Hybrid Cars Are Niche No More

NEW ENERGY ECONOMY 

06.06.14

Hybrid Cars Are Niche No More 

Just a decade ago, your only option for a gas-electric vehicle was the Prius. Now the demand is so large that everyone from Hyundai to Lincoln is diving in. 

Henry Ford used to say that customers could get the Model T in any color, so long as it was black. The lack of choice didn’t stop the cheap vehicle—the first car to really put Americans on wheels—from becoming popular. But in the 1920s, when rivals offered vehicles with more options (and more colors), Ford’s rigidity forced the Model T to lose market share. 

Not too long ago, the market hybrid cars seemed similarly monotone. Customers could have hybrids in any variety they liked, so long as it was a Prius. 

That may be only a slight exaggeration. For the last several years,Hybridcars.com has been tallying the number of hybrid vehicles sold every month. Back in May 2008, consumers had 15 models to choose from, the Toyota Prius, which came in a single model, accounted for about 42 percent of total hybrid sales. 

Sales of hybrids dipped sharply in 2009, but they have come back strongly. This week, figures for May 2014 were reported. Total sales of hybrids (including plug-in hybrids) were over 59,000, more than double the May 2009 low of about 25,000. And the Prius is still a major player—with a significant change. In May 2014, there were four different versions of the Prius on the market—the traditional liftback, the Prius C, the Prius V, and the Prius Plug-in. Combined they sold about 27,000 units, accounting for about 45 percent of the total hybrid market. 

And this speaks to a larger dynamic. Hybrids may still be a niche product—they account for less than 4 percent of car sales in any given month. But the number of models is proliferating rapidly, and that is helping to bring in new buyers. In 2007, consumers had about 12 hybrid models to choose from. In 2010, there were 25 different hybrids in the market, up from 20 in 2009. But last month, carbuyers could choose from well over 50 different types of hybrids, including seven plug-in hybrids. 

The offerings now span the full spectrum of manufacturers, styles, and price points. While the Prius still dominates, several other types of hybrids have gained critical mass, like the Ford Fusion hybrid (4,461 units last month) and the Hyundai Sonata hybrid (2,094 units last month.) In all, some 16 different hybrid models sold more than 1,000 units in May 2014, which is a record. And members of this club include cars generally not thought of as highly fuel-efficient, like the Lincoln MKX. 

It’s a simple reality that many of the venerable brands and nameplates consumers recognize now come in a hybrid model—the Buick Lacrosse and Chevrolet Malibu, for example. And many of these hybrids remain true novelties. So far this year, sales of the hybrid versions of the Cadillac Escalade and Chevrolet Silverado have been 20 and 12, respectively. 

What accounts for the proliferation? Part of it can be chalked up to demand. At a time of high gas prices and concerns over emissions, car buyers are concerned about efficiency. The U.S. is a consumer-driven economy. And there’s nothing the Americans consumer loves—or demands—more than choices. By rolling out hybrid versions of popular models, carmakers are trying to offer greater choices. Offer more people more choices of a new type of product, and more people will be willing to experiment. Since May 2009, both the number of hybrid options and the number of hybrids sold has more than doubled. 

Part of the increase in the number of offerings can be tied to public relations and marketing. For car makers, hybrids have become synonymous with forward —thinking and progress. And so it is good to be seen as having one and working on that technology. 

But there’s something else happening. Even though hybrids account for less than four percent of the market, the technology behind them is becoming more mainstream. The idea of using more powerful and more intelligent electric-powered batteries to assist in the generation of power to drive vehicles has gained a great deal of traction. So-called hybrid lite systems, like Ford’s Ecoboostand General Motors’ eAssist, are integrating hybrid technologies into conventional cars that nobody would think of as a hybrid. 

As recently as a few years ago, buying and driving a hybrid was an exercise in conspicuous consumption. With its distinctive design and huge market share, the Prius easily stood out. Today, seen from a distance, almost any vehicle on the road could be a hybrid.