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Report: Hybrids Not Selling As Well As Analysts Predicted

By Bengt Halvorson
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2011 Toyota Prius

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Among vehicles that you fill with gasoline, the list of most fuel-efficient models is topped by several hybrids—including the Toyota Prius, Lexus CT 200h, and Honda Civic Hybrid. But only the 2011 Prius today could be called a big seller; and even at that, it's at a fraction of the sales that were predicted years ago.

Veteran automotive columnist Alex Taylor III at Fortune has taken a look at how forecasts for hybrid models have, at times, been almost wildly optimistic.


For instance, in 2008, J.D. Power predicted that hybrid vehicle sales would hit 600,000 annually in 2009 and continue to about a million units per year by 2012, as long as gas prices continue to grow. Gas prices did continue to grow for much of that period, and instead, they totaled about 290,000 for 2009 and fell to about 236,000 in 2010.

As recently as 2008, Honda was anticipating that hybrids would account for ten percent of its global vehicle sales by 2010. Not even close.

Forecasts have also pegged hybrids and electric cars at that time, combined, as grabbing about four percent of the market—yet they haven't yet reached 2.5 percent.

Ford Chairman Bill Ford recently wrote a piece, also for Fortune, in which he anticipated that about a quarter of the company's fleet will be electrified by 2020.

But in that same piece, Ford concedes that "You might as well throw a dart. One thing I've learned is that you can't push technology. It has to be pulled."

As Taylor points out, Ford intended to build up to 250,000 hybrids by 2010, but it sold roughly 35,000 in 2010.

Meanwhile, Renault-Nissan CEO Carlos Ghosn has been essentially betting the company's future on EVs, anticipating that battery electric vehicles (not hybrids) could account for ten percent of the company's worldwide sales by 2020.

Toyota (which had talked about making its lineup all-hybrid by 2020), recently passed three million total sales of its hybrid models worldwide and one million Prius models sold in the U.S. Yet so far, it's a market anomaly; in fact, none of the newer hybrid models introduced—including the Honda Insight, Honda CR-Z—have proven themselves to be much more than niche models. The Insight in particular has foundered at a fraction of its intended sales.

Of course, the stock market crash in 2008 and the following 2009 recession probably had something to do with that missed target. During that time, sales have slumped and sticker prices have arguably had a greater influence than gas mileage—although hybrid interest did show signs of surging for a time when gas prices rose more rapidly past $4 a gallon.

Let us know what you think. Are hybrids finally going to arrive for a larger portion of the automotive market, or will their price premium still prove an obstacle?

[Fortune]


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Comments (23)

  1. larry300 avatar larry300 Posted: 5/26/2011 3:19pm PDT

    Simply put, buying these hybrids makes no economic sense since an identical gas compact cost less than 15k new compared to hybrid's +23k for prius and +35 for the volt with incentives. It would take forever for the savings in gas or electricity to compensate the outstanding difference in price. People looking to save are going to cars like the Ford fiesta or Hyundai Elantra. Most hybrid buyers (those who did the math anyway) are concerned with the environmental benefits of hybrids and EVs. Gas hybrids would be doing even worst if euro diesel compacts like the polo were available here since they get better fuel effeciency.
     
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  2. Damien Posted: 5/26/2011 4:04pm PDT

    I agree with larry300. I also discount the benefit to the environment, as you must mine the metals for the battery, and process those materials, in addition to the extra gadgetry. Then, you have the extra (potentially hazardous) waste in the future, when the vehicle is worn out. Simply put, hybrids are vaporware good for little more than posing a green image to all those you drive by. Might be another factor is the slower-than-expected adoption.
     
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  3. JKD Posted: 5/26/2011 4:34pm PDT

    @larry300 - BS on euro diesels since they're too dirty for our market, so it's a no go from the start, completely irrelevant...
    @Damien - BS on "hazardous waste." 99% of batteries get recycled, yes even those from the hybrids (still going very strong for more than a decade) and the latest lithiums.
    I'd say BS on the study too since you can't even get a hybrid at MSRP these days, so I really doubt it's the lack of interest from the consumers. Just try finding one - it's a supply and not a demand issue.
    It's even worse with electrics. You could say "oh, only 2K have been sold this year, so apparently no one wants them."
     
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  4. kenny Posted: 5/26/2011 7:36pm PDT

    JKD, the point are valid -- Euros have been working on making their cars much cleaner including the diesels. We have set our priorities a little differently, so the diesels are harder to sell here, but that just stupid Gov-ment reg-u-lat-tin. The Smart Diesel etc. are very small and don't pollute much but get great fuel economy.
    EVs are idiotic and hugely over-rated and expensive. If it weren't for unrighteous tax incentives they'd disappear overnight and hybrids aren't much better -- do the math... IF you can. silly socialists!
     
