By on January 5, 2015

BMW i8

With fuel prices continuing their downward spiral, one would think EVs and hybrids would become the new Hummers and Escalades to be left to rust in the backlot of the dealership. Not quite.

Detroit Free Press reports standard hybrids saw the biggest drop in sales through November 2014, from 459,375 in 2013, to 418,850. PHEVs and EVs like the BMW i8 and Nissan Leaf fared better in comparison: PHEVs rose from 43,988 to 51,490 year-over-year, and EVs jumped from 42,924 to 55,906 in the same period.

Meanwhile, SUV and trucks dominated the scene, whose rise was fueled by the improving economy and new housing starts, with lower fuel prices certainly helping matters. Sales of the former parties took 52 percent of the overall United States domestic market through November, compared 48 percent for passenger cars.

Finally, fuel economy numbers fell from a high of 25.8 mpg in August, to 25.3 mpg months later. As long as fuel prices remain on their downward trajectory, automakers may find it hard to meet the federal government’s tightening fuel standards, which are set for a fleet average of 34.1 mpg by 2016, and 54.5 mpg by 2025. The law mandating the standard is set to undergo a mid-term review in 2017.

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29 Comments on “Hybrids Down, PHEVs, EVs Up In US Sales Amid Falling Fuel Prices...”


  • avatar
    psarhjinian

    Unsurprising.

    Hybrids are mainstream cars at mainstream prices; as fuel gets more costly, sales go up; as fuel gets cheap, people opt for something more traditional. We’ll probably see the take rate on small turbos tank for the same reason.

    EVs are more discretionary. Tesla’s an example, but this applies to EVs from the Leaf to the i8: you aren’t buying a mid-size luxury sedan to save pennies on fuel, you’re buying brand and image. Otherwise, you’d buy a Prius.

    • 0 avatar
      Lorenzo

      I don’t think we’ve seen the last of small turbos. As the article points out, automakers aren’t free to give the market what it wants, the crazy people in Washington D. C. must be satisfied.

      The automakers have also spent $ billions developing small efficient engines to meet federal fuel economy standards, and they’re not going to throw that investment away, even if they were freed from those standards. Platforms have been designed for turbo fours, and that’s what will be available until the automakers get their money back.

      Lower gas prices could last for a couple years, but that’s still shorter than industry lead times for new models. Automakers will have to respond to the market with what they have, and the B&B will have to guess who the winners and losers will be. My best guess is that the shrinkage of the mid-sized and full-sized car market will be reversed in the short term. Who will benefit the most from that?

      • 0 avatar
        FormerFF

        You do realize that a significant part of why gas prices are so low is that the US is using less gasoline than it used to?

        • 0 avatar
          Lorenzo

          Actually, gasoline consumption hasn’t gone down, it’s been flat, despite more cars on the road. The drop in crude oil prices is global, and has global causes.

          American gasoline usage has virtually no impact on the world price of oil, and very little on the WTI price in the US, where crude oil exports are banned, and most US crude is high quality, producing more motor fuel per barrel than imported oil.

          Domestically, the 20-plus year hiatus in refinery construction has combined with an increase in domestic crude production to create a buyer’s market, with refiners choosing the cheapest crude available. That drives down the price of crude and the price of the fuels refineries produce.

          • 0 avatar
            hybridkiller

            Sorry Lorenzo, FFF is right, and it’s a fairly dramatic drop:

            http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

          • 0 avatar
            redav

            The drop in US consumption is not the cause of the drop in oil prices. It is purely because Saudi in particular is dumping more oil on the market than the market needs–supply and demand. Whatever US consumption happened to be (up, down, steady), they would adjust how much they sell to reach the their target price point.

          • 0 avatar
            28-Cars-Later

            I’m paraphrasing but the best theory I came across is futures have been high since the fake recovery began in 2009 which in turn propped up the post 2009 pricing. The futures began to unwind and thus oil crashed something like 50% in six months.

          • 0 avatar
            hybridkiller

            “The drop in US consumption is not the cause of the drop in oil prices.”

            If you had said “not the ONLY cause” I’d agree with you 100%, but it’s more complex than that.

            You’re right, in that US gasoline consumption has been falling since 2005. It’s the relatively recent US shale oil boom (and resulting supply glut) – combined with expectations of a recession in Europe AND falling US demand – that pulled the bottom out of the market.
            The Saudis haven’t actually increased output, they’ve simply maintained it – most likely because they recognize the permanent shifts here, and know that the stranglehold they once had on the global market has largely abated – they simply can’t manipulate global prices as effectively as they once could.
            With prices in free fall, why on earth would the Saudis be “dumping more oil on the market than the market needs” if their goal was “to reach the their target price point”?

          • 0 avatar
            redav

            hybridkiller,

            The problem with the assumption that new sources–such as shale–are the cause for this drop is that it has dropped below what those technologies can sustain much too quickly. Most new projects won’t start for under $80/barrel. Also, the sudden drop doesn’t correspond to any sudden cause (whether production or consumption) within the US.

