Sales of plug-in hybrid vehicles are faltering in Europe, which has been their most important market to date, while demand is rising for for full-electric vehicles.
As consumers turned away from diesel cars after Volkswagen’s diesel scandal and Europe’s lawmakers toughened emissions regulations, some automakers bet heavily on plug-in vehicles, which are powered by an internal combustion engine and an electric motor that can propel the vehicle without emissions for short distances.
Plugs-in models offer consumers a way to get a sampling of the EV experience without jumping fully in and are often described as a transition technology — a bridge to a full-electric future.
The latest data shows two very different sales trajectories between plug-in hybrids and full-electric vehicles.
Sales of plug-in hybrids in France fell 28 percent in June. In Germany — another former stronghold for the technology — registrations dropped 16 percent.
In the UK, plug-in hybrids were neck-and-neck with full-electric cars as recently as 2019. Now, two battery-electric cars sell for every one plug-in model.
Some of this is to be expected. In 2020 and 2021, automakers had to meet Europe’s stricter CO2 targets for new vehicles, and plug-in hybrids were treated favorably under the regulations.
Many automakers did not have their new full-electric architectures fully ready. When faced with two options — to market full-electric vehicles underpinned by modified internal combustion platforms, or plug-in hybrids — many opted for the latter.
Europe’s vehicle CO2 regulations do not tighten again until 2025. As more automakers get their full-electric platforms ready for model launches, full-electric models look poised to continue their ascendency of the sales charts.
Consumers are clearly ready, with wait times already stretching well into next year for most of the popular full-electric models in Europe.
Many plug-in hybrid owners are happy with their cars.
But from a policy perspective, there is an elephant in the room: drivers often do not end up charging these vehicles all that frequently.
A recent study of 9,000 vehicles from the International Council on Clean Transportation found that real-world fuel consumption from plug-in hybrids was 2.5 to 5 times higher than what is approximated under official laboratory testing procedures.
That gap between theory and practice is part of the reason national governments are cutting purchase subsidies for plug-in hybrids faster than for full-electric models.
The UK, for example, eliminated purchase subsidies for plug-in hybrids in 2018, while Germany announced just this week that subsidies will end this year.
One critical distinction here is that the share of electric kilometers driven on a plug-in hybrid depends heavily on who owns it.
Among privately owned vehicles, the ICCT study found real-world electric-driving share was 45 percent to 49 percent. Not bad, though still short of what the official test cycles assume.
For company cars, that dropped to a dismal 11 percent to 15 percent. Company vehicles are a huge part of the market in Europe, accounting for more than half of new-car sales in many countries.
Upcoming policy changes could further erode the case for plug-in hybrids. The European Commission is expected to introduce new “utility factors” for these models from 2027. These are the values intended to reflect how often the vehicles are driven in electric mode, and critically, what CO2 emissions value they are assigned.
The goal for the regulation is to use real-world driving behavior from both private and company-owned vehicles to set the values, using on-board monitors.
Unless something dramatic changes in the next few years, this will make plug-in hybrids a less attractive way for automakers to meet emissions regulations.
Manufacturers will see this change coming down the road and start to allocate investments accordingly.
Relatively strong sales of plug-in hybrids in China are keeping the global numbers afloat for now.
Plug-in sales there more than doubled last year, led by offerings from BYD and Li Auto, though even that was not enough to keep pace with growth in full-electric demand.
China has more high-rise apartment dwellers with limited home-charging options, but the government is making a huge push to build out public-charging options and help keep the full-electric car market expanding quickly.
The municipal government in Shanghai is also set to remove favorable treatment for plug-in hybrids beginning in 2023, and others could follow.
If plug-in hybrids are a bridge, it’s starting to look like a short one.