 end-users, as shown in Figure 1.

Based on the study’s findings, customers are more willing to buy diesel HEVs than gasoline HEVs in Europe, as shown in Figure 2.

Figure 4. Customer Willingness to Pay Extra for Different Types of Hybrid Vehicles (Europe), 2006. Click to enlarge.

However, diesel HEVs are far more expensive than gasoline HEVs. Figure 3 compares the costs of conventional diesels, gasoline hybrids, and diesel HEVs.

Regarding the likely purchase by type of HEV, customers are willing to pay more for full HEVs than they are for micro and mild HEVs. More than 21% of end-users are willing to pay an additional €1,500 for full HEVs, as shown in Figure 4.

Figure 5. Sales of Hybrid Vehicles (Europe), 2006. Click to enlarge.

Full hybridization is targeted at SUV/MPV-segment vehicles, since these are better suited to achieving better performance, fuel savings and reduced emissions than small and medium-segment vehicles. Frost & Sullivan projects sales volumes of around 150,000 full HEVs in Europe by 2012. Figure 5 provides data for 2006.

Sales of Micro-Hybrid Vehicles Have Been Disappointing

PSA Group was the only VM to sell micro HEVs in Europe in 2006, with volume running around 5,000 units. PSA Group launched the Citroen C2 start/stop hybrid in 2006, with sales estimated at around 2,000 units in that year. Ford also had plans to launch the Ford Fiesta micro HEV in 2006. However, due to the extra cost of micro hybridisation (€500-700) compared to conventional gasoline vehicles, Ford has postponed its launch date and is likely to launch its micro HEV in 2008. According to a Research Engineer at Ford’s Forschungszentrum, “The main reason for us not launching micro hybrids is the cost. It is not as cheap as it is claimed to be. So, we are delaying the project.”

General Motors has very concrete plans to launch HEVs in North America, whereas its HEV strategy in Europe is not at all clear. “We are looking at micro hybrids and we see it as a potential market. But the business cases for projected volumes are not positive, and hence we have stalled the project for the time being. We are likely to introduce micro-hybrid vehicles by 2008/2009,” commented a Research Manager for Alternative Propulsion Vehicles at Opel.

Until late 2004, BMW had no plans to enter the HEV market, but has sprung a big surprise on the market by announcing micro-hybridization of the BMW 1, 3 and 5 Series by 2015. According to the Head of Alternative Propulsion, “We are likely to standardize the entire 1, 3 and 5 Series line-up with micro-hybrid vehicles in the coming years,” which is likely to help BMW reduce fleet average emissions of carbon dioxide (CO2) in the years ahead.

The Mild-Hybrid Segment Was a Niche in 2006

Honda, Mercedes, and Volkswagen are the only VMs in Europe that are working on mild HEVs (no pure-electric driving mode). Due to high costs (€1,500-2,000), a lack of pure electric driving (no direct mechanical link between electric motor and wheels), and smaller advantages in terms of emissions and fuel savings than offered by full HEVs, the uptake rates of mild HEVs will be lower than those of full HEVs. Honda managed to sell around 4,500 to 5,000 Honda Civic and Honda Insight mild HEVs in Europe in 2006.

European sales of HEVs in 2006 were disappointing compared to sales in other regions, such as North America and Japan. The main reasons for this were a higher penetration of diesel vehicles, customers not being willing to pay extra for HEVs, a lack of HEV models in Europe, and European VMs not pushing HEVs.

However, European VMs are facing an uphill struggle to meet the voluntary ACEA agreement to reduce CO2 emissions to 140 grams per kilometer (g/km) by 2008 and 120 grams by 2012. At present, most European VMs are in the 150 to 160 g/km range. VMs feel that HEVs provide a solution that will enable them to reduce emissions considerably, compared to alternative solutions such as gasoline direct injection (GDI), automated manual transmissions (AMTs), and low-rolling-resistance tires.

HEVs will reduce CO2 fleet averages by 10 to 50 g/km, depending on the type of HEV. Europe will see considerable growth in the number of HEVs with introduction of models such as Audi Q7, Porsche Cayenne, Volkswagen Touran, BMW X3, Mercedes M Class, S Class in the years ahead, with volumes projected to be over 1.3 million vehicles in 2012. HEVs will definitely be a force to be reckoned with in Europe in the years ahead.

For further information, contact:

Michael Banks
Corporate Communications
Automotive & Transportation
Automation & Electronics
Frost & Sullivan
t) +44 (0)20 7915 7876
f) +44 (0)20 7730 3343
4 Grosvenor Gardens, London SW1W 0DH



"Hybrid electric vehicles (HEVs) have been a very niche market in Europe over the last few years, and 2006 was no different. Their penetration rate was less than 0.5%, with diesel vehicles still dominating the market. European vehicle manufacturers (VMs) are still not confident about introducing hybrid vehicles, with most VMs like Ford, Opel, and VW delaying their plans to launch HEVs in 2006."

They probably aren't buying in because they don't have to buy a hybrid to get a fuel efficient vehicle, like we do in Canada or the United States.


Brad, your comment is even more valid in the areas where gasoline prices are artificially held higher than diesel prices. If the true market value of gasoline were used I bet the HEV penetration would be a bit higher.

Micro hybrids (idle start/stop) are probably the best bet for luxury and exotic car manufacturers to quickly reduce their CO2 output. $500-700 euros additional cost on a Porsche would probably not be noticed by their customers, but the company would definitely reap the benefits of the slightly lower CO2 output of their fleet.

Rafael Seidl

Patrick -

you may turn out to be right, especially since Porsche still categorically rejects diesels even for its SUV, which shares a platform and assembly line with VW's Touareg.

