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Sales of plug-in hybrid cars fall, is the end of this technology coming?

Electric cars are gaining ground over plug-in hybrids. The gradual withdrawal of subsidies for this technology makes manufacturers opt for focus on its purely electric offer and also that buyers no longer find economic advantages in them. The figures already show that sales of plug-in hybrid cars are falling in Europe which has always been its most important market. In parallel, the demand for fully electric cars increases every month.

With the gradual elimination of the supply of diesel cars in Europe, as a result of different circumstances, and European legislators tightening emissions regulations, car manufacturers they saw a lifeline with the addition of plug-in hybrid technology to their offering. Its dual combustion engine and electric motor allowed many short trips to be made without any type of pollutant emission, while there were no autonomy impediments for long trips.

Plug-in hybrids have been conceived as a step prior to total electrification. A way to educate drivers to a new way of using the car. A transition technology for the transition to a 100% electric car. However, not all owners have a linked charging point to do this every day, so many of these vehicles always work as combustion vehiclesheavier and therefore even more polluting than traditional ones.

The latest data shows two very different paths in the evolution of sales of plug-in hybrids and pure electric vehicles. In Francethe first fell a 28% in the month of June, while in Germanyone of the cradles of this technology, the fall was of a 16%. In United Kingdomplug-in hybrids were locked in a neck-and-neck fight with all-electric cars back in 2019. Now, for every plug-in hybrid, two pure electrics are sold.

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Sales history of plug-in hybrid (left) and 100% electric (right) vehicles in Europe. The trend of recent months is clearly different in both graphs. Source BloombergNEF.

What is happening? This is an expected effect caused by legislation and by advances in battery technology. In 2020 and 2021, car manufacturers had to comply with strict CO emissionstwo of the new European regulations for new vehicles. Nevertheless, plug-in hybrids received favorable treatment in these regulations.

Many automakers weren’t quite ready with their new electric architectures when they were faced with two options: market all-electric vehicles backed by modified internal combustion platforms or invest in the development of plug-in hybrids. Many opted for this second option, since large amounts of money were not necessary.

CO emission regulationstwo in Europe they will harden again in 2025. In this time, manufacturers have been able to develop a good part of their fully electric platforms and now they are willing to launch fully electric models from them.

Although most plug-in hybrid owners are happy with their purchase and the technology has caught on with buyers, from a political perspective there is an elephant in the room: the figures show that plug-in hybrids in the real world pollute much more than they do in the homologation world.

A recent International Council on Clean Transportation study of 9,000 vehicles found that the actual fuel consumption of plug-in hybrids is of 2.5 to 5 times higher than what is estimated in the official homologation cycle. This gap between theory and practice is part of the reason some national governments are cutting purchase subsidies for plug-in hybrids before cutting those for all-electric models. The United Kingdom, for example, eliminated subsidies for the purchase of plug-in hybrids in 2018, while Germany announced this week that it will end them from next year.

The proportion of kilometers driven in electric mode in a plug-in hybrid largely depends on who owns it. Among private vehicles, the ICCT study found that real-world electric driving fell between 45 and 49 percent of the total. Although it is a figure that can be considered acceptable, it is below what the official test cycles assume.

However, in the case of plug-in hybrid cars that belong to the companies’ fleet, the percentage is scandalously reduced to a range comprised between 11 and 15 percent. Company cars are a large part of the European market, accounting for more than half of new car sales in many countries.

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Market share of plug-in hybrid and electric vehicles in Europe in recent years. Source BloombergNEF.

The next changes in the legislation are aimed at penalizing plug-in hybrid vehicles. The European Commission is expected to introduce new “utility factors” for these models from 2027. This value reflects how often the vehicles are driven in electric mode and, more importantly, what value of CO emissionstwo they are assigned. The objective of the regulation is to use the real behavior of private vehicles and those belonging to company fleets to establish these values, using monitors located on board.

Unless there are major changes in the next few years, this situation will make plug-in hybrids are a less attractive path for automakers to comply with emissions regulations so that they will shift their investments to dedicate them to fully electric vehicles.

For now, the relatively high sales of plug-in hybrids in China maintains the global figures. These more than doubled last year, led by offerings from BYD and Li Auto, though it has not been enough to keep pace with growth in all-electric demand.

In China, the proportion of people living in high-rise apartments with limited home charging options is higher. The government is making a big effort to develop public charging options and help the fully electric car market expand rapidly. Thus, the Shanghai municipal government is also preparing to eliminate the favorable treatment of plug-in hybrids from 2023.

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