For years, alternative fuel vehicles appeared to be a somewhat futuristic dream for environmentally concerned individuals but today they are a reality for an increasing number of US consumers.
The latest research from Mintel shows that sales are up an astounding 73%, with nearly 440,000 hybrid, plug-in hybrid, and electrics sold thus far this year. The rapid sales growth in hybrid and electric vehicles makes the segment the fastest growing in the US 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 too (from 3 models in 2011, to the 11 available today). And, despite the dramatic growth in 2012, hybrids and electrics will make even more headwind in the US market over the coming years.
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. Looking forward, Mintel has forecast 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, by 2017 Mintel forecasts that sales of hybrid and electric vehicles will reach 850,000 units as newer models gain traction with consumers. The market is expected to account for 5% of the total US car market by that date (2017).
And it appears that consumer concern for the high and rising cost of fuel may drive the development of the market even further. More than one third (34%) of younger consumers aged 25-34, think that "it is easy to make back the extra money spent on a hybrid car in savings at the pump".
However, there are still some factors preventing consumers from buying a plug-in hybrid or electric car. 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 US consumers is the recharge time of plug-ins and EVs.
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 anywhere between $10,000-$20,000 more than their conventional counterparts.