The Shifting Landscape: From Plug-In Hybrids Dominating to Declining EV Market Share
The Shifting Landscape: From Plug-In Hybrids Dominating to Declining EV Market Share

The Shifting Landscape: From Plug-In Hybrids Dominating to Declining EV Market Share

September 2, 2023

The era of plug-in hybrid electric vehicles (PHEVs) that can both charge from an electrical outlet and refuel at a gas station seems to be waning, particularly in Australia. Recent data indicates that electric vehicles (EVs) accounted for an unprecedented 9.4% of new car sales in June, a significant increase from 1.7% the previous year. This shift in consumer preference raises several questions about the environmental impact and future relevance of PHEVs.

In Australia, the automotive landscape is undergoing a transformation, with a growing focus on sustainability and reducing carbon emissions. As this shift occurs, it’s crucial to understand the role PHEVs play in this transition and whether they are as environmentally friendly as they claim to be.

The Rise and Fall of PHEVs in Australia

About a decade ago, PHEVs entered the Australian market as a greener alternative to traditional internal combustion engine vehicles (ICEVs). They offered solutions to some of the challenges associated with fully battery electric vehicles (BEVs), such as driving range and charging infrastructure. Initially, PHEVs saw stronger sales compared to BEVs. However, the landscape has changed dramatically. As of June, PHEVs made up just 6.24% of EV sales, overshadowed by the growing popularity of BEVs.

The decline in PHEV sales is not just a result of advancements in BEV technology; it also reflects changing consumer perceptions. PHEVs were initially marketed as a transitional technology that would eventually lead to more sustainable transportation options. However, as BEVs have improved, the need for this transitional step has diminished, leading to a decline in PHEV market share.

Technological Advancements in BEVs

One of the key reasons for the decline in PHEV popularity is the significant improvement in BEV technology. BEVs now offer better range, faster charging times, and more affordable pricing. Additionally, a broader range of models has entered the market, giving consumers more choices. These advancements have led to increased skepticism about the environmental benefits of PHEVs, which we will explore in the next section.

The improvements in BEVs are not just limited to range and charging times. Innovations in battery technology have also made BEVs more efficient and environmentally friendly. As a result, the gap between BEVs and PHEVs in terms of environmental impact has widened, making BEVs an increasingly attractive option for eco-conscious consumers.

Environmental Concerns About PHEVs

Recent studies have cast doubt on the environmental credentials of PHEVs. A 2022 report by the International Council of Clean Transportation (ICCT) found that PHEVs consumed three to five times more fuel than officially reported. Furthermore, real-world testing revealed that the combustion engine was used far more frequently than expected. These findings have led to stricter regulations in the European Union, which will more than double its official CO2 output estimates for PHEVs starting in 2027.

These environmental concerns are not limited to fuel consumption and CO2 emissions. There are also questions about the production process of PHEVs, which involves both an internal combustion engine and an electric battery. This dual system can result in higher manufacturing emissions, offsetting some of the environmental benefits gained during operation.

Life Cycle Emissions

While operating emissions are a concern, it’s essential to consider the total “life cycle emissions” of a vehicle, which includes manufacturing and disposal. Studies show that BEVs generally have slightly higher production emissions than ICEVs but significantly lower operational emissions. This balance tips even further in favour of BEVs when the electricity used for manufacturing comes from renewable sources.

Moreover, the life cycle emissions of a vehicle are not static; they can change based on various factors such as the source of electricity used for charging. In countries where the electricity grid is primarily powered by renewable energy, the life cycle emissions of BEVs can be significantly lower than those of PHEVs, further strengthening the case for BEVs over PHEVs.

Policy Implications and Subsidies

The debate over whether PHEVs should be classified as EVs has policy implications. Last year, amendments were made to limit government support for PHEVs, and they will no longer be exempt from fringe benefits tax after 2025. Some states offer incentives for PHEVs, while others restrict support to “zero-emission vehicles,” which usually excludes PHEVs. This inconsistency in policy could influence the future market share of PHEVs.

The policy landscape is further complicated by the varying approaches of different states and territories in Australia. While some regions offer generous incentives for BEVs, others provide limited support for PHEVs. This lack of uniformity can create confusion for consumers and manufacturers alike, potentially slowing down the transition to more sustainable transportation options.

The Global Perspective

While PHEVs are losing market share in many countries, they are gaining traction in China, the world’s largest auto market. PHEV sales in China surged by 88% year-on-year in the first quarter of 2023, outpacing the total EV sector’s growth of 29%. This divergence suggests that the future of PHEVs is still uncertain and may vary from one market to another.

The rise of PHEVs in China could be attributed to several factors, including government incentives and a different consumer mindset. However, it’s worth noting that even in China, the long-term sustainability of PHEVs is being questioned as BEVs continue to improve. This global variability adds another layer of complexity to the future of PHEVs.

The future of PHEVs remains uncertain. While they serve as a transitional technology, their market share is declining as BEVs become more advanced and affordable. The environmental benefits of PHEVs are also under scrutiny, raising questions about their long-term viability. As the automotive landscape continues to evolve, it will be interesting to see how PHEVs adapt to these changes.


  • Are hybrids cleaner than electric cars?
    • Generally, BEVs have lower life cycle emissions compared to PHEVs, especially when charged with renewable energy.
  • What are the disadvantages of a plug-in hybrid car?
    • PHEVs can have higher operating emissions and may not offer the same environmental benefits as initially advertised.
  • Do plug-in hybrid vehicles release carbon dioxide?
    • Yes, PHEVs do emit CO2 when the internal combustion engine is in use.
  • Why plug-in hybrid is not popular?
    • Advancements in BEV technology and growing environmental concerns have led to a decline in PHEV popularity.

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