Hybrid or EV?: The big dilemma among global auto players

Despite these efforts, the pace of EV sales is expected to slow in 2024. The Canalys report predicts that the global electric vehicle market growth rate will decline to 27.1% this year. One of the main reasons for this slowdown is the reduction in state subsidies, which makes EVs less economically attractive to potential buyers. In contrast, government incentives played a key role in driving EV adoption in 2023, resulting in an estimated growth rate of 29% and 13.7 million units sold.

As growth in all-electric vehicles falls short of expectations, major automakers are adjusting their strategies to serve customers in the middle. There is a growing trend to rethink the feasibility of hybrid vehicles to meet consumer demand and avoid costly fines associated with federal fuel economy and emissions standards.

Also read: Ferrari plans to launch three cars in 2024, new hypercar could feature plug-in hybrid technology

This shift in strategy is somewhat counterintuitive for an industry that has recently focused on promoting fully electric vehicles. Despite investing billions of dollars in EV technology, many automakers believe that hybrid vehicles will reduce fuel consumption and emissions in the short term, while also providing a stepping stone toward fully electric vehicle electrification. Recognizes the potential to work.

Hybrid vehicles, which combine traditional internal combustion engines and EV battery technology, provide a middle ground for both consumers and automakers. It maintains the convenience and friendliness of a traditional gasoline car, while also offering the environmental benefits of an electric vehicle.

Automakers choosing the hybrid route

Recently, Jaguar Land Rover (JLR) announced a shift in strategic focus from solely battery electric vehicles (BEVs) to plug-in hybrids (PHEVs). The company originally planned to introduce six BEVs by 2026, but due to unexpected demand for plug-in hybrid vehicles, it has now revised its strategy to only four. Sales of JLR's PHEV models increased significantly in Europe in 2023, increasing by 68% to 45,224 units, but slowing growth in EVs prompted a change in strategy.

Also read: Hybrid vs EV: Where should governments put their money?

On the coast of India, Toyota Kirloskar Motors of India has appealed to the government for a significant tax cut on hybrid cars. Automakers are demanding a 21% tax cut, arguing that hybrid cars should receive preferential legal treatment because they emit significantly less pollutants than gasoline-powered cars.

Also read: JLR commits to reduce vehicle emissions by 54% across value chain by 2030

Maruti Suzuki, India's leading automaker, shares a similar opinion, advocating incentives for hybrid vehicles over BEVs. Maruti Suzuki officials said that although BEVs have zero tailpipe emissions, they are highly carbon-intensive as they rely on electricity from coal-fired power plants. In fact, Shashank Srivastava, senior executive officer, marketing and sales, MSIL, had earlier said that hybrid cars will account for around 25 per cent of total Maruti car sales in the Indian domestic market by FY2031. .

This shift in focus towards hybrids is further supported by a recent study conducted by experts at Kanpur Institute of Technology. The study compared the life cycle emissions (LCA) of hybrid electric vehicles (HEVs) and BEVs and concluded that HEVs with electronic fuel are more environmentally beneficial. This discovery positions HEVs as a viable option for sustainable transportation in India.

The rise of hybrid cars signals a potential tipping point. The future of mobility is shaping up to be a mixed bag, with major car manufacturers such as JLR and Toyota adjusting their strategies to evolving market trends, with hybrid vehicles playing a key role in driving sustainability and innovation. I am fulfilling my role.

Why this shift?

As the automotive industry moves towards electric vehicles (EVs), there is a surprising resurgence in interest in hybrid vehicles, challenging conventional wisdom. Automakers have invested heavily in EV technology, but recent developments signal an ideological shift toward hybrids.

One of the main reasons for this change is the potential cost savings and the ability of hybrids to address common concerns associated with EVs, such as range anxiety and lack of charging infrastructure. According to Edmunds, the average cost of a hybrid vehicle is $42,381, compared to the average cost of an EV ($59,400), plug-in hybrid (PHEV) ($60,700), or even a traditional ICE (internal combustion engine) vehicle. It is said to be significantly lower than the cost ($44,800). ). This cost difference can translate into significant savings for automakers, making hybrids an attractive option.

Toyota, the world's largest automaker and a pioneer of traditional hybrids with models like the Prius, has been particularly affected by this change. The company has faced criticism from environmental groups for its strategy of focusing on a mix of hybrids, PHEVs and electric vehicles, which some see as a lack of commitment to an all-electric future. However, Toyota insists that it plans to introduce EVs globally in stages, responding to consumer needs and taking into account the different pace of adoption in each market.

Furthermore, Toyota argues that it is necessary to consider the environmental impact of EV manufacturing compared to hybrid electric vehicles. The company claims that for every battery electric vehicle with a range of 320 miles, it can produce eight plug-in hybrids with a range of 40 miles, thus emitting up to eight times less carbon dioxide into the atmosphere. .

Toyota Chairman and former CEO Akio Toyoda said people are finally starting to see reality, citing criticism that the company's EV efforts have been slow. This transition to hybrid represents a pragmatic approach by automakers to balance sustainability goals with market realities, and highlights the complexity of the auto industry's transition towards electrification. Masu.

The automotive industry is at a critical juncture, having to balance the drive towards full electrification with the practical realities of consumer demand and regulatory requirements. As the industry continues to evolve, the role of hybrid vehicles is likely to become increasingly important in shaping the future of mobility.

First edition publication date: February 14, 2024, 11:34 AM IST