Hybrid cars still have a future, despite falling sales

Canadian sales of hybrid gas-electric vehicles have slowed as gas prices have remained relatively low, but industry experts say hybrid cars are far from doomed.

Hybrid sales peaked in 2012 at just under25,000, according to data fromDesRosiersAutomotive Consultants, or about 1.6 per cent of all new vehicles sold that year.This year, though, only 15,000 to 20,000 hybrid sales are expected, according to DesRosiers presidentDennisDesRosiers. The approximately$3,000 to $5,000 pricepremium for a hybrid vehicle, he says, may no longer be worth ittoconsumers,especially when the fuel efficiency of conventional cars has improved significantly.

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For example, a 2015 Toyota Prius hybrid can travel 100kilometres on just 4.6L of gasoline in the city, and 4.9L on the highwayfora starting price of $26,305, as listed on Toyota Canada's website. Hybrid cars are generallymore fuel efficient during city driving. In comparison, the non-hybrid 2015 Toyota Corolla LE ECO can be driven100kilometreson 7.7L of gas in the city or5.6L on the highway, for a lower starting price of $20,710.

"For hybrids, sometimes the trunk space is not as good, sometime the performance is not as good," saysJessica Caldwell,senior analyst with Edmunds.com."Why do you want to have those negative attributes for a very marginal savings of fuel economy?"

For consumers buying hybrids at current gas prices,"the math just doesn't add up at the end of the day," says Michael Hatch, chief economist with the Canadian Automobile Dealers Association. "Over the life of the vehicle, you're not likely to recoup the extra cost."

Hybrids to stay on the roads

Analysts sayhybrid sales will rebound in the futureif the price of oil rises again. But thereare other reasons hybrids are likely to stick around.Canada and the U.S. have both imposed strictregulations on car manufacturers, which requirethem to continuously improve fuel efficiency in future models. Hybrid technology is one way to achieve that goal.

"Hybridizationis an integral part of the electric drive mix, and of theautomakers' plans toachieveefficiencystandards," saysGenevieveCullen, president of theElectric Drive Transportation Association, a U.S. trade groupthat promotes electric vehicles.

"Since hybrids came in the market, people have been predicting their demise," adds Cullen. "The one thing that is truly certain in this life is that gas prices are volatile, and it's one of the reasons why finding alternatives and building them into our fleets is so important."

Car manufacturers have simply invested too much in hybrid technology to let it fail, believes analyst Dennis DesRosiers. He thinks hybrid cars will continue to be one of many options available to consumers.

"It's a viable technology, and there's a role for it," says DesRosiers. "Where we're heading is a multi-powertrain, multi-fuel approach to energy in our vehicles."

Although all-electric vehicles or alternative powertrainslike hydrogen fuel cellsmay eventually make hybrids obsolete, those powertrain options currentlylack fuelling infrastructure in many areas. That may help hybrid carsremain a viable choice for commuters looking to save money on gas or reduce emissions.

Even if if the hybrid car does eventually die out in the face of zero-emissions vehicles, the automakers' investments in hybrid cars won't be wasted. Technologieslike advanced batteries and regenerative braking will live on in the next generation of advanced vehicles, say analysts.

Provincial subsidies for hybrid vehicles

Canadians have only bought about 150,000 hybrid vehicles since they became available in the year 2000. That's just 0.6per cent of the 24.4 million light vehicles sold over that 15-year period, according to data fromDesRosiers Automotive Consultants.

Major Canadian provinces have tried to defray the higher cost of hybrids by offering incentives and rebates, although those tend to focus on plug-in hybrid vehicles with batteries that can be charged from an external power source, rather than standard hybrid vehicles whose batteries are recharged by brake energy.

In British Columbia, certain plug-in hybrid vehicles are eligible for rebates up to $5,000. Quebec and Ontario both offera variety of lease and purchase rebates for somehybrids, which vary based on vehicle prices. Some argue that these subsidies might ultimately be harming automakers' efforts to develop cost-effective hybrid models.

"The challenge is for manufacturers to be able to produce these things at a price that's competitive with traditional vehicles without that subsidy," says Michael Hatch of the Canadian Automobile Dealers Association."Ultimately, the manufacturers are going to have to find a way to bring these vehicles, these alternative propulsion systems to the market in a competitive way that can compete with traditional vehicles without that subsidy."