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Hybrid and Electric Cars - UK - December 2016

“From what can be considered as comprising a niche market, hybrid and electric cars are quickly establishing themselves as a fast-developing market. Stimulated by support from government and manufacturers, demand for these vehicles has led to them becoming the most dynamic segment within the UK car market. With support and innovation continuing, Mintel predicts further expansion with these vehicles becoming a common feature on our roads.”

– Neil Mason, Head of Retail Research

This report looks at the following issues:

  • Plug-in hybrid electric market set for take-off
  • EVs appear more of a long-term bet
  • Dealers and the internet should be part of a wider communication strategy

Historically, the environmental benefits of hybrid and electric cars have been the main driver of sales. Added to this are the financial savings that are possible, best illustrated by their lower running costs compared to petrol or diesel vehicles. While the higher purchase price of a hybrid or electric car remains a major barrier, this too has been lowered in recent years through the availability of the UK government’s plug-in car grant. Worth up to £5,000 off the price of a qualifying car, the grant has helped with the affordability of going hybrid or electric.

An additional push for the market has come from the expansion in the number of models in segments such as ULEVs (Ultra Low Emission Vehicles). These have grown from 12 in 2012 to 38 by Q2 2016. As this market has continued to develop, many more manufacturers have entered. Yet despite this, segments such as ULEVs remain dominated by a small number of companies with Mitsubishi and Nissan accounting for over half of sales in 2015.

Mintel’s report on the hybrid and electric car market covers vehicles that are powered either wholly or in part by an electric motor and/or batteries as defined by the UK government. These vehicles are slowly becoming a feature of the UK car market although currently they still account for only a small percentage of vehicles on the road.

Five types of hybrid and electric car are included in this review:

  • Hybrid Vehicle or HV (combining an electric motor with a traditional fuel such as petrol or diesel. The electric motor is charged using the motion of the car and will typically kick in at low speeds)
  • Electric Vehicle or EV (a vehicle powered, in part or in full, by an electric motor and battery that can be plugged into the mains or a charging point)
  • Plug-in Hybrid Electric Vehicle or PH-EV (a vehicle with a battery and an internal combustion engine (petrol, diesel etc). Power from the battery is supplemented with power from the internal combustion engine. Once the charge of the battery is exhausted the vehicle operates as a hybrid. The battery can be plugged into the mains or a charging point)
  • Range Extended Electric Vehicle or RE-EV (a vehicle powered by a battery with an internal combustion engine powered generator on board. Once the charge of the battery is exhausted the internal combustion engine takes over. The battery can be plugged into the mains or a charging point or charged by the internal combustion engine)
  • Fuel Cell Electric Vehicle or FC-EV (a vehicle that uses hydrogen gas as a fuel, which is stored in a compact, strong, but lightweight pressure tank. Power is generated by the fuel cell stack and is used to drive the FC-EV’s electric motor, with additional power supplied when needed from a secondary battery)

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
      • Executive Summary

          • The market
            • Hybrid and electric sales are set to continue to increase
              • Figure 1: Hybrid and electric new car registrations (Great Britain), by volume *, 2011-21
            • Hybrid electric vehicles dominate when it comes to sales
              • Figure 2: Hybrid and electric car new registrations by type (Great Britain), by volume, 2011-16
            • Hybrid and electric car parc set to approach 350,000 vehicles in 2016
              • Figure 3: Hybrid and electric vehicle car parc (Great Britain), by volume, 2011-16
            • Franchised dealers dominate the market
              • Figure 4: Sales of new and used hybrid and electric cars, by channel, 2015
            • Companies and brands
              • Not all car manufacturers are active in the hybrid and electric market
                • Figure 5: ULEV Manufacturer share, Q4 2015 and Q2 2016
              • Promotional expenditure on hybrid and electric cars has fluctuated recently
                • Figure 6: Recorded above-the-line, online display and direct mail total advertising expenditure on hybrid and electric cars, 2011-15
              • The consumer
                • Few adults own a hybrid/electric car
                  • Figure 7: Vehicle ownership, September 2016
                • Sizeable minority interested in buying a hybrid/electric car
                  • Figure 8: Interest in owning a hybrid/electric car, September 2016
                • Internet and dealers important for information
                  • Figure 9: Sources of information on electric/hybrid cars, September 2016
                • Costs are a key consideration for buyers
                  • Figure 10: Factors associated with purchasing a hybrid/electric car, September 2016
                • Charging and costs dominate electric vehicle worries
                  • Figure 11: Concerns about owning 100% electric vehicles, September 2016
                • Ease, and flexibility in use, typify views towards electric vehicles
                  • Figure 12: Statements associated with hybrid/electric vehicles, September 2016
                • Awareness of fuel cell technology is low
                  • Figure 13: Awareness of fuel cell electric vehicles (FC-EVs), September 2016
                • What we think
                • Issues and Insights

                  • Plug-in hybrid electric market set for take-off
                    • The facts
                      • The implications
                        • EVs appear more of a long-term bet
                          • The facts
                            • The implications
                              • Dealers and the internet should be part of a wider communication strategy
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Hybrid and electric vehicle sales benefit from strong growth…
                                      • …with electric vehicles seeing the strongest expansion in sales
                                        • Ultra-low emission vehicles account for a much stronger share of sales
                                          • Hybrid and electric vehicles approach 1% of the car parc
                                            • Number of models offered records steady expansion
                                              • Expansion of charging network is proving helpful
                                                • Franchised dealers dominate the market
                                                  • UK government is active in the uptake of hybrid and electric vehicles
                                                  • Market Size and Forecast

