Electric Vehicles drag, while Hybrids charge ahead.

Despite impressive technology, consumers and automakers proceed with caution for Electric Vehicles. Expect hybrids to expand their market reach, as plug-ins, performance and diesel versions add to the Prius/Insight beachhead.

At least nine electric vehicles will be pushed into the auto market in 2013, despite distrust of the technology. Only two per cent of the public is considering purchase of an EV, according to one survey. Very high prices, fears about fires during an accident, and limited range, and long charging times will continue to hold back EVs for several years.

Next generation hybrids will outsell all-electrics

In contrast, hybrids have large momentum and are going to get even more, as climate change and rising gasoline prices motivate consumers for more fuel efficiency. Today’s generation of hybrids, like the Prius, offer 60 to 80% better fuel mileage than an equivalent size vehicle, at a 10 to 20% price premium. Local and national tax credits and incentives often close most of that price gap. And a six to eight year old Prius, in reasonable condition, may still command high trade-in value. The economics for hybrids is already favorable. In the next three to five years, a new generation of hybrids will shift public perception even further. More efficient plug-in hybrids by Toyota, GM, and others will increase the fuel mileage advantage to over 100%. Diesel-hybrids from Volvo and Peugeot will extend that fuel mileage to the 150 mpg range.

Hybrids optimized for acceleration and performance will remake the mindset of auto enthusiasts. Companies like Audi and Porsche, already leaders in the sports car and premium segments of the auto market, are racing performance hybrids at famous tracks and events like the Nurburgring and Le Mans. New technology, such as regenerative braking, flywheel energy storage, and high torque electric motors are creating an advantage on the race track, through better acceleration and fewer pit stops. The adage, ‘race on Sunday, sell on Monday’ will change the perception of hybrids from weak performing gas sippers to the experienced driver’s best choice. Expect hybrids to continue to steadily gain market share over this decade. Expect the hype for electric vehicles to be replaced by more sober market forecasts and by tough going for startups that focus exclusively on electric vehicles. For a detailed report, look for the July issue of MegaTrends.