Why Toyota’s Plug-in Prius, Other Plug-in Hybrids, Are Selling So Well

With an all-electric range of 6 miles from full to empty, and a ‘blended’ gasoline + electric range of 11 miles from a full charge, the 2014 Toyota Prius Plug-in Hybrid is the smallest-range plug-in car on the market today.

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The Toyota Prius Plug-in Hybrid is outselling the Chevy Volt. Why?

Yet U.S. sales of Toyota’s first mass-produced plug-in hybrid topped 2,692 cars in the month of May, setting an all-new record for the model. Even though sales were lower than May during the month of June at 1,571 sales, the Toyota Prius plug-in Hybrid still leads Chevrolet’s range-extended Volt EV on year-to-date sales.

Other cars — like the Ford Fusion Energi Plug-in Hybrid — are also experiencing a massive boost in sales of late, showing a clear move towards plug-in technology among the car-buying public.

But why are cars like the Toyota Prius Plug-in Hybrid and Ford Fusion Energi Plug-in Hybrid selling so well? And what can we learn from their successes?

Brand familiarity, brand loyalty

Without question, part of the reason Toyota’s plug-in Prius and Ford’s Fusion Energi plug-in hybrid are selling so well is a firmly entrenched brand loyalty among customers.

With more than ten years of hybrid sales under its belt, Toyota’s Prius line has become a synonym among mainstream car buyers for fuel economy, frugality, and environmentally conscious motoring. Now reaching the end of its third generation of production, many Prius customers are on their second — or even third car. Trading up to a Plug-in Prius when it’s time to switch cars is a logical and familiar move for them, since the plug-in Prius contains all the familiar features of the hybrid Prius but adds the benefits of a limited-range EV, such as the ability to make all-electric local trips.

Ford's Fusion Energi Plug-in Hybrid offers familiarity for existing Fusion owners, while adding plug-in capabilities

Ford’s Fusion Energi Plug-in Hybrid offers familiarity for existing Fusion owners, while adding plug-in capabilities

Similarly, Ford’s plug-in Fusion offers existing owners the chance to trade-in their existing, familiar Fusion to something with a plug without worrying about losing all the things that made them a Fusion customer in the first place. And with cumulative U.S. sales totalling more than 1.6 million cars, Ford has a lot of existing Fusion customers to convert to a plug-in.

A simple solution to range anxiety

Rather than confront customer’s worries about all-electric range anxiety, Ford and Toyota’s approach to plug-in vehicles — even though both brands currently offer all-electric ‘compliance cars’ in select markets — has been to offer gasoline engines as a familiar, reassuring backup for when all-electric range isn’t enough.

In fact, both brands have used the very spectre of range anxiety, playing on their customer’s misgivings about all-electric cars, to sell their plug-in hybrid vehicles as being superior to all-electric options.

Add this to the simple fact that both the Ford Fusion Plug-in Hyrbid and Toyota Prius Plug-in Hybrid offer better gasoline-only fuel efficiency than the Chevrolet Volt — even though the Volt wins on all-electric and overall combined fuel efficiency — and it’s easy to see why so many car buyers are choosing the Fusion and Prius plug-ins over all-electric models.

All the perks

Like all-electric cars on sale in the U.S. today, those buying plug-in hybrids like the Toyota Prius Plug-in Hybrid and Ford Fusion Energi Plug-in Hybrid, are eligible for up to $7,500 (depending on the car’s battery pack size) in Federal tax credits. Depending on the state, plug-in hybrids also attract a varying amount of local incentives, further reducing effective purchase price for owners.

A point of note: while both the Ford Fusion Energi and Prius plug -in Hybrid (eligible for $4,007 and $2,500) in rebates respectively) are not eligible for the full $7,500 in Federal tax rebates, their lower sticker price over all-electric models means that more buyers are tempted to opt for plug-in over all-electric. 

That badge is worth a lot in California, even if you never plug in.

That badge is worth a lot in California, even if you never plug in.

In addition to incentives, most plug-in hybrid owners in the state of California are eligible to apply for a free green HOV-lane access decal, giving them unlimited single-occupant access to the state’s many hundreds of miles of carpool lanes. With notorious traffic jams along its major arterial freeways, paying extra for a plug-in car to save hours on the weekly commute makes economic sense — even if the person buying the plug-in car never intends to plug in.

And if the person buying the plug-in car doesn’t intend to plug-in all that often, it makes sense to buy a plug-in hybrid with good gasoline-only gas mileage over a range-extended electric car with poorer gasoline-only gas mileage.

Normality

Aside from all of the reasons we’ve listed above, both the Ford Energi plug-in hybrid and the Toyota Prius plug-in Hybrid look no different to their non-plug-in siblings. Unlike the Chevrolet Volt, Nissan LEAF, Mitsubishi i-Miev and BMW i3, the plug-in Prius and the Fusion Energi look like normal, gasoline-guzzling cars.

For someone who isn’t keen on overtly promoting their green credentials — or for someone who prefers to blend in with the crowd — both cars offer a more conventional appearance and to some extend, more conventional operation, since they can be driven on gasoline or electricity.

The challenge

Despite not having the most efficient or best equipped plug-in cars on the market, both Ford and Toyota have made massive gains in the plug-in market by the associations made with existing brands. With plug-in cars offered as an addition to an existing car range, it’s also easier for dealers to push customers towards the higher-ticket plug-in variant of a car, especially if a customer has already partly committed to buying a particular model.

Like upgrading the trim package, upgrading to plug-in capabilities is an extra bonus many car buyers will consider, when switching to an entirely new plug-in vehicle may be out of the question.

In order to beat Ford and Toyota, other automakers need to change gear.

In order to beat Ford and Toyota, other automakers need to change gear.

For other car companies however, there are two different options to meeting — and beating — Toyota and Ford in the market place.

The first is to offer more competitive pricing on plug-in models, making them compete more directly with limited-range plug-in hybrids. The second is to offer more plug-in transitional vehicles: vehicles which offer range-extended plug-in hybrid drive trains but retain the look and functionality of a well-known, beloved brand.

As to getting more people in electric rather than plug-in hybrid cars? That’s a tougher challenge: but current incentives for plug-in hybrids — especially limited-range plug-in hybrids — are simply too large. While current rebates focus on emissions and battery pack size over range, incentivising customers to buy longer-range plug-ins would help encourage more car buyers to choose longer-range plug-ins.

Do you agree? Leave your thoughts in the Comments below.

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