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  5. Jim Posted: 5/26/2011 8:12pm PDT

    I dont really care for Hybrids either, I would much rather have a clean diesel vehicle.
     
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  6. JoBlow Posted: 5/26/2011 10:39pm PDT

    It's not only the premiun at buying but the cost of repair in the future.
    Many non hybrids come close to hybrids for fuel economy and most of the time the difference between government test and real world fuel consumption is way way off compare to normal cars.
     
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  7. Michael Posted: 5/26/2011 11:00pm PDT

    JDK, BS to your arguments. Low sulfur diesel fuel is clean burning. Compressed natural gas vehicles are even cleaner building. As for batteries being recycled -- prove it. Go ahead. Show me where hybrid batteries are being recycled. Pfft. You won't. Why? Because nobody's doing it. Put down the crack pipe and wake up to the reality that hybrids are hype and nothing more.
     
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  8. Elripster Posted: 5/27/2011 3:19am PDT

    Of course hybrid batteries are largely recycled.
    http://www.treehugger.com/files/2010/10/toyota-begins-nimh-battery-to-battery-recycling-in-japan.php
    As is the rest of the car. If you wish to see this in process visit your local auto dismantler.
    Hybrids are not hype. It simply takes less energy to get a car from point A to point B on electricity than on NG or any ther gaseous or liquid fuel. Electric machines are around 90% efficient vs. 40% at best for clearn desiel (and less for gasoline and NG). Add that electric machines (in EV's) typically propel the vehicle through single gear reduction transaxles and you cut the gear train losses even further.
     
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  9. Elripster Posted: 5/27/2011 3:23am PDT

    Another thing to add regarding PHEV's and EV's is the reduction of tail pipe and GHG emissions. If one runs the math (see GREET), one will see that even on our national average grid electricity mix (with all the coal), our vehicles will emit far fewer GHG emissions running on grid electricity than on gasoline or diesel. NG is less clear since the recovery methods need to researched and I haven't had time to do that.
    Point is there is merit to EV propulsion technologies although the costs argument is not likely to work in its favor for a long long time.
     
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  10. B.C.Teo Posted: 5/27/2011 7:08am PDT

    I ageed with JKD that there is a supply problem with hybrids.I also ageed with those apposing JKD.I wish more people appose JKD so that i could get my hybrid fast instead of waiting for 6 months for a Lexus ct200h
     
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  11. JKD Posted: 5/27/2011 9:31am PDT

    @Michael - I'm not sure why you didn't get my point about the diesels (not enough education?) BS on what exactly? That the euros can't deliver the cheap diesel engines to meet our stringent emissions standards? VW Polo cannot meet those requirements here but the 40K 335D can... That's the car to have but I'd still pick the LEAF out of the too though it'd be very close :-)
    @kenny - The EVs will work out for a lot of people including myself with a van, the SUV, and an active family. Those Bush EV tax incentives are not so commie evil either, it's mostly a scam, and people will wake up in horror next year when they find out they get a sliver or nothing of the "promised" $7.5K. Most don't have that kind of bottom line tax liability.
     
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  12. Randy Posted: 5/27/2011 10:43am PDT

    American don't care to have things forced on them. You can tell me castor oil tastes good and make me gulp a spoonful every day, but I know it tastes bad. Same thing with hybrids - we're told how wonderful they are but we know our money is better spent elsewhere once we do the math. Having to drive a car 125,000+ miles to get the initial costs back just doesn't cut it.
     
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  13. fb_1510606196 avatar Carl Thelin Posted: 5/27/2011 10:52am PDT

    Until we get a magic battery that 1) take Malibu size car 300 miles and, 2) be refilled (recharged) in 5 minutes, non of the price differential really matters. That was the requirement ever since we started looking at alternative fuels. Diesel does it.
     
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  14. JGSGHC Posted: 5/27/2011 10:52am PDT

    The idea here is to move further away from our dependence on oil for car fuel. No one said it would be easy or cheap. We need alternatives to fossil fuel at all levels of power consumption and usage. Cars are a good place to start as China and India rapidly come on board with visions of American style car ownership and use.
    BTW, at one time cars in America were powered by steam and yes even electricity as well as gas. Read your history.
    http://www.ehow.com/list_7570236_powered-early-cars.html
     
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  15. fb_1510606196 avatar Carl Thelin Posted: 5/27/2011 11:02am PDT

    Do not worry about the chemical/toxic hazards of batteries. For nearly a century we have been complacent with galvanized steel gasoline tanks under the trunk or back seat of cars. For a while the fuel filler was hidden behind the license plate just above the bumper!
    Today's better NiMh or Li-ion batts are wrapped in tough packages. Dollars and range are the factors holding back hybrids and plug-ins.
     