However, Porsche makes sports cars and, adding a heavy traction battery or ultracap module would be reduce the specific power of the vehicle. They could get the weight penalty back down by using lighter materials, but the SUV apart, high-yield steels and aluminum are already used almost throughout. Carbon fiber parts are suitably expensive and hence exclusive, but they are a pain to recycle - something the EU insists on.

A more likely route is that Porsche, which just announced it will raise its stake in VW to just under 30%, will push for wording in the upcoming draft of the EU directive limiting fleet average CO2 emissions such that it can lump its own gas guzzlers in with VW's more frugal offerings.

That said, BMW's efficient dynamics approach of idle stop plus intelligent alternator control, electric power steering and an electric water pump may catch on, regardless of how the EU directive plays out.


Very true Raf.

I was citing Porsche as an easy example other companies may not be so lucky...I don't know off hand if larger auto companies own Ferrari, Lamborghini, etc.

An extra 40-50lbs of heft is not unreasonable; I would think much of the ballast could be conveniently placed to assist in balance of the vehicle (you can place a battery most anywhere you like).


The problem is that most of our small clean diesel cars in Europe, are already more efficient than the hybrids sold in the US.

We're waiting for a diesel hybrid. That would sell, because diesel is the preferrd fuel here (it's also cheaper).

Rafael Seidl

Patrick -

Ferrari is afaik still a stand-alone company, but it sold Maserati to Fiat in 2005. VW owns both Lamborghini and Bugatti plus Bentley and Audi, among others.

Personally, I suspect Porsche would rather produce a hybrid gasoline SUV than one powered by a diesel. We'll have to wait and see what - if anything - they decide to do to reduce the CO2 emissions of their true sports cars. Again, diesel is not considered an option at Porsche, even if Subaru has now managed to build an opposed-four.

The only thing that is fairly certain is that sports cars manufacturers will only start offering hybrids if not having one becomes an image problem for the target customer group. If push comes to shove, they will pay fines in Europe just as they have paid gas guzzler tax for many years in the US.

Rafael Seidl

Gio -

Citroen has a few small cars with diesel engines and idle-stop feature. VW had it in the Lupo as well.

Diesel engines and electric drive trains are both heavy, expensive and produce a lot of torque at low revs. Also, diesel emissions regs are getting tougher, so microhybrids apart, the only option would be to cut cylinder count in half and to pair that with a hefty electric motor on the transmission side, powered by ultracaps. Its job would be to brief acceleration boosts and efficient recuperation. At constant vehicle speeds it would act as an additional flywheel.

Still, a mild or full diesel hybrid would be a very expensive solution for a passenger car. Better perhaps to keep optimizing the engine periphery (cp. BMW's efficient dynamics approach) and invest in emissions control to make diesel a viable option even in the US and Japan. After all, in terms of mitigating global warming that is probably the cheapest option in the medium term.

Note that diesel hybrids may well make sense for medium and heavy duty vehicles.



"The problem is that most of our small clean diesel cars in Europe, are already more efficient than the hybrids sold in the US."

This is so wrong. As a French hybrid owner, I can not let say that. Unless you compare a Prius with something which has half the size and the weight. And as a city cyclist, I know how much of a scandal is the dirtiness of our efficient Diesels... don't be too impatient to buy Diesels, you American, wait until they become REALLY clean !

"We're waiting for a diesel hybrid. That would sell, because diesel is the preferrd fuel here (it's also cheaper)."

Diesel is the preferred fuel because it has LESS TAX, period. Let the tax be equal and it will be more expensive than gas/petrol. Now Peugeot/Citroën has announced a Diesel hybrid, yes... I hope they succeed but it's very likely they must face a financial disaster because of it. A Diesel engine is intrinsically more expensive to make than a gasoline one. The situation will get worse when pollution limits get lower for Diesels. Now benefits of "hybridizing" an engine are smaller for Diesel than for gas engine. How is it possible that they finally end with a profitable product after they've claimed for years that gas/electric hybrids were not ?

Hope I'm wrong, but...



In the US they simply pass the gas guzzler tax costs onto the consumer.

They would probably do the same in the EU.



You are right on all counts. However, for some heavy commercial vehicles, like buses, refuse trucks, or city delivery vehicles, diesel hybrids is established and quite economical technology.


I agree with you Andrey, Diesel is an appropriate technology for heavy vehicles. But we've got too many dirty Diesel cars (even the smallest ones) here in Europe !

Stan Peterson

Once again the politicians screw up the logical, economical alternatives by rewarding some (dirty diesel), and punishing others, (gas hybrids), in hare-brained, non-economic bouts of "must-do-something" non-accomplishments.

Socialist EU is a joke; making pious bleats about the GHGs, and doing less, and yelling more. Mean while sticking their sanctimonious noses up into the air.

The reality is the US has reduced the growth of GHGs much more than the EU has. Us industry has actually achieved hte 1990 Kyoto objective of cutting GHG emissions ot the 1990 level or did any of you know that? (Population growrth and larger numbers of hosuholds add to US GHG output.) And the US has not even claimed all the benefits it has achieved, (like the extensive casual reforestation in the US, fixing large amounts of CO2).

The only thing the EU has managed to do is increase the amount of hot air emanating from political idiots.

Pushing for diesels is good, but not at the cost of the higher pollution that can easily be smelled by any foreigner deplaning in a EU city. Your air is worse than it used to be, and your GHG emissions are worse than they used to be, while you make and break promises to cut them and don't produce.


There was an article on speed limits for the Autobahn. This does not sit well with those who buy performance cars. Imagine a Porsche or BMW owner that says, "oh, it also has start/stop ability to improve mileage"...kind of a non-starter, so to speak.

Why many europeans car manufacters dont produce some like this? . i think its because they dont want. because tesla producer already sold the technollogy to big cars manufacters.

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