            Increased US production over the last several years certainly has stabilized the price of oil–no doubt there. But if prices don’t come back up, a lot of that US production is going to taper off. So while it might be as simple as vibration in the system, I tend to not think that to be the primary cause.

            The recent bottom falling out was caused by Saudi announcing their production decision(s), not because of recession, new technology, or any other gradual event. It’s not like we’ve been somehow dealing with an stealthily-increasing glut for several years and then suddenly realized it. No, something big spooked the market and changed a bunch of people’s minds in a (relative) hurry.

            While Saudi’s control isn’t close to what it used to be, they still have enough power to do this–at least in the short term. I don’t think their intent was to push it down to $50/barrel, and I expect it come back up once things settle down, but I do believe they deliberately acted to pressure certain producers. (I have no idea if that’s Russia, Iran, or even the US fracking industry.)

          • 0 avatar
            hybridkiller

            You seem to be stuck on the idea of a single cause for this, but commodities traders – the ones whose decisions are driving all of this – look at a whole range of things that affect supply as well as demand. If you pay attention to this stuff on a daily basis (as I do) you will hear what these guys are thinking right from the source(s) – I’m not just arbitrarily pulling this stuff out of my own head. Current supply/demand conditions have created a “perfect storm” for a bear market in oil.

            From everything that I’ve read, the threshold for profitable shale oil production is somewhere around $60. While it won’t stay on line at $50/bbl, if oil heads back towards the $80-$100 range that additional supply comes back into play. THAT’s the new reality for the Saudis.
            The upshot of all this is that, absent some major geopolitical or weather event, permanent shifts have occurred which point to an equilibrium price of $70-$80 /bbl – at least in the medium term.

            When you’re trying to analyze the Saudis’ motives, it’s important to remember that Saudi Aramco IS the Saudi govt, and provides 90% of their gov’t revenue – which is spent almost entirely on wages/salaries and social programs. They need to maintain that income stream if they are to avoid an Egypt-style Arab Spring.

    • 0 avatar
      energetik9

      I see reverse logic on the EVs and especially small turbos. Efforts to reduce mass, improve efficiency and emissions to comply wife cafe standards are all driving manufacturers to this. I don’t see it changing.

  • avatar
    FormerFF

    It might help if Toyota revised the Prius. How long has this model Prius been in production?

  • avatar
    KixStart

    There’s more and more BEV and PHEV choices as we go along and they get up to $7500 in tax credits from the Feds and additional money and consideration from some states. This props up their sales, where the mainstream hybrids are going to respond to normal market forces.

  • avatar
    hybridkiller

    I don’t believe gas prices are the primary driver of this (or any) recent sales trend. Does anyone seriously think oil and gas prices will stay at these low levels for long?
    I may be an outlyer in my thinking here, but it seems to me that more affordable EVs combined with the ubiquity of more powerful, efficient turbo 4s (some capable of close to hybrid MPG numbers) will gradually drive hybrids toward irrelevance.
    Even PHEVs don’t get great mileage when running on gas, and if your typical commute doesn’t exceed plug-in range then a pure EV makes more sense.

    I will acknowledge that the now-iconic Prius IS exceptionally efficient, but it comes with too many sacrifices in other areas for most people to stomach.

    Hybrids have always struck me as a transitional technology at best, and until battery tech catches up will likely remain a good option for some.
    But they are not, and never were, the ultimate solution in efficient vehicle propulsion.

    Clever/snide comment on my username in 3, 2, 1…

    • 0 avatar
      FormerFF

      I drive a PHEV Fusion. On a recent highway trip, I got 39 mpg, with the cruise set at 75 mph, and average around 45 mpg in town on those fairly rare occasions where I don’t have battery to use. The weight of the battery isn’t that much of a consideration in a hybrid vehicle since most of the energy used to accelerate it is recaptured during braking.

    • 0 avatar
      FormerFF

      I drive a PHEV Fusion, On a recent highway trip, I got 39 mpg with the cruise control set at 75 mph and four people in the car. On the rare occasion where I need gasoline for an entire leg of a local trip, I’m averaging around 45 mpg.

      • 0 avatar
        hybridkiller

        Didn’t mean to totally dis hybrids, but 40-45 mpg hwy is well within Corolla/Civic/TDI territory. It’s very good, but if that’s the best we’re gonna see from most hybrids then I think the technology has about run it’s course.

        That said, it sounds like you are the ideal case for a hybrid – a substantial amount of your driving is within plug-in range, and you can still do long trips without resorting to another car.

        • 0 avatar
          FormerFF

          If you do all highway driving, you don’t need a hybrid. My intown driving averages 19 mph, and that’s where the hybrid does so well. The PHEV is even better, the fuel cost per mile on battery is less than 2 cents using my electric provider’s overnight EV rate. The electric driving experience is also vastly more pleasant at those low speeds.

        • 0 avatar
          niky

          40-45 mpg from a Civrolla? Not at 75 mph. You’re more likely to see the same 39-ish mpg. And you’re not going to be getting 45 mpg in traffic.

          Of course, they’re cheaper than a PHEV Fusion. But they’re also smaller.

          • 0 avatar
            hybridkiller

            niky, you missed my point – that hybrids may get better mpg, but only marginally better than many ICE cars (notable exception Prius).

