Global Hybrid Cars - Sep'13

Whitepaper on Global Hybrid Cars

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OverviewGlobal hybrid cars are gaining acceptance as consumersacross the globe seek to lower their fuel expenditure andmanufacturers are compelled to decrease vehicle CO2

emissions.

In 2011, Hybrid car sales was 2.5 Million Units and isestimated to reach around 3 Million Units by the end of2013.

In future, the hybrid car sales market is anticipated togrow at a CAGR of around 11.5% during 2013-2017 toreach 4.72 Million Units by the end of 2017.

Hybrid Car Sales (Million Units), 2011-2017

Source: IEA-HEV, RNCOSNote: e/f = RNCOS Estimation/Forecast

Market Driving Factors▪ Increasing Global oil consumption and Shrinking of

Fuel Reserves

▪ Rising awareness of the environmental issues andgrowing concern over the increasing carbon emissions

▪ Volatile Oil Prices

▪ Constantly introduced emission regulations in manycountries

▪ Changing consumers' preferences

▪ Government Support (Subsidies and incentives)


Top Sales RegionsUS leads the hybrid electric car sales marketaccounting for almost half of the total sales. Othermajor regions are Japan and Europe with 33% and10% share, respectively.

Hybrid Electric Car Sales by Region (%), 2012

Source: US Department of EnergyNote: Data till June, 2012

Top ManufacturersToyota leads the hybrid car market with 67% share,followed by Ford with 17% share. Other major players areGeneral Motors, Nissan and Honda with less than 10%share each.

Hybrid Vehicles Sales by Company in US (%),June 2013

Source: c1gas.org


Opportunities

Presently, the hybrid vehicles account for around 3%share in the total global car sales market. So, there is ahuge scope for growth, especially in the emerging markets.

Many countries across the globe are providing fundingand tax exemptions for hybrid car sales growth in theircountry. For instance, Federal and Ontario governmentsare making repayable contributions of US$ 34 Million toToyota Motors to build a hybrid car in Canada.

The growth in automotive industry as a whole willprovide growth opportunities for hybrid car sales in thecoming years, especially in the Asian region.

To remain competitive, the automakers are focusing on designing new hybrid vehicles that will cater toconsumers in both mature and emerging markets while manufacturing them at low-cost using the mostadvanced technology.

With rising oil prices and development of emission standards across the globe are forcing the automanufacturers to come up with vehicles with low fuel consumption that will help in reducing both fuelconsumption and CO2 emissions

Leading auto companies across the globe are launching new hybrid models that will help in the growth of thehybrid car sales growth in future. For instance, Nissan will create hybrid versions of most vehicles in itslineup and will launch 15 new hybrids by 2016. Similarly, Mazda has planned to launch its first hybrid carthis year (2013) in Japan.


Still, the cost of hybrid models is significantly higher than the normal models for the same car which isaffecting the mass adoption of these cars, especially in the emerging markets. For instance, Ford Fusionhybrid costs US$ 3,480 more than the non-hybrid version up front.

Europe accounts for the 3rd major sales market for hybrid car sales. However, the present Eurozone financialcrisis has adversely affected the operations of many global automakers, especially GM and Ford, who have asignificant exposure to the market

Availability of alternative fuel options such as flex-fuel, hydrogen fuel, CNG etc are affecting thehybrid car sales market.

With advancement in technology, engines areproviding better fuel economy on the available fuel sources such as diesel, gasoline etc.

Electric Cars is giving a direct competition to the growth of hybrid cars as these are thepure green vehicles with zero emissions leading to more acceptance than the hybrid cars. Moreover, the priceis also competitive compared to the hybrid vehicles.

Auto manufacturers are facing technological challenge in making the hybrid cars with better mileage andfuel options. For hybrid vehicles, gasoline engines have good fuel performance. But in terms of technology,

Challenges

the diesel hybrid can increase the fuel economy a bitmore than the gasoline engine. However, for theformer, the company needs to have the emissioncleaning system to make a contribution for a cleanerenvironment.

Moreover, the type of cars preferred varies dependingon the region. For example, hybrids are popular inJapan, Europe and the US. Further, in these markets,the type of vehicles customers prefer is somewhatdifferent. Compact cars are preferred in Japan. Sincethe fuel cost is very high, people largely opt forhybrids. But in the US, people prefer bigger cars suchas the Camry.


Future OutlookGlobal Hybrid vehicles market scenarioseems somewhat dice for the coming 2-3years with weak demand and significantchallenges faced by the industry.

Over the next 5-7 years, the hybrid car salesgrowth will depend on the decline in the costand advancement in technology.

With the time and research on thedevelopment of the battery systems of hybridcars, the overall cost of batteries and totalcost of ownership is expected to decreasesignificantly. By 2017, it is expected that thetotal cost of ownership of plug-in hybridelectric vehicles with a battery will be lowerthan an internal combustion engine vehicle.Besides, this government funding and taxexemptions will fuel growth in the hybrid carmarket.

However, competition will remain tough with advancement in alternative option vehicles and growth in pureelectric vehicles which will affect the growth of the hybrid vehicles market.

Regionally, growth prospects are bright for hybrid car sales in asian market. However, companies have todevelop hybrid vehicles which are affordable, user-friendly and environment-friendly.


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Automotive

Global Hybrid Cars - Sep'13