The trade writers and auto guys have changed their tune. Before, hybrid vehicles supposedly were a technological dead end with nowhere to go. Electric vehicles (EVs) representing the future would soon put even these “gas-sippers” out of business. But now, the EV business’ expansion of market share has begun to stutter, possibly because the potential buyers worried about a lack of charging stations (a topic we covered last week). Recent figures show that hybrid and plug in hybrid vehicle sales now exceed those of EVs in the US. Consumers who want to make a social statement with their vehicles don’t want to worry about getting stuck on the way to their buffalo ranch or ski lodge. They can buy a hybrid instead. Admittedly, from a carbon reduction standpoint, it might only be half a statement but it’s better than nothing. And we should add that the newest hybrids with larger batteries from Toyota for example can function in all electric mode for trips of up to 90 miles.
Gasoline producers might feel better because hybrids do consume gasoline, but maybe they shouldn’t if people buy hybrids more readily than EVs. Do the arithmetic. Hybrids have double the mpg of internal combustion engines, more or less. Raising the EV share of cars on the road by 10 percentage points will cut gasoline demand by 10%. Raising the hybrid’s share of cars on the road by 20 percentage points will also cut gasoline demand by 10%. If too many potential EV buyers settle for being only half carbon-free rather than get stuck on the road, hybrids could continue to outsell EVs. Stated differently, it takes less than three minutes to fill up a vehicle's gas tank and get over 300 miles of range—a huge convenience advantage over EVs.
Now, here is the problem. The EV charging stations need more traffic in order to break even. If potential EV buyers choose hybrids instead, then not enough traffic will develop and the charger companies will pull back from new installations, which will cause more EV potential purchasers to think twice. That hybrid is not a bad choice and maybe they can buy some carbon offsets as expiation for their half hearted environmentalism. No fooling. Hybrids and EVs sell to the same market, we suspect. Every hybrid sold, then, represents a potential customer lost to the charging network for at least 3-5 years. Without a viable, convenient charging network, EV’s could end up mainly as an urban fleet vehicle, i.e taxis, and not much more, at least not until battery technology improves. Robust hybrid sales could deflate the prospects for charger businesses.
Thomas Edison and Joseph Swan both claim to have invented the incandescent light bulb at roughly the same time. Swan invented a light bulb. Edison invented a lighting and power system. Everyone knows Edison’s name. Hardly anyone remembers Swan. If the car manufacturers, or the government, or the utilities do not support the infrastructure needed to service an EV market—and customers can choose freely between EVs and hybrids—the EV market could fizzle out. The gasoline sellers might figure that half a filled gas tank is better than none as they worry about their future sales prospects. But it’s the electric companies that could lose a 30% potential increase in sales with these types of technological compromises on the long road to electrification.
By Leonard Hyman and William Tilles for Oilprice.com