            A Corolla won’t get 40, but “39-ish”? Ok…

            “And you’re not going to be getting 45 mpg in traffic.”

            And neither will the hybrid IF it needs to run on gas.

            As to size, I believe a Passat TDI is roughly comparable to a Fusion (which loses 4 cubic feet of trunk space to the batteries), easily surpasses it for hwy mpg, and won’t do a whole lot worse in city driving – again comparing it to the Fusion running as a hybrid on gas, not as an EV.
            (I know, cost of diesel, VW reliability, blah blah…)

            I was making a broad comment about hybrid technology – that I think it is merely a stepping stone, and that once PEV range limitations have been mitigated, hybrids will become marginalized niche vehicles. If they were getting something like 50% better mpg then I would feel differently.

            It’s JMO, I don’t expect anyone to agree with it, and I’ve already acknowledged that hybrids are a good choice for some.

          • 0 avatar
            niky

            Hybrids, as long as they’re properly programmed and built, will save gasoline over regular cars in traffic, thanks to battery and fuel management strategies. I recall one trip where we ran a Gen2 Prius in grinding traffic (meaning an average speed of under 5 mph) and still got around 35 mpg. Our control car was a Focus diesel, and that got 20 mpg. Our chase car, a Protege, was doing in the ‘teens.

            Of course, that’s the Prius, and, as you’ve noted, other manufacturer’s hybrids don’t do so well. So, yeah… Hahaha!

            Agree that the Passat is a better match. VW’s TDIs are good motors, and I’ve seen over 60 mpg out of their 2.0.

            Not quite sure hybrids are a dead end. It’s more likely that hybrid tech will simply filter into more mainstream cars. We’re already seeing stop-start, automatic neutral coasting and other techniques filtering into non-hybrids, as well as lower-friction engines and drivetrains…

            In the end, we’ll still be using ICEs for a big portion of our fleets. But we’ll need them to be very efficient to stretch out our fuel resources over the next hundred years or so.

          • 0 avatar
            hybridkiller

            niky, agreed on pretty much everything you said.

            I think hybrids are a “dead end” only in the same sense that I think ICE propulsion is a dead end (I’m talking 25-50 years from now). When compared to electric motors, IC engines just can’t compete in efficiency, performance, reliability, emissions – just about any metric you care to apply. The reason ICE vehicles are still dominant isn’t in the engine/motor itself, it’s in the energy storage medium. Liquid petro-based fuels are energy-dense, make for fast and convenient refueling, and provide the needed range that batteries can not at this point.

            I believe once the current problems of sufficient electricity storage for vehicles have been solved, EVs will rise to dominance rather quickly. (don’t worry, y’all can still keep your HELLCATs)

  • avatar
    JK43123

    A local news outlet was recently at a car dealer talking with people buying big whomping SUVs. “Now that gas has come down we can afford it.” These people never learn.

    John

    • 0 avatar
      niky

      Reminiscent of how Fit and small car sales perked in 08 then started to slide as the economy improved.

      Should be noted that while EVs improved, the *total* number of “green” car sales (Hybrids, PHEV and EV) overall declined.

  • avatar
    carguy

    Sorry, didn’t read the article – too busy staring at that gorgeous i8.

    • 0 avatar
      FormerFF

      It is a sweetie. I was very disappointed to hear that when Road and Track asked for one to include in its Performance Car of the Year testing, BMW declined, saying they didn’t want it on the track.

  • avatar
    hybridkiller

    It might be good to bear in mind that while truck/SUV sales were up in November, so were small cars and CUVs, with CUV sales up 13.6% vs 9.6% for SUV/truck sales (ytd from 2013).
    Much of this is (still) pent up post-recession demand, industry analysts predicting sales won’t sustain these levels in 2015 – irrespective of fuel prices.

  • avatar
    eggsalad

    I’m still waiting for CPO Prius prices to come down. So far they haven’t, at least not here.

  • avatar
    redav

    I do not believe people buy EVs to save money on gas, regardless how much cheaper electricity is compared to gasoline. If that was a primary selling point for EVs, then I think EV sales would be higher. Assuming reasonable gas prices, we’re already past the point where EVs are cheaper over a car’s entire life cycle.

    So, whatever causes people to buy EVs, whether that’s genuine concern for the environment, a dislike of oil companies, fashion/trendsetting, etc., I don’t see any of those things changing much with cheaper gas. Thus, EV sales being maintained is expected.

    On the other hand, it seems to me that hybrids are marketed mostly as a way to save gas (saving money, saving the environment). They’ve become so ubiquitous that they don’t serve as a fashion statement anymore. As regular ICE cars get better, the benefit of hybrids gets smaller regardless of gas prices. So whether hybrid buyers are concerned with either money or the environment, there’s less reason to buy a hybrid. IIRC, hybrid sales were down long before oil tanked.

    Again, IIRC, diesel sales are way up, but so is the diesel fuel premium. While gas around here is near $2, diesel is still around $3.50. If fuel prices are driving recent sales trends, there should be an effect seen with diesels.

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