Plug-In Hybrid Vehicles See Sudden Increase in Popularity

November 21, 2019 by Nicole Wakelin, @nicolewakelin

California has long been ground zero for hybrid vehicles. Thanks to this year’s Los Angeles Auto Show, it looks to become the same for plug-in hybrid crossovers.

Automakers at the show debuted a host of electric vehicles and plug-ins. There’s the new Toyota RAV4, a BMW X3, a Lincoln Corsair and a Hyundai that points to a plug-in version of the Tucson compact crossover.

WHAT’S A PLUG-IN?

Such vehicles are a true hybrid between a fully-electric car and a gasoline auto. They have batteries that can hold enough electricity to run the vehicle on electrons alone for anywhere between 20 and 40 miles. When that runs out, a gas engine kicks on and extends the range for hundreds of miles. These crossovers can run on gas or electricity.

They are different than conventional hybrids like the Prius. The conventional hybrids get a boost from an electric motor and recharge through braking. They can’t run more than a few feet on just electricity and should be considered gasoline vehicles.

Plug-in hybrids, however, don’t have the same widespread acceptance. The idea of plugging in a car, whether it’s a hybrid or a pure electric, is still something that makes people uncomfortable.

Part of the challenge is the lack of charging stations. Depending on where you live, it can be tough to find them along your daily route. While a plug-in hybrid still has a gas engine, not being able to plug-in at the grocery store or local mall reduces the benefits by forcing the driver to operate mostly in the gasoline mode.

That’s left plug-ins playing catch up. Automakers seem ready, making them the stars of this year’s L.A. Auto Show rather than afterthoughts. What changed?

LOOK TO CALIFORNIA

It helps to understand the growing popularity of plug-in hybrids by looking to California, which is the biggest market for plug-in electric vehicles in the country. The state’s Zero-Emission Vehicle Program run by the California Air Resources Board strictly monitors how many plug-in electric vehicles an automaker sells each year.

“The ZEV mandate has annual increases in the percentage of PEVs that need to be sold and manufacturers that don’t hit those thresholds have to either buy credits from other companies that have exceeded their targets or pay fines,” said Sam Abuelsamid, Navigant Research principal analyst.

At the same time, California requires a certain number of plug-in electric vehicles to be sold. It’s reducing the number of cars that qualify for incentives through the Clean Vehicle Rebate Project. Luxury options are now off the approved list thanks to a pricing cap of $60,000.

Even some vehicles that fall under that cap don’t qualify under the recently revised program. A new rule requires plug-in hybrids to have a CARB-approved all-electric range of at least 35 miles instead of the existing 20 miles to be eligible for a $1,000 rebate. That eliminates the Subaru Crosstrek and Mitsubishi Outlander, which are the only two plug-in hybrid crossovers priced under the threshold. The mileage requirement puts the new Lincoln Corsair out of the money, but Toyota’s RAV4 qualifies.

OPPORTUNITY FOR NEW MODELS

That creates an opportunity for new models that meet the required electric range and have pricing below the threshold. But Abuelsamid said he isn’t convinced that tightening the rules for rebates will have much effect on what consumers purchase.

“As to whether the rebate changes will have any impact, I doubt it. I think it’s good to reduce the rebates for high-income buyers because frankly, if they want an E.V., they can probably afford it anyway,” he said.

As for those on a tighter budget, “The reality is that most drivers never buy a new car anyway. Used cars outsell new by about 3-to-1,” he said.

That isn’t slowing down the introduction of new plug-in hybrid and fully electric options.

Automakers are rolling out more than 100 new electric nameplates over the next several years as they try to create plug-ins “that consumers actually want to buy, hopefully without discounting the price too much,” Abuelsamid said.

John O'Dell November 19, 2019
It will be close to a year before the first customer takes delivery of one of Ford’s new Mustang Mach-E electric crossovers, but the on-line order banks are open.

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