EXECUTIVE
SUMMARY
HYBRID AND ELECTRIC CARS
US, FEBRUARY 2019
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HYBRID AND ELECTRIC CARS, US - FEBRUARY 2019
Overview
Today the rise of electric cars seems closer
to reality than science fiction. Consumers
have become accustomed to the idea
of electric cars on the road and most
manufacturers have introduced plans for
future EVs (electric vehicles). Nevertheless,
hybrid and electric cars remain a niche
market and represent just a small fraction of
total vehicle sales. Ultimately, consumers’
love for internal combustion engines is not
likely to be broken anytime soon. Brands
need to identify who would consider buying
an AEV (alternative energy vehicle) and
increase consumer education on costs and
experience to convert them to an alternative
energy vehicle.
The issues
Consumer education on EVs sorely
lacking
Most consumers believe that EVs are the
future of cars, yet very few consumers
have any idea how much it would cost to
maintain and operate an EV. Electric vehicle
sales jumped considerably in 2018 as the
new technology firmly entered the market
with Tesla’s introduction of the Model 3. Yet
AEVs remain a niche market with significant
challenges ahead before they may reach
the masses.
As financial considerations are the primary
driver for AEV sales, brands need to
increase consumer education on the cost
of operating and maintaining EVs. Many
view EVs and hybrids as high maintenance,
but often they are in fact more reliable than
ICEs (internal combustion engines) and less
expensive to maintain. Brands will also need
to produce models at affordable prices,
something that even Tesla has struggled
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with, as it has yet to offer the Model S at the
company’s original target price of $35,000
(see Perception of AEVs).
More mature mild hybrid segment
sales slowing
Mild hybrids are the best-selling segment of
the AEV market, but experienced declining
sales in 2018. The segment is more mature
and lacks the excitement being focused on
many new EVs. Consumers are more likely
to consider buying a mild hybrid than an
electric vehicle, likely because it is less of a
transition from an ICE vehicle that they can
feel comfortable with. Much of the decline
in the mild hybrid segment was offset by
gains in EV sales. However, should the
EV segment falter, the entire AEV market
would be at risk given the weakness in
the traditional hybrid segment (see Market
Breakdown).
The opportunities
AEV owners incredibly satisfied
Nearly all consumers who own an AEV
would consider buying another one the next
time they purchase a car. This demonstrates
a high level of consumer satisfaction that
can be spread to other new consumers.
Considering so few consumers own AEVs
and are likely unaware of current customers’
satisfaction, brands should make a point to
educate the public on the overwhelmingly
positive experience being enjoyed by AEV
owners (see AEVs Considered).
Most would consider an alternative
energy vehicle
of Tesla, AEVs are now more likely to be
perceived as a status symbol than an oddity
for environmental enthusiasts. AEVs are
especially popular among younger and more
affluent consumers. Should manufacturers
succeed in producing AEVs at a lower cost,
sales for the segment should continue
to grow steadily (see Alternative Energy
Vehicle Consideration).
Tesla, EV segment sales incredibly
strong
Over 235,000 electric vehicles were sold in
2018, a phenomenal growth rate of 125%.
Battery electric vehicles now account for
over one third of AEVs sold, as consumers
want the newest and most innovative
options in the market. Tesla’s success has
propelled the segment not only in sales but
also in perception, as the brand has helped
make some battery powered vehicles a
known status symbol. With many new EV
slated to be introduced in the coming years,
the EV segment remains a wide open future
of possibility and opportunity (see Company
and Brand Sales of AEVs).
What it means
Consumer sentiment is very positive for
the AEV market, as most consumers have
grown accustomed to the technology and
would at least consider buying a hybrid or
electric vehicle. When the rubber meets
the road, however, consumers are balking
at the prospect of paying more for a
hybrid or electric car. Brands will need to
compete on pricing and improve consumers’
understanding of overall ownership costs to
win new buyers.
Alternative energy technology is now
widely accepted among the car-buying
population. In fact, thanks to the success
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