J.D. Power forecasts hybrid- and battery-electric vehicles will represent 7.3% of global auto sales in 2020
28 October 2010
|J.D. Power forecast of hybrid-, plug-in hybrid- and battery-electric vehicle global sales through 2020. Click to enlarge.|
A new report from J.D. Power and Associates estimates combined global sales of hybrid-electric vehicles (HEVs), plug-in hybrid-electric vehicles (PHEVs) and battery-electric vehicles (BEVs) will total 5.2 million units in 2020, or some 7.3% of the 70.9 million passenger vehicles forecasted to be sold worldwide by that year. Global HEV, PHEV and BEV sales in 2010 are forecasted to total 954,500 vehicles, or 2.2% of the 44.7 million vehicles projected to be sold through the end of 2010.
The report, titled “Drive Green 2020: More Hope than Reality” considers various factors affecting the future potential for “green” vehicles in the world’s largest automotive markets. These factors include market trends, regulatory environment, consumer sentiment and technology development in these markets.
Interest in HEVs and BEVs is driven by a dramatic reduction in or elimination of tailpipe emissions, and the increased fuel economy of these vehicle types helps reduce the world’s dependence on oil. The drawback to these technologies is that fossil fuels (principally oil and coal) are still used to produce the electricity that powers these vehicles, thereby eliminating some of the potential gains. Therefore, it is not clear whether there would be a substantial reduction in emissions by switching to these new powertrain technologies. In addition to questions about dependence on oil and reduction in emissions, battery packs are prohibitively expensive to manufacture on a large scale, and the disposal of depleted battery packs presents yet another environmental challenge. Perhaps most importantly, there are major hurdles that must be overcome regarding battery-based vehicles to ensure consumer acceptance.—“Drive Green 2020: More Hope than Reality”
According to the report, it will be difficult to convince large numbers of consumers to switch from conventionally powered passenger vehicles to HEVs and BEVs. A consumer migration to alternative powertrain technologies will most likely require either one of the following scenarios, or some combination of these scenarios:
- A significant increase in the global price of petroleum-based fuels by 2020;
- A substantial breakthrough in green technologies that would reduce costs and improve consumer confidence; and/or
- A coordinated government policy to encourage consumers to purchase these vehicles.
Based on currently available information, J.D. Power concluded that none of these scenarios are likely during the next 10 years.
While considerable interest exists among governments, media and environmentalists in promoting HEVs and BEVs, consumers will ultimately decide whether these vehicles are commercially successful or not. Based on our research of consumer attitudes toward these technologies—and barring significant changes to public policy, including tax incentives and higher fuel economy standards—we don’t anticipate a mass migration to green vehicles in the coming decade.—John Humphrey, senior vice president of automotive operations at J.D. Power and Associates
|A different take|
|Oliver Hazimeh, partner and head of the global e-Mobility practice at PRTM, a global management consulting firm, has a different perspective on the prospects for electrified transportation.|
|“PRTM believes that it’s not a matter of if—but how fast and to what extent—different electrified vehicles will be adopted as we approach an electrification tipping point.|
|“PRTM estimates that there are different degrees of electrification with different penetration rates, i.e. by 2020 PRTM estimates that EVs will have a 4-5% adoption rate; plug in hybrid electric vehicles will be at 5-6%; and hybrid electric vehicles will reach 20%.|
Breakdown of Global HEV and BEV Sales by 2020. Of the 5.2 million HEVs, PHEVs and BEVs forecasted to be sold worldwide in 2020, some 3.9 million units (about 5.5% of the market) are expected to be HEVs and PHEVs according to the J.D. Power and Associates global forecast numbers for the third-quarter of 2010. The leading markets are the United States (1.7 million units), Europe (977,000 units), and Japan (875,000 units). China is expected to sell fewer than 100,000 HEVs in 2020.
Of the 1.3 million BEVs projected to be sold worldwide in 2020 (about 1.8% of the market), sales in Europe will account for 742,000 units; sales in China will account for 332,000 units; and the United States and Japan should each account for sales of approximately 100,000 BEVs in 2020.
|Consumer interest in alternative powertrains, pre- and post introduction of price premium. Click to enlarge.|
Consumers. While consumers have a variety of concerns about HEVs and BEVs, J.D. Power said, more important are the personal financial implications of deciding to purchase an alternative-energy vehicle. While many consumers around the world say they are interested in HEVs and BEVs for the expected fuel savings and positive environmental impact they provide, their interest declines significantly when they learn of the price premium that comes with purchasing these vehicles.
While most consumers say they want to create a smaller personal carbon footprint, research shows this consideration carries relatively low weight in the vehicle purchase decision.—“Drive Green 2020: More Hope than Reality”
The overall cost of ownership of HEVs and BEVs over the life of the vehicle is also not entirely clear to consumers, and there is still much confusion about how long one would have to own such a vehicle to realize cost savings on fuel, compared with a vehicle powered by a conventional internal combustion engine (ICE). The resale value of HEVs and BEVs, as well as the cost of replacing depleted battery packs, are other financial considerations that weigh heavily on consumers’ minds.
Finally, the report says, it is clear from research in the world’s largest automotive markets that buyers of hybrid and electric vehicles occupy a unique demographic niche. Buyers of HEVs and BEVs are generally older, more highly educated (possessing a postgraduate degree), high-income individuals who have a deep interest in technology, or who like to be among the early adopters of any new technology product. As a result, it is not clear that HEVs and BEVs will appeal to the general population.
Government Regulations. While the governments of the world’s largest automotive-producing nations have schedules in place for improving fuel economy and reducing exhaust emissions, there is little consensus about the timing or manner in which these objectives are to be achieved. Some governments are promoting HEVs, others are focusing on BEVs, and still others are considering additional options.
According to Humphrey, the lack of consistency in regulations across markets is causing global automakers to hedge their options by seeking alliances and technology-sharing agreements. The heavy fixed costs associated with developing multiple powertrain options simultaneously are prohibitively expensive. When combined with the projected lower sales volumes of these products, collaboration between auto companies is almost a necessity to control costs and remain competitive.
One unpredictable aspect of the 2020 outlook is how markets would be affected if more stringent and consistent legislation is adopted that supports specific technologies. In particular, China has the ability to move quickly, invest heavily in the development of one specific propulsion technology, and mandate fuel economy or emissions standards that could favor a particular technology or require a minimum sales penetration level for vehicles with a designated technology. Given the size and growth rate of the Chinese auto market, such a coordinated regulatory environment might allow Chinese companies to achieve economies of scale and drive down the cost of alternative-energy vehicles.
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