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ICCT Senior Fellow projects incremental manufacturing cost of hybrids can drop to ~$1,200 by 2020; subsequent surge in adoption to ~70% of new vehicle sales by 2030

Future improvements in P2 hybrid systems should drop high-volume direct manufacturing costs to about $1,200 by 2020—very close to the approximately $1,000 cost threshold required for mainstream customer acceptance, according to John German, Senior Fellow and the US Lead for the International Council on Clean Transportation (ICCT).

Combined with the push from the proposed 2017‐2025 CAFE/GHG standards, as well as manufacturers’ addition of additional consumer features and future synergies, the drop in cost will help pull hybrid sales out of their slow projected ramp-up over the next 8-10 years to enter a period of rapid mass market acceptance and roughly 70% sales penetration by 2030, German said in a talk at the SAE Hybrid Vehicle Technology Symposium in San Diego last week.

I don’t think there is going to be much of a sales increase up to about 2020 or so. JD Power had 7.7% in 2018, I’m actually below that in 2018. The reason is it’s going to take time to bring out the new technology. It will take more time to build up sales so that you can actually design the vehicles around the hybrid system and that’s where you get a lot of cost reduction.

In the 2020 timeframe, I think you’ll see this all come together. [Hybrids] will go mainstream. By 2030, I’m saying 70% of the market. This is why I’m bullish about conventional hybrids; its not so much what’s happening now. Costs are too high, but they are going to come down.

—John German

German based his analysis on ICCT-sponsored updates of two studies, one by FEV on hybrid system manufacturing costs, and one by Ricardo on efficiency modeling. He focused on developments in the so-called P2 system—generally a single motor with two clutches integrated between the engine and the transmissions. Examples of this system are recent introductions by Nissan, VW, Hyundai, BMW and Mercedes, he noted.

FEV system boundaries for cost evaluation: powersplit (left) and P2 (right). Click to enlarge. Source: John German, ICCT

Referencing earlier work by the National Academy and MIT, German said that the P2 system can deliver 90% of the benefit at 1/3 of the cost of an input powersplit system using planetary gearing, as exemplified by the Toyota and Ford hybrid systems.

Input powersplit systems rely on two large motors (generator and traction) and offer tremendous flexibility in operation, German said. One major benefit is the optimization of city cycle efficiency. However, while one can run the motors at any load point required or desired, the Achilles’s heel is the fixed torque split between engine and generator he said.

If you’re just cruising down the road, you have power going to the generator recovered by the motor back into propulsion—those are both losses. Your motor now has to be sized to handle the combined output of the generator and battery pack. The generator has to handle regenerative braking plus the power from the engine. This results in two very large motors.

—John German

The P2 system, by contrast, relies simply on a clutch between the engine and the transmission. With the clutch, you can run on the electric motor alone, and increase the amount of regen. The Achilles’ heel for this system, German said, is starting the engine when running down the road in electric mode. Different manufacturers are exploring different approaches: Hyundai with a separate belt-alternator-starter system, Nissan with a second clutch, VW by retaining a conventional torque converter, he said.

ICCT contracted with FEV to update that company’s earlier study on costs. In that update, FEV tore down 5 different European vehicles to determine hybrid costs. Among the high level results German presented at the SAE symposium was the finding that net incremental direct manufacturing costs for both the powersplit and the P2 systems are essentially the same, with the exception of the transmission and motor system. This element is substantially less expensive in the P2 system (€703 vs €875).

Ricardo’s updated study on efficiencies—with an eye to the 2020 timeframe—using a variety of models found that the P2 system offers 102% of the benefit of a powersplit system at 8% lower cost. Furthermore, German suggested, the P2 system has future opportunity for cost reduction, including:

  • High‐powerLi‐ion batteries—i.e., smaller, lighter, lower-cost;
  • Vehicle load reduction
  • Integrating the motor into transmission and system into vehicle;
  • Experience; and
  • Additional synergies and features

The P2 applications have been low-volume applications. If it’s a low-volume application, the motors and clutches have been hung on to the existing architecture. This is not what you want to do for high volume. There is a lot more potential for P2.

—John German



I've got no idea how this:
'the P2 system offers 102% of the benefit of a powersplit system at 8% lower cost'

fits in with the earlier claim that:
'German said that the P2 system can deliver 90% of the benefit at 1/3 of the cost of an input powersplit'


and Toyota/Ford have lots of mass production in the power split architecture.. the hybrid premium on a Prius is about $1500, that sounds reasonable to me since they dont have to spend money on a conventional transmission.

Nick Lyons

Hmmm--no links to the studies mentioned.

Account Deleted

Good point Davemart

And even viewed in isolation the two statements do not make sense.

Regarding 'the P2 system offers 102% of the benefit of a powersplit system at 8% lower cost' this claim is BS because the P2 system is most definitely less efficient than the power split system.

Regarding 'German said that the P2 system can deliver 90% of the benefit at 1/3 of the cost of an input powersplit' this claim is also BS as the P2 system is definitely not 1/3 the cost of the power split system.

It is even a question whether the powersplit system is more expensive than the P2 system. Toyota has just priced their 50 mpg Prius C at 19k USD using a powersplit system and compare that to the similar sized 42 mpg Honda Insight priced at also 19k USD and that uses a P2 system.

Frankly I would not pay any attention to what John German is saying as he does not have a clue.


In 3 weeks, if Prius C sales soar in the US the way they have in Japan - these senior wizards can make all the hybrid projections they want.


Getting a C in the US will not be easy..


102% = +2% benefit for a 8% reduction in cost = a total of about 10% NET? Both designs are very close to being equivalent. The main difference may be with the royalties that one has to pay.

Jay Kalend

After all this mumbo jumbo, it appears the most coet effective mode is to disconnect and shut down the engine and let the battery propel the car. Then propel the car entirely by the engine and hopefully recharge the battery at who knows what driving conditions. Isn't that what the Chevy Volt was supposed to do all along?

When they say 'X % of the benefit' that might as well be the reduced engine size and fuel consumption and nothing else. The actual costs including maintenance of the electric train are still subjective. Show me a study that really proves that EV's are cost and capital competitive with ICE.

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