Looking at the global car market right now, you might think plug-in hybrids are the new black. According to the National Highway Traffic Safety Administration, 30 different plug-in hybrid electric vehicles (PHEV) are currently available. More are on the way as automakers add PHEV models to transition American car buyers to electric vehicles (EV). But expected changes in European Union regulations and investment guidelines could paint the future of PHEVs black.
The issue? Some environmentalists suggest that PHEVs are not nearly as "green" as they are portrayed to be.
The problem is not so much with plug-in hybrid technology but how plug-in hybrid owners use their vehicles. In short, people infrequently plug them in. And when plug-in hybrids are not operating in electric-only mode as often as possible, they are less fuel-efficient and more significant producers of carbon dioxide and nitrogen oxides than conventional cars and trucks.
Why is that? With the added weight of their battery packs and motors in addition to their internal combustion engines (ICE), PHEVs are heavier than conventional vehicles.
With these factors in mind, European Union regulators are considering new rules that would speed the transition from ICE to EV, essentially making the bridge between the two, PHEVs, undesirable. A U.S. example of this phenomenon is General Motors' cancellation of the Chevrolet Volt PHEV in favor of the battery-electric Chevrolet Bolt EV.
According to a report from Reuters, "Draft 'green' finance regulations would ban [auto] manufacturers from labeling them as 'sustainable investments' beyond 2025, potentially deterring investors." The Reuters report also suggested that potential EU rules on nitrogen oxide emissions could increase the cost of manufacturing PHEVs.
Several European manufacturers are heavily committed to PHEVs and sell a wide variety of plug-in models worldwide, including in the U.S. But if regulators in Europe turn away from PHEVs, will their counterparts in the U.S. follow suit?
Global automakers are concerned that changes in PHEV regulations will keep their plug-in hybrid models from finding buyers, potentially costing them billions.
"It's crazy to do this by 2025 because effectively you kill demand today," Adrian Hallmark, CEO of Bentley, told Reuters. Like Audi, Bentley is a Volkswagen Group unit counting on PHEVs as transitional vehicles with a reasonably long shelf life. "For most people, a battery-electric car is not yet practical," Hallmark added.
Currently, in terms of federal income tax incentives for buyers, PHEVs are treated like pure electric vehicles. This makes them more affordable and appealing to consumers. The 2021 BMW i3, 2021 Chrysler Pacifica PHEV, and 2021 Toyota RAV4 Prime currently qualify for $7,500 tax credits, while more than a dozen other PHEVs qualify for $4,000 or more.
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