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  16. JKD Posted: 5/27/2011 11:50am PDT

    @Carl - 300 miles was a requirement for whom exactly? Definitely not for me or tens of thousands of others on the waiting list. My only requirement is to be able to cover max 50 miles or so in a single day if I need to (and pay $1.25 for it.) Most other times I need 30 miles or less and so do 75% of my neighbors. We all have 2-3 cars, it's America and if the EV can cover 90% of our daily needs then it's a revolution no old geezer has time to wait for. And screw diesel and its particulates too.
     
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  17. JKD Posted: 5/27/2011 12:00pm PDT

    @Randy - I'm not in the hybrid market right now but if I were I'd pick up the Prius for extra $8K over the Corolla in no time. It's a better, safer car with more cargo room, at least extra 10 MPG, much better trade-in value and definitely better for our kids and the environment. Any potential payoff and the hedge against rising fuel prices is just the bonus for its target audience and not the main consideration. People buying Escalades don't have to justify their choice and it's not just the small member either. I'm sorry you don't understand. Following your own logic you'd better drive an old Escort but most of us Americans don't want to be like that.
     
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  18. Jeff Posted: 5/27/2011 2:39pm PDT

    Strip mining Canada's landscape to harvest nickel for NiMH batteries isn't exactly environmentally friendly. Lithium is better, but the economics of recycling lithium is such that it is cheaper to mine new metal rather than recycle the batteries. The new silver based batteries are a huge advance, but can't get around the relative shortage of silver in the first place.
    Battery powered cars are a dead end technology. There is no getting around it.
    Hydrogen is the only meaningful answer. No greenhouse emissions and only water from the tail pipe. Power can be provided by fuel cell technology realizing greater efficiencies. We could produce it from solar energy. What's not to like? Perhaps big oil going out of business?!
     
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  19. Damien Posted: 5/27/2011 4:48pm PDT

    @JKD I call BS on your BS. The batteries can certaily be recycled--very carefully, because they are heavy metals. You wouldn't want to ingest them. Also, the process of recycling makes them LESS green as that, too, takes energy to do--energy not expended on a car with a conventional ICE. Add that to my other comments proving hybrids to be machines of a green image, and not a green reality. As Jeff suggested, let's go to hydrogen. (H2 = water emissions+electrolysis = H2 again.
     
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  20. bengt avatar Bengt Halvorson Posted: 5/27/2011 6:32pm PDT

    @JKD, To your comment about supply and demand, while the Prius is now selling at or a bit above sticker, according to TrueCar data, this month the Honda Insight has still been selling below sticker. Other hybrids such as the Cadillac Escalade Hybrid (including incentives, admittedly) are selling at thousands under sticker.
     
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  21. fb_1510606196 avatar Carl Thelin Posted: 5/28/2011 11:11am PDT

    JKD - Agreed that for folks like you who have several vehicles, having a hybrid city car makes sense. I was writing about the majority (?) of families that cannot afford that. Many have one Malibu sized car for the family to take them where the want to go even on vacation. However, I saw another suggestion. If only one person in that family needs a daily city car, they could rent a large cruiser for a vacation with the savings. You made a good point.
    Diesels? Yes, I drove many when they were noisy stinkers, especially at truck stops. Not so much anymore. But maintenance is still a tough one there.
     
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  22. William J Toensing Posted: 5/31/2011 3:08am PDT

    Fuel economy is my highest priority but my car must be a hatchback, stationwagon, or mini-van. I would like to see VW bring in the Polo TDI which gets 60 to 70 MPG. If Ford would offer its diesel versions of the Fiesta & Focus that they do in Europe they would be my first choice. If I were to buy a new car today my first choice would probably be a Prius & my 2ed choice a VW Jetta TDI "Sportwagen" or TDI Golf & would probably be my first choice if I could buy a new TDI as cheap as a Prius with the #1 package. If Hyundai/Kia would offer a diesel model like they do in Europe, it would probably be my first choice in view of its lower price & 10 year 100,000 mile warrenty. I would probably go go for the Chevy Volt if it was $20,000 cheaper.
     
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  23. Steve Posted: 6/1/2011 8:08am PDT

    Looking to buy a 200ct in Jan of Feb. When prices are back to normal. Would like a volvo S60 diesel but no chance within 2 years. willing to pay extra just to keep from importing oil this country cannot afford. Any better car over 3200 lbs???
     
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