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The hybrid electric car has its place. Activists are attacking firms such as Toyota for not ditching them quickly enough in favor of battery-only ones, as politicians prepare to cut subsidies or ban gasoline-electric engines outright. The elimination of the internal combustion engine is the ultimate goal, but there is still a long way to go. Pushing the pace could leave the middle class and poor countries behind, and even trigger a popular backlash against clean cars in general.
Many big brands still like hybrids; China’s Li Auto does nothing else. According to the IEA, in 2021 there were more than 5 million on the world’s roads, 30% of all electric vehicles. Toyota argues that policies banning internal combustion and hybrid cars are moving too fast. It even threatened in July to close its UK factories if London followed through on its threat to ban the technology by 2030.
This kind of attitude has made the largest automaker by vehicles sold unpopular with shareholders and environmentalists. The New York City pension fund was among those to rebuke the brand, at its annual meeting in June. Greenpeace ranks it as the worst manufacturer in decarbonization. But it still has the lowest-emitting fleet outside of Tesla. It’s largely because of its collection of hybrids, with the Prius leading the way. Launched in 1997, the first mass-produced hybrid was a hit with conscientious consumers; even now it is among the most fuel-efficient mid-priced cars. The 2022 Prius Eco travels 24 kilometers per liter (kmpl), twice the world average.
Hybrids are generally cheaper to make and buy than pure electrics, and increasingly so as battery costs have skyrocketed. In the crucial mass market segment, they have better profit margins. The technology has improved and diversified. Some designs, like the BMW i3 and Li L9, are more based on electricity, with a small internal combustion engine. Others rely more on gasoline.
Fully battery-powered vehicles, however, are more efficient at converting energy, as well as having no emissions: they use at least 77% of the battery’s energy to move, while some hybrids waste up to 79% to heat and exhaust. the friction. Combine this with a virtually fossil-free power grid in a small, rich country, 100% electric makes perfect sense. In Norway, where hydroelectricity provides practically all the energy, they are already more than 80% of new car sales; those of hybrids have been reduced to a percentage of single digits.
But the further we get from Norwegian nirvana, hybrids may continue to play an important role. In the US, pure EVs almost always emit less gas than combustion vehicles, even taking into account the emissions generated by their construction. A study by the Union of Concerned Scientists showed that the average electric vehicle generates emissions equivalent to those of a hypothetical gasoline model that yields 39 kmpl. But regional variations are notable. In Hawaii, the average electric gets only 22 kmpl, because the grid itself runs mostly on oil. Other areas are worse. The most efficient battery electric (VEB) on the market only reaches 23 kmpl in the Midwest region, around Wisconsin, worse than a Prius.
This highlights a problem for other countries with dirtier combinations. Coal produces 35% more CO2 than gasoline, and is the world’s largest source of this gas. Although it only contributes a fifth of the electricity in the US, it accounts for a much larger piece of the pie in the huge Asian economies, which now contribute most of the growth in new emissions. For India, the third emitter, it is more than half of its electricity network. China, the largest car market, relies on coal for nearly two-thirds of its electricity, as does Australia; the figure exceeds 80% in Poland or the Chinese province of Inner Mongolia. In these places, the relative advantage of VEB emissions over hybrids is reduced.
Additionally, surveys show that range anxiety is a real issue for consumers. Calming him down takes time and a lot of money. The US, for example, aims for half of the new cars sold in the country in 2030 to be zero-emissions. To ensure drivers can charge when and where they need to without waiting in long lines, the government will have to spend $35 billion on 1.2 million public charging points, according to McKinsey, to expand current inventory by more than 20 times.
It is also human to resist changing habits. Throughout history, both environmental activists and tech entrepreneurs have underestimated the stubbornness of the masses when it comes to making small behavioral changes. If people don’t bother to bring reusable coffee cups to the local coffee shop for a discount, is it any wonder some don’t wait half an hour for their car to charge?
And there is the difference in wealth. Pure electrics are more expensive on average, and investors have concentrated on luxury brands such as Tesla and China’s Nio. Charging facilities are concentrated in high-income areas, according to McKinsey, and electricity from those stations could cost five to 10 times more than household outlets. If the clean car movement is associated with expensive vehicles, long waits and higher tax bills, it will reduce demand, interest in making them and popular support for public investment.
Finally, it is worth remembering the scope of the problem. Nine out of ten cars sold are still gas guzzlers, and global emissions continue to rise. Even if the electric goal in the US is reached by 2030, for example, 85% of the vehicles on its roads will continue to run on combustion. But if the cheaper and increasingly efficient hybrids cannibalize the demand for traditional models, they will progressively reduce the fleet’s emissions, even if they burn a little gasoline. When it comes to cars, investors should tolerate different shades of green.