Why Stellantis, Toyota remain bullish on plug-in hybrids

Plug-in hybrids suffered a sales decline in 2022 -- in contrast to the success of full-electric cars -- as automakers were forced to make difficult production decisions amid supply chain shortages.

Plug-in hybrid sales tumbled 9 percent in the year to the end of October to 783,245, according to figures from market analyst Dataforce.

Meanwhile, sales of full-electric cars jumped 25 percent during the period to 1.13 million.

Plug-in hybrids combine electric powertrains capable of battery-powered ranges of 50 to 60 km with a combustion engine for longer journeys.

The technology sharply lowers CO2 emissions compared with gasoline or diesel alternative, according to official tests, qualifying them for tax incentives in some countries and reducing automakers’ fleet emissions. However, detractors say the results are rarely repeated in real life.

The Volkswagen Group made deep cuts in production of plug-in hybrids in 2022, even going so far as to halt production of Seat models with the powertrain.

Through 10 months, eight of the 10 plug-in hybrids with the biggest percentage declines in sales were from VW Group, led by the Seat Leon compact and the Audi Q7 large SUV (see table, below).

VW brand executives told Automotive News Europe that the declines were “a supply issue, not a demand issue” caused by difficulties procuring parts for the models.

Renault also slowed production of its limited range of vehicles with the powertrain, with sales of the plug-in hybrid version of the Renault Captur small SUV dropping 53 percent through 10 months, and the plug-in hybrid Renault Megane compact falling 55 percent.

October’s figures also showed a sales bump for certain VW Group plug-in hybrids, such as the VW Tiguan (+375 percent) and Audi A3 (+153 percent), suggesting supply constraints are easing for the company. Renault’s plug-in hybrid sales remained depressed, with the Captur down 60 percent and Megane off 81 percent for the month.

The Ford Kuga compact SUV was Europe’s top-selling plug-in hybrid seller after 10 months (see table, below) as the U.S. automaker continues to rely on the model to reduce its CO2 footprint in the region.

The model’s 38,172 sales during the period were flat compared with the same period last year, but Ford was still able to extend the Kuga’s lead over the second-place model – this year the BMW 3-series – by more than 10,000 units.

Ford has been incentivizing Kuga plug-in hybrid sales.

For example, buyers in Germany were being offered a discount of 6,750 euros in December while UK customers were able finance a new model with 0 percent interest in an offer that ended Dec. 31.

Ford’s continued support for its low-CO2 Kuga was one reason sales of volume plug-in hybrids were down just 2.5 percent after 10 months compared with the year-before period, allowing them to overtake premium plug-in hybrids, which were down 14 percent, by a tally of 395,161 to 388,084, according to Dataforce.

Like Ford, Stellantis remains convinced of the benefits of plug-in hybrids for volume brands. The company this year launched plug-in hybrid derivatives of the Peugeot 308 (above), Citroen C5 X, Opel/Vauxhall Astra and Peugeot 408.

Toyota, meanwhile, recently revealed the fifth-generation Prius as a plug-in hybrid only for Europe and confirmed its support for a technology that has the capacity to reduce CO2, using a much smaller battery than for electric cars.

“During the coming 10 to 15 years of battery materials shortages, precious battery cells should not be squandered in long-range BEVs [battery-electric vehicles] driven short distances,” Gill Pratt, chief scientist at Toyota, said last month at a media forum held in Brussels.

Toyota will also launch the next C-HR small SUV with a plug-in hybrid version, the company said, expanding its range to three in Europe.

Fellow Japanese automaker Honda is also poised to launch its first plug-in hybrid in 2023, a version of the CR-V compact SUV.

Mazda, meanwhile, launched its first plug-in hybrid, the CX-60 compact SUV, in 2022 and in October the car was the No. 8-selling plug-in hybrid in the region ahead of rivals such as the Peugeot 3008 and VW Tiguan.

Mitsubishi also is doing well with the Eclipse Cross compact plug-in hybrid, which was the No. 10-selling plug-in hybrid after the 10 months, with sales up more than 201 percent.

Target of green groups

There is a risk when developing new plug-in hybrids. They have long been a target of green groups for their poor real-world CO2 performance.

Earlier this year the International Council on Clean Transportation (ICCT) published a report stating that the real-world fuel consumption of plug-in hybrids on average in Europe was three to five times higher than WLTP type-approval values.

Subsidies for plug-in hybrids are being reduced across Europe as countries look to reduce costs, although the perks still help drive the market, said Matthias Schmidt, head of Schmidt Automotive Research.

“It’s too early to write off plug-in hybrids,” he said. “They still come with significant tax benefits in many markets such as Germany, Sweden and the UK. "This continues to give them a business case.”

Fears that cars aren’t being plugged in as intended could be allayed by a new category within the recently published Euro 7 emissions regulation proposals. Euro 7G is aimed at plug-in hybrids and has the effect of certifying them as suitable for zero-emission zones within cities.

Using GPS-tracked geofencing technology, cars would sound an alarm if the battery charge wasn’t sufficient to continue the journey within the zone and if the battery was not charged within 5 km (3.1 miles), the car would be shut down.

Automakers are including larger batteries coupled to more powerful electric motors, especially in larger premium cars, to ensure that their EV experience is more suited to a high-end model. For example, Land Rover included a 38.2-kilowatt-hour battery pack in the new Range Rover, up from 13.1-kWh pack in the previous model, mated to a 143-hp electric motor.