CHICAGO -- Sales of alternative fuel vehicles are up 73%, with nearly 440,000 hybrid, plug-in hybrid, and electrics sold thus far this year, according to the latest research from Chicago-based Mintel. The rapid sales growth in hybrid and electric vehicles makes the segment the fastest growing in the United States for 2012, supplanting the still fast-growing compact car vehicle segment.
The number of plug-in and electric models available to the public has nearly quadrupled over the year--from three models in 2011 to 11 available today.
And hybrids and electrics will make even more headwind in the U.S. market over the coming years, Mintel predicts.
Over the past nine years, the share of hybrid and electric cars has grown from virtually zero (0.5%) in 2004 to 3.3% in 2012 of all vehicles sold. Mintel forecasts sales of hybrid and electric cars to exceed 535,000 units by the end of 2013, or a 14% increase in sales over 2012 estimates. Furthermore, Mintel forecasts that by 2017, sales of hybrid and electric vehicles will reach 850,000 units as newer models gain traction with consumers. It expects the market to account for 5% of the total U.S. car market by 2017.
"New midsize hybrid models, such as the Toyota Prius v and Chevrolet Malibu Eco, have proven popular with consumers, in particular families, who want to buy green without sacrificing other features that fit their lifestyles," Colin Bird, automotive analyst at Mintel, said. "The segment will grow even further in 2013, with the launch of several new models, including the complete Ford Fusion Hybrid series, and the Honda Accord Hybrid, which will fulfill a wider variety of needs than conventional compact hybrids. Midsize plug-in hybrids will also enter the mainstream in 2013, with the introduction of the Ford Fusion Energi and the Honda Accord Plug-in, which will further improve mainstream acceptance of this, still, fairly novel powertrain segment."
Consumer concern for the high and rising cost of fuel may drive the development of the market even further, said Mintel. More than one-third (34%) of younger consumers aged 25 to 34 think that "it is easy to make back the extra money spent on a hybrid car in savings at the pump."
There are still some factors preventing consumers from buying a plug-in hybrid or electric car, however. Battery issues are a top concern among consumers, with 87% worrying about the length of time the battery will run for, 86% are concerned about not being able to find somewhere to recharge their vehicle while on a trip and the same number (86%) about availability of places to charge outside the home or their area of living. Another source of apprehension for 85% of U.S. consumers is the recharge time of plug-ins and electric vehicles.
Price remains the biggest hurdle for plug-in hybrids and electric cars as they enter the market. Mintel's consumer survey showed that the average consumer was willing to spend about $2,000 more to upgrade from a conventional car to an electric-only version of the same car; however, today's plug-in hybrids and electric cars cost between $10,000 and $20,000 more than their conventional counterparts.
"The 'live for today' mentality that prompted the rise of SUVs has disappeared. Consumers today demand products that promise protection and durability. There is a new mentality that emphasizes preparing for and protecting against potential future disasters such as another oil shock or even just steadily rising prices at the pump. Hybrid and electric cars might be positioned to help consumers weather the storm of future spikes at the pump and they might be marketed as long-term investments that can help consumers protect against likely increases in gas prices. Messaging might be similar to advertisements for financial products, with the long-term savings on gasoline measured as 'returns'," Colin said.