Hybrid vehicles: Trends in technology development and cost reduction

Since their introduction, sales of hybrid vehicles and the number of hybrid models have both risen steadily in the U.S., with that growth trend accelerating sharply starting in 2003. The forty-five hybrid models available in 2014 captured about 2.75% of the overall U.S. passenger vehicle market.

Hybrids are far from a mature technology, and innovations are coming rapidly. Improved batteries designed with high power density for hybrid applications are on the near horizon. Hybrid systems other than the input power-split design pioneered by Toyota almost two decades ago present huge opportunities to reduce cost through better design, learning, and economies of scale.

The analyses summarized in this briefing paper suggest that before 2025 full-function P2 hybrids are likely to fall to half the cost of 2010 systems, without factoring in additional cost reductions enabled by vehicle weight reduction. 48-volt systems have the potential to be significantly more cost effective, achieving most of the benefits of a full-function hybrid at much lower cost. Some manufacturers might deploy them as stepping stones to higher-voltage systems, with the lower-cost systems used to accelerate market acceptance while the costs of all hybrid systems come down. Low-cost hybrid systems have already been made standard on a few mainstream models.

If the cost of full-function hybrids can be cut in half, their cost-effectiveness will come well within the range of current technologies being used to comply with vehicle efficiency standards. And mild hybrid systems should be even more cost-effective. Thus, even without considering the other consumer benefits of hybrid systems (such as instant low-speed torque and lots of electrical power), it appears likely that cutting hybrid costs in half and development of mild hybrid systems should put these technologies into the consumer mainstream by 2025.