Demand For Hybrid Electric Vehicles Will Double By 2020

Oct. 20, 2006
Western Europe, Japan and the U.S. are the big markets for HEVs.

By 2015 worldwide demand for hybrid-electric vehicles (HEVs) will hit 4.3 million units and double by 2020, according to The Freedonia, Group, a Cleveland-based research firm. With the increase in demand, cost disparities between HEVs and conventional light vehicles are expected to decline. Currently there is a $1,000-$3,000 cost variable.

The markets for the HEV will continue to be the U.S., Western Europe and Japan, with the Chinese market picking up. Demand for HEVs in Western Europe, where overall light vehicle diesel demand has already reached 50% of the total market, is expected to be significantly lower than in the U.S., says Freedonia.

The U.S. will be the smaller market of the three as fuel costs are erratic. Also there is less demand for light diesel vehicles beyond the full-size truck and sport utility vehicle categories. Despite being less cost effective than internal combustion engine (ICE) vehicles, HEVs have carved out a niche in the U.S. as a "carbon neutral" enabling technology. But recent attempts by some OEMs to position HEVs as high performance alternatives to pure ICEs stalled due to unfavorable price/benefits levels, according to Freedonia.

Japan will see increased demand for HEVs going forward, as government agencies and allied associations continue to put tax and other incentives in place to stimulate demand. Elsewhere in the Asia/Pacific region, both China and South Korea are expected to be strong HEV markets, due to government interest in dealing with mobile emissions (China), and because local production is planned (both China and South Korea).

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