Market Analysis: Chances are good that you too will soon be driving an electric or hybrid car


Over the last five years, the U.S. auto industry has faced some of the biggest challenges in its history. As a result, there’s been a huge shift in what auto makers are producing and in what consumers are willing to purchase. Now that the public is being more intellectual with their buying habits and demanding more of their vehicles, America is without a doubt, on the verge of an automotive renaissance.

With the number of hybrid, plug-in, and electric vehicles at an all-time high, it’s clear that car makers are becoming aware of the fact that the market for these vehicles is getting exponentially larger. The first quarter of 2012 has seen hybrid sales up 37.2% from last year and electric vehicle sales up 32.3%. These numbers indicate that, what once was a niche market for the green-minded and smart shopper is now becoming the market for the everyman.


It is on this this platform that industry leader Toyota, with its revamped and expanded Prius line, Chevrolet, maker of the Volt, and Nissan, the brain behind the Leaf, hope to strike while the iron is hot. April proved to be a key month for these brands with the Prius line selling a total of 25,168 units, and the Volt and Leaf selling 1,462 and 370 units respectively. Among these, Toyota is the only one to offer a full-fledged nontraditional line which includes the Prius, the Prius C (sub-compact), the Prius V (wagon), and the all-new Prius plug-in. The Prius c sold 1, 654 units during April alone which was an impressive feat considering the Volt’s and the Leaf’s earlier debut.   

What allows Toyota to stand out in this race is that it offers an alternative for everyone. The Prius C is a viable option for anyone looking to have a hybrid for under $20,000 with best city mileage among non-plug in hybrids (53mpg which is 2mpg more than the regular Prius) and this is definitely a segment in which Toyota hopes to dominate. The 3rd generation Prius is still as popular as its predecessors (although styling upgrades are long overdue). The Prius V affords the cargo space that haulers have been vying for (34.3 cubic feet versus 21.6 in the Prius), while the Prius plug-in represents Toyota’s entrance into plug-in hybrid electric vehicles (PHEVs).   


So far, the Chevy Volt is exceeding Nissan Leaf in sales for 2012. There has been a 197% increase in Volt sales over the last year, with over 5,000 Volts being sold in the first quarter of 2012. After working on its battery issues from last year, it appears that the Volt is gaining a steady following but only time will tell how it will match up to the time tested reputation of the Prius.   

The Leaf’s dwindling sales primarily seem to be stemming from range issues. EPA testing reveals variations of up to 40% depending on real-world driving conditions with an average of 73mi on a full charge (based on five-cycle tests which included cruising, city traffic, highway, stop and go traffic, and heavy stop and go traffic). The Leaf is more practical as an errand car for those who live in areas with multiple charging stations available and even offers the benefit of a complimentary charging station for lessees.    


In the past people were hesitant to purchase hybrids because of higher upfront costs and the fact that these cars did not afford many utilitarian needs. Today however, hybrids are available across all segments from small entry level sedans to large luxury SUVs. Now that most households have 2-3 three cars or more, over the next 5 years we will probably be seeing more and more people having at least one hybrid. Widespread adoption of electric vehicles will take longer simply because in most states, charging stations are few and far between, with the highest numbers being in California, Florida, Texas, and Washington. So far Midwestern states have been the most reluctant to adopt electric charging stations with virtually zero in Montana, North Dakota, and Wyoming.

As more government incentives and subsidies become available to states, there will hopefully be higher adoption rates which will heighten EV interest and purchases. With personal charging stations running anywhere form $800-$2000, public availability will ultimately be a game changer for EVs. Lack of range continues to be an overall concern for EVs, which have, for the most part, been limited to use for weekday commutes rather than long distance travel. With new technology constantly being invented, that hurdle may eventually be overcome too.    


With the future of gas prices still uncertain, it’s apparent that the dynamics of what we drive and how we drive will continue to change. The higher the price of gas, the more inclined Americans will be to put the extra effort into learning about and ultimately investing in, hybrid and electric vehicles. The market for cars, like the market for any other commodity, is almost entirely influenced by the users. If the public wants a diversified car market, then that’s what they must demand of manufacturers.

The more educated society becomes on the sustainability and preservation of natural resources, the more open it will become to driving not only what’s best for their wallet but driving what’s best for the future. Today, America is closer to that vision than ever before and from the looks of it the road ahead is going to be a smoother ride than we ever thought was possible.

JibbinJibbin Abraham is an undergraduate student pursuing a degree in Business and Marketing at Binghamton University.  He enjoys following the latest automotive trends and developments in the U.S. as well as abroad and spends his free time reading various auto websites and blogs. His ultimate goal is to pursue a career where he can mesh his passion for business and for cars.

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