For years, alternative fuel vehicles appeared to be a somewhat futuristic dream for environmentally concerned individuals but today they are a reality for an increasing number of US consumers. Latest research from Mintel shows that sales are up an astounding 73 percent, with nearly 440,000 hybrid, plug-in hybrid, and electrics sold thus far this year. The rapid sales growth in hybrid and electric vehicles makes the segment the fastest growing in the US for 2012, supplanting the still fast growing, compact car vehicle segment.
The number of plug-in and electric models available to the public has nearly quadrupled over the year too (from 3 models in 2011, to the 11 available today). And, despite the dramatic growth in 2012, hybrids and electrics will make even more headwind in the US market over the coming years.
Over the past nine years the share of hybrid and electric cars has grown from virtually zero (0.5 percent) in 2004 to 3.3 percent in 2012 of all vehicles sold. Looking forward, Mintel forecasts sales of hybrid and electric cars to exceed 535,000 units by the end of 2013, or a 14 percent increase in sales over 2012 estimates. Furthermore, by 2017 Mintel forecasts that sales of hybrid and electric vehicles will reach 850,000 units as newer models gain traction with consumers. The market is expected to account for five percent of the total US car market by that date (2017).
Colin Bird, automotive analyst at Mintel, said:
"New midsize hybrid models, such as the Toyota Prius and Chevrolet Malibu Eco, have proven popular with consumers, in particular families, who want to buy green without sacrificing other features that fit their lifestyles. The segment will grow even further in 2013, with the launch of several new models, including the full Ford Fusion Hybrid series, and the Honda Accord Hybrid, which will fulfill a wider variety of needs than conventional compact hybrids. Midsize plug-in hybrids will also enter the mainstream in 2013, with the introduction of the Ford Fusion Energi and the Honda Accord Plug-in, which will further improve mainstream acceptance of this, still, fairly novel powertrain segment."
And it appears that consumer concern for the high and rising cost of fuel may drive the development of the market even further. More than one third (34 percent) of younger consumers aged 25 to 34, think that "it is easy to make back the extra money spent on a hybrid car in savings at the pump."
However, there are still some factors preventing consumers from buying a plug-in hybrid or electric car. Battery issues are a top concern among consumers, with 87 percent worrying about the length of time the battery will run for, 86 percent are concerned about not being able to find somewhere to recharge their vehicle while on a trip and the same number (86 percent) about availability of places to charge outside the home or their area of living. Another source of apprehension for 85 percent of US consumers is the recharge time of plug-ins and EVs.
Price remains the biggest hurdle for plug-in hybrids and electric cars as they enter the market. Mintel's consumer survey showed that the average consumer was willing to spend about $2,000 more to upgrade from a conventional car to an electric-only version of the same car. However, today's plug-in hybrids and electric cars cost anywhere between $10,000-$20,000 more than their conventional counterparts.
"The 'live for today' mentality that prompted the rise of SUVs has disappeared. Consumers today demand products that promise protection and durability. There is a new mentality that emphasizes preparing for and protecting against potential future disasters such as another oil shock or even just steadily rising prices at the pump. Hybrid and electric cars might be positioned to help consumers weather the storm of future spikes at the pump and they might be marketed as long-term investments that can help consumers protect against likely increases in gas prices. Messaging might be similar to advertisements for financial products, with the long-term savings on gasoline measured as 'returns,'" Colin concludes.