SOURCE: Freedonia Group, Inc.

December 04, 2006 16:10 ET

World Hybrid-Electric Vehicle Demand to Double by 2020

CLEVELAND, OH -- (MARKET WIRE) -- December 4, 2006 -- Worldwide demand for hybrid-electric vehicles (HEVs) will advance rapidly to 3.9 million units in 2015 and then to nearly double that number by 2020. HEVs are expected to quickly penetrate the world light vehicle market in response to rising energy demand, which in turn has led to erratic fuel prices and increased emissions regulations worldwide. Cost disparities between HEVs and conventional light vehicles -- currently estimated at between $1,000 and $3,000 -- are expected to decline as production volumes increase. The primary markets for HEVs will remain the Triad countries (i.e., the U.S., Western Europe and Japan), although the rapidly growing Chinese market is also expected to experience relatively strong demand for these fuel efficient and environmentally friendly vehicles. These and other trends are presented in "World Hybrid-Electric Vehicles," a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.

Within the Triad, the U.S. market is expected to experience the highest levels of demand for HEVs, due to erratic fuel costs, the market's unique Corporate Average Fuel Economy requirements, and the lack of significant demand for light vehicle diesels beyond the full-size truck and sport utility vehicle categories. Despite being less cost-effective than internal combustion engine (ICE) vehicles, HEVs have carved out a niche in the U.S. as a "carbon neutral" enabling technology. This niche in part appears to be animated by the extra cost associated with the vehicles, especially regarding HEVs that are both uniquely styled and focused on delivering superior fuel economy. On the other hand, recent attempts by some OEMs to position HEVs as high performance alternatives to pure ICEs stalled, due to unfavorable price/benefits levels.

Demand for HEVs in Europe, where overall light vehicle diesel demand has already reached 50 percent of the total market, is expected to be significantly lower than in the U.S. Japan will see increased demand for HEVs going forward, as government agencies and allied associations continue to put tax and other incentives in place to stimulate demand. Elsewhere in the Asia/Pacific region, both China and South Korea are expected to be strong HEV markets, due to government interest in dealing with mobile emissions (China), and because local production is planned (both China and South Korea). Other regions of the world will experience lower HEV demand.

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