Hybrids and EVs battle it out… for now

SALES of plug-in hybrid electric vehicles (PHEVs) have tanked in Europe and are now running at a shrinking sales rate there compared to just one year ago, while in Australia updated versions of the Kia Niro and Volvo XC40 no longer have a PHEV option.

The developments in Europe – driven by staged reductions in the eligibility of PHEVs for government incentives and upcoming emissions regulations that will increase the calculated CO2 output of PHEVs – will likely impact what vehicles are sold in Australia and when.

It could also transpire that should it become difficult to sell PHEVs in major markets like Europe, car-makers may choose to amortise the technology by exporting it to countries such as Australia where emissions regulations or broader market conditions make PHEVs a better bet.

This will weigh heavily on the decision of all car-makers that have the option to sell PHEVs in Australia but Mitsubishi – which launches the Outlander PHEV medium SUV in Australia this week and already sells the Eclipse Cross PHEV here – remains optimistic.

According to UK publication Autocar, the utility factor (UF) of a PHEV is calculated by blending the CO2 output when driving in ICE-only mode with the energy used while in electric-only mode, resulting in a combined figure that is often well below real-world outputs.

However, Mitsubishi Motors Australia Limited (MMAL) CEO Shaun Westcott told GoAuto at this week’s Outlander PHEV launch that customer research revealed that “owners of our Mitsubishi PHEVs use the vehicle in full electric mode 84 per cent of the time”.

“That means we can bring a PHEV to market which can be used right now to reduce emissions by 84 per cent, straight up, without needing to spend one dollar on additional infrastructure charging stations, networks or the grid,” he added.

New EU6e regulations scheduled to come into effect by 2027 will increase the UF of PHEVs from roughly 800 in 2025 to 4000 by 2027, causing the calculated CO2 outputs of a 50g/km PHEV to be rated at 125g/km in five years.

Car-makers have been surprised that the EU has chosen to hit PHEVs so hard by a UF that is twice as high as expected.

June sales of plug-in hybrids in France fell 28 per cent month on month, while former PHEV stronghold Germany saw registrations drop 16 per cent in the same month and in the UK, two BEVs are sold for every PHEV.

By contrast, PHEV sales in China have remained relatively strong – more than doubling last year, led by offerings from BYD and Li Auto – and PHEV uptake there has also been driven by the large numbers of high-rise apartment dwellers with limited home charging options.

Still, PHEVs did not keep pace with BEV sales growth in China, where central and regional governments are making a huge push to build public charging facilities and help keep the full-electric car market expanding quickly.

Against this international backdrop, Mr Westcott remained positive that PHEVs are the right car for the moment in Australia.

“We believe that the Mitsubishi Outlander PHEV combines the best of EV and hybrid technology and is practical and environmentally friendly,” he said.

“We are not denying that the future is electric and to get us to that point, we believe the plug-in hybrid fills the gap, right now.

“Australia has, at this point in time, insufficient charging capacity across the country. Charging infrastructure is developing, but these ongoing range and recharging anxiety issues that we’re experiencing in the market don’t affect our vehicles.”

Other brands currently feeding PHEVs into the Australian market include Ford, MG and Peugeot, as well as premium marques BMW, Land Rover and Mini plus supercar manufacturers like Ferrari and McLaren.

While Hyundai has axed the Ioniq range that included a PHEV among its three electrified driveline options, a PHEV version of the Santa Fe large SUV is incoming.

Toyota, a leader in hybrids that never brought PHEV versions of the Prius or RAV4 to Australia but will introduce the pure-electric bZ4X here next year, told GoAuto it is focused on “reducing emissions with our current hybrid line-up”.

A Toyota Australia spokesperson said the company “remains committed towards offering an electrified powertrain in all segments across our extensive vehicle range by 2030, excluding GR and performance models”.

“It is too early to speculate as to what the future electrification mix will be … any new vehicles will be announced in due course.”

Mr Westcott voiced concerns about the Australian energy grid being too reliant on “dirty power” and the punitive road user charges that in some jurisdictions act like a double taxation on PHEVs.

“We agree and we understand and we accept that we have to reduce emissions as a nation we have to do a lot more to reduce emissions,” said Mr Westcott.

“But to get there, we need to invest in an electricity grid that meets future demand, as well as much higher intensity focus on renewables and energy storage.”

For Kia’s part in the Australian PHEV puzzle, a local spokesperson for the brand said the company will be continuing with its hybrid offerings here.

“Sorento PHEV is a low volume model and supply is around 10 units per month (HEV is around 10-20),” they told GoAuto.

“Our (limited) local supply is due to its popularity in overseas markets with stricter incentives/emission targets. Sorento PHEV will remain and we could sell more if supply increased.”

In relation to the new Niro, the Kia spokesperson said: “The PHEV variant wasn’t introduced with the all-new Niro range due to the low demand in the previous generation. It has however been homologated for Australia and can be introduced in the future.”

The European experience is likely to force more buyers to choose a pure-electric vehicle straight after getting out of a petrol or diesel car, rather a PHEV serving as stepping stone.

Many manufacturers gambled on PHEVs holding sway with transitioning customers for a few years before embracing pure EVs, helping to buy development time for full EVs and the necessary infrastructure, but Euro buyers are going fully electric sooner.

The proposed EU emissions laws will effectively kill off any major advantage held by PHEVs over their solely internal combustion engine (ICE) and all-electric counterparts, compounded by the upcoming ban on ICE vehicles from 2035, targeting net zero emissions across the continent from 2050.

This not only leaves owners vulnerable to higher taxes and emissions charges in some regions, but it also affects the fleet emissions of manufacturers, forcing them to either develop cleaner and more efficient ICEs to be mated to their PHEV powertrains or implement higher-capacity battery packs into the models, limiting the amount of time the conventional engine is running, says the Autocar report.

For European market vehicles, it means manufacturers will have to rapidly move to a richer mix of BEVs – predicted to be 3:1 for each ICE sale.

Challenging times are ahead for an industry already grappling with battery cell and semiconductor supply.

“The challenges facing EVs at the moment include the fact that the technology is still very expensive at this point in time, and as a result, they are very expensive to buy,” said Mr Westcott. 

“While there has been some recent alleviation in the space, battery electric vehicles are slow to charge and insecurity around high-speed charging infrastructure remains.

“We need to invest in an electricity grid that meets future demand, as well as much higher intensity focus on renewables and energy storage.

“The other thing to bear in mind is the energy intensity of manufacturing batteries and also the recycling of those batteries; how do we deal with them at the end of life. 

“We also need to introduce equitable incentives and usage charges for all electrified vehicles across all states consistently in Australia. We need to incentivise the uptake of electric vehicles and battery electric vehicles and not create obstacles for consumers.”