As many carmakers abandon their EV ambitions, hybrids are making a comeback
The global electric vehicle (EV) market is currently facing significant headwinds that could slow its growth. Three primary factors are contributing to the challenges for EV penetration. Firstly, concerns over EV capital costs are rising, particularly due to falling prices for used EVs.
In the UK, for example, used EV prices have decreased sharply, making new EVs seem less economically attractive. Secondly, political uncertainty, including upcoming elections in several regions, has created unpredictability around government policies that directly affect the EV industry.
Moreover, a lack of sufficient rapid-charging infrastructure is becoming a more pressing issue as EV adoption increases. Automakers have expressed concerns about driving range and charging accessibility, which may lead to consumer hesitation in purchasing EVs.
In light of these challenges, hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) have gained traction, especially in markets like the US, where their sales have recently outpaced EVs. HEVs are now projected to exceed global sales forecasts by 1 to 2 million vehicles.
Although HEVs are also seen as a transitional technology, they are being increasingly recognized for their ability to reduce CO2 emissions while maximizing automaker profitability. Additionally, HEVs have a lower payback period, around three years, compared to EVs, mainly due to savings on fuel costs.
On top of that, given their longer market presence since 1997, HEVs have become a reliable choice, with stable used car prices. Furthermore, hybrids provide strong performance, offering higher horsepower compared to traditional gasoline engines, which may attract drivers looking for more power when accelerating, such as for highway merging.
Despite the slowdown in EV sales, Goldman Sachs analysts still expect long-term growth in the EV market, driven by the pursuit of carbon neutrality. Their base-case scenario projects a 21 percent increase in global EV sales in 2024, though a bear-case scenario, factoring in the current headwinds, predicts a 2 percent decline.
China’s role in the global EV market also impacts the industry’s dynamics. With over 5 million vehicles in excess production capacity, China is pushing to expand domestic EV adoption and increase exports, particularly to Southeast Asia. However, efforts by countries like the US, Europe, and India to block Chinese EVs from their markets may limit the extent of this export growth.
So now that some carmakers have officially hit the “U-turn” button on their EV only ambitions, it appears that now hybrids are the optimal choice for most. Do you agree? We got all this from Goldman Sachs and their full article is linked here. Thank you Goldman Sachs for the information and images.
