Hybrid Electric Car Market Overview
The global hybrid electric car market is estimated to be valued at $57,164.8 million in 2017 and is projected to reach $1,38,023.3 million by 2023, witnessing a CAGR of 16.7% during the forecast period. The stringent emission norms and falling battery prices in different regions are some of the main factors driving the market growth.
GLOBAL HYBRID ELECTRIC CAR MARKET, BY HYBRIDIZATION, $M (2013-2023)
Based on hybridization, the hybrid electric car market is categorized into full and mild. In terms of value, full hybrid electric vehicles (HEVs) held the largest share in the market during the historical period and is estimated to contribute close to 89% share in 2017. This is attributed to their early inception compared to the other counterpart, environment friendly engine, and lighter weight resulting in less energy consumption.
A hybrid electric car uses an internal combustion engine in combination with a battery for propulsion. The battery in the vehicle is charged by converting kinetic energy (during braking) into electrical energy. A full hybrid car can run only on the battery power (for a limited distance), while in a mild hybrid car, the combustion engine remains the main source of propulsion and the electric motor only assists the engine at appropriate times or might power the car (for a very short distance).
By the type of battery used, the hybrid electric car market is divided into nickel–metal hydride (NiMH) and lithium-ion (Li-ion). NiMH batteries accounted for a larger share in HEV sales during the historical period, owing to their lower cost, higher durability, and more safety features than Li-ion batteries. However, Li-ion batteries powered HEVs are anticipated to be high in demand, witnessing CAGR of 29.2% during the forecast period, due to its falling prices, light weight, small size, high energy density, low maintenance cost, and low rate of self-discharge.
Based on type, the hybrid electric car market is categorized into hatchback, sedan, and others. The “others” category include sport utility vehicles (SUVs), multi-purpose vehicles (MPVs), and crossovers. In terms of value, the hatchback category is estimated to contribute major share to the market in 2017. This can be attributed to consumer preference toward small cars in major hybrid electric car market, such as Japan and their low cost compared to other car types.
Geographically, Asia-Pacific region dominated the hybrid electric car market in the historical period and estimated to contribute more than 57% share by value in 2017. This is attributed to increasing government support to the market in the form of incentives in different countries and stringent emission norms in Japan. In addition, Japan is a hub for major HEV companies, such as Toyota, Honda, Mitsubishi, Nissan, and Panasonic.
Hybrid Electric Car Market Dynamics
The major trend identified in the hybrid electric car market is the increasing demand of mild category HEV globally. Besides, stringent emission norms in different regions is a key factor driving the industry growth.
Mild hybrid electric cars are expected to hold a larger share in the hybrid electric car market, especially in emerging countries such as China and India, during the forecast period. This growth can be attributed to the low cost of mild hybrid cars compared to full hybrid cars.
A full hybrid car is around $2,500–$3,500 more expensive than a similar conventional car. Even though a full HEV is more fuel efficient than the mild one, the latter offers a better cost-to-benefit ratio because of comparatively low upfront cost. To meet emission targets and save fuel costs, customers are finding more value in mild hybrid cars compared to other electric vehicles because of the latter’s lower costs.
Some other factors contributing to the increasing demand for mild hybrid cars over full hybrid cars are easier mechanical integration of components and powertrains, the cost-saving aspect for customers and the time-saving aspect for manufacturers, and higher power-to-weight ratio owing to lower battery weight.
The growing concern for carbon dioxide emission around the world is leading to a gradual phase-out of conventional vehicles. These stringent emission norms will ultimately increase the price of conventional cars and encourage customers and automobile companies to adopt low-emission cars, such as HEVs. Many countries have increased taxes on conventional fuel cars and are offering incentives, such as high-occupancy vehicle lane exemption and emission inspection exemption, to hybrid car customers. Altogether, these factors are driving the growth and expansion of hybrid electric car market globally.
HEV sales are dependent on gasoline prices. Low gasoline prices can affect the fuel-saving advantage that customers have from HEVs. Lower fuel prices can influence the customer decision of paying a high upfront price for an HEV. For instance, falling gasoline prices are a major challenge to the growth of HEVs, particularly in North America.
HEVs are more expensive than conventional fuel vehicles. With a continuous decline in fuel prices, the payback period of HEVs increases, which, in turn, lowers the interest of customers in HEVs, restraining the hybrid electric car market growth.
Hybrid Electric Car Market Competitive Landscape
Some of the major players operating in the global hybrid electric car industry are Toyota Motor Corporation, Honda Motor Co. Ltd., Bayerische Motoren Werke (BMW) Group, Ford Motor Company, Volkswagen AG, General Motors Company, and Hyundai Motor Company.