For all the enthusiasm around full battery-powered electric vehicles, we are still only halfway there. In reality, the hybrid is to own the electrified side of the road for some time to come.
Investors have run up the stock prices of electric-vehicle companies and their valuations far higher than the businesses really warrant.
Electrics amounted to just 2.6 percent of total vehicle sold last year and made up only 1 percent of all vehicles on the road. The share of sales is projected to rise to 6.6 percent by 2040.
On the other hand, hybrids, which use powertrains combining internal combustion and electric motors, are finding increasing favor with consumers. Sales peaked in 2013 in the US, coinciding with the year Tesla Inc initially said it planned to start deliveries of its Model S full-electric sedan.
However, purchases of hybrids have ticked up over the past couple of years and they are penetrating global auto markets at a far faster pace than pure electric vehicles.
Early this month, Toyota Motor Corp, which introduced the Prius a generation ago, said that hybrids would account for one-quarter of its sales next year.
Such vehicles account for an increasing share of vehicles sold by Japanese automakers. Think of the Honda Motor Co’s Insight or Civic.
Globally, several firms are making hybrid versions of their models — such as the Ford Fusion, Chevrolet Impala or Lincoln MKZ — chipping away at Toyota’s global share of this sub-segment to about 30 percent from 80 percent.
Part of this is policy, part the cost of battery technology. As policymakers realize that the dream to go green with cleaner, full-electric vehicles is at least a decade away, they have started accommodating hybridization.
The mixed-power vehicles can cut carbon dioxide output by 10 to 30 percent, getting governments at least some distance toward their climate goals.
China is to include hybrids in its going-green vehicle regulations, based on their fuel efficiency, after previously excluding them.
In keeping with that, Mercedes Benz AG-owner Daimler AG and China’s top domestic automaker, Geely Holding Zhejiang Geely Holding Group (吉利控股集團), last month announced that they would join forces to develop a hybrid powertrain to be manufactured in China and in Europe.
Automakers are still finding the cost of electric vehicle and battery technology tough to digest, especially after industry sales tanked over the past year thanks to the COVID-19 pandemic.
Despite all its corporate governance troubles, Nissan Motor Co is an electric-vehicle bull and its Leaf model is well-liked.
Even so, the company thinks electrics would reach the profitability of gasoline-powered models only by 2030, “citing such a target for the first time,” Goldman Sachs Group Inc analysts have said.
To get there, battery costs will have to fall to US$65 per kilowatt-hour from US$150 to make them relatively affordable for consumers.
All the while, regulators are pushing more stringent fuel economy standards.
In the US, the incoming administration of US president-elect Joe Biden could use higher fines to encourage manufacturers to electrify their fleets, Nomura Holdings analysts have said.
However, setting up such incentives with electric vehicles and pushing regulation too fast can backfire.
Hybrids are one compliance solution, if not necessarily the technology transition that consumers might have chosen. They are cleaner, not clean, and some are dirtier than others.
The plug-in type, for instance, has been dubbed by Greenpeace as “the car industry’s wolf in sheep’s clothing.”
Others hold more promise, such as strong hybrids versus the mild type, whose weaker motors cannot power the vehicles on their own.
Given the gritty details of the clean technology curve, investor expectations lie too far into the future. Hydrogen fuel cells? Even more expensive.
Get used to it: We will not all be driving electric vehicles soon. Your next ride might simply be electrified.
Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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