                                                    • Hybrid and electric car sales record strong growth
                                                      • Figure 14: Hybrid and electric new car registrations (Great Britain), by volume*, 2011-21
                                                      • Figure 15: Hybrid and electric new car registrations (Great Britain), by volume*, 2011-21
                                                    • Electric vehicle registrations begin to challenge hybrid sector
                                                      • Figure 16: Hybrid and electric car new registrations by type (Great Britain), by volume, 2011-16
                                                    • Forecast methodology
                                                      • The impact of the EU referendum vote
                                                        • Wider demand for vehicles is set to soften after a period of expansion
                                                        • Market Segmentation

                                                          • North/South divide evident when it comes to sales of new hybrid and electric cars
                                                            • Figure 17: Hybrid and electric new car registrations (Great Britain by region), by percentage*, 2011, 2013, 2015
                                                          • PH-EVs largest segment of the ULEV market
                                                            • Figure 18: ULEV sales (Great Britain), by volume, 2012-16
                                                          • Hybrid and electric cars are expected to account for 1.1% of the total car parc in 2016
                                                            • Figure 19: Hybrid and electric vehicle car parc (Great Britain), by volume, 2011-16
                                                          • Hybrid electric vehicles dominate the hybrid and electric car parc…
                                                            • Figure 20: Hybrid and electric vehicle car parc (Great Britain), by volume, 2011-16
                                                          • … although growing demand for PH-EVs is raising their profile
                                                            • Figure 21: Hybrid and electric vehicle car parc (Great Britain), 2011-16
                                                        • Channels to Market

                                                          • Franchised dealers dominate
                                                            • Figure 22: Sales of new and used cars, by channel, 2013-15
                                                          • Little evidence of the internet playing a major role as a sales channel
                                                            • Figure 23: Vehicle advertisements, by fuel type (ebay.co.uk), November 2016*
                                                        • Market Drivers

                                                          • GB’s love affair with the car continues
                                                            • Figure 24: Number of licensed cars (Great Britain), 1995-2015
                                                          • Shift towards low carbon cars begins to take off…
                                                            • Figure 25: Number of licensed cars (Great Britain) 1-100 g/km, 2001-15
                                                          • …although hybrid and electric vehicles are still a niche market
                                                            • Figure 26: New car registrations, by fuel type, 2011-16
                                                          • Expansion in number of models also assists market
                                                            • Figure 27: Development of ULEV models, 2012-15
                                                          • UK charging network sees expansion…
                                                            • Figure 28: Number of charging locations and connectors, 2011-15
                                                          • …with faster connectors being installed
                                                            • Figure 29: Development of charging landscape, 2011-15
                                                          • Prices remain a major barrier for buyers
                                                            • Figure 30: On the road prices for leading hybrid and electric vehicles, November 2016
                                                            • Figure 31: On the road prices for most popular alternative vehicles by selected segment, November 2016
                                                          • Recent falls in motoring expenses aren’t helping hybrid and electric cars
                                                            • Figure 32: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2011-15
                                                        • Regulatory and Legislative Developments

                                                          • Office for Low Emission Vehicles
                                                            • Plug-in car grants
                                                              • Policy commitments
                                                                • Recent announcements
                                                                  • FC-EVs (May 2016)
                                                                    • Charging points (October 2016)
                                                                      • Additional £35 million for ULEVs (October 2016)
                                                                        • Further support given in the November 2016 autumn statement
                                                                        • Companies and Brands – What You Need to Know

                                                                          • Mitsubishi and Nissan dominate the ULEV market
                                                                            • Market growth sees fragmentation in terms of manufacturer share
                                                                              • Considerable interest in research and development
                                                                                • Advertising expenditure records yearly fluctuations
                                                                                • Market Share

                                                                                  • ULEV market dominated by a small number of manufacturers
                                                                                    • Figure 33: ULEV Manufacturer share, Q4 2015 and Q2 2016
                                                                                  • Outlander PHEV leads the ULEV sector
                                                                                    • Figure 34: ULEV model sales by registration, 2012-16
                                                                                • Launch Activity and Innovation

                                                                                  • First hydrogen refuelling station being installed within an existing forecourt
                                                                                    • Nissan develops world’s first Solid Oxide Fuel-Cell
                                                                                      • Nissan offers free home charging units to buyers…
                                                                                        • …while workplace charging grants are also launched
                                                                                          • Hyundai enters the hybrid and electric market
                                                                                            • Nissan takes a controlling stake in Mitsubishi
                                                                                            • Advertising and Marketing Activity

                                                                                              • Support for hybrid and electric cars has fluctuated in recent years
                                                                                                • Figure 35: Recorded above-the-line, online display and direct mail total advertising expenditure on hybrid and electric cars, 2011-16
                                                                                              • Television increasingly dominates as the preferred promotional channel
                                                                                                • Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure on hybrid and electric cars, by media type, 2011-15
                                                                                              • Toyota has led the market since 2013
                                                                                                • Figure 37: Recorded above-the-line, online display and direct mail total advertising expenditure on hybrid and electric cars, by manufacturer, 2011-15
                                                                                              • Outlander and Auris account for over half of investment
                                                                                                • Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure on hybrid and electric cars, by brand, 2011-15
                                                                                              • A note on adspend
                                                                                              • The Consumer – What You Need to Know

                                                                                                • Relatively few adults currently own a hybrid or electric car
                                                                                                  • Interest in future ownership appears strong
                                                                                                    • Websites and vehicle manufacturers are important channels for information
                                                                                                      • Cost is a key barrier to ownership
                                                                                                        • Charging is a particular concern for electric vehicle ownership
                                                                                                          • Greater access to charging points is a key issue for many drivers
                                                                                                            • Awareness of FC-EVs is low
                                                                                                            • Vehicle Ownership

                                                                                                              • Alternative fuelled vehicles fail to make an impact
                                                                                                                • Figure 39: Vehicle ownership, September 2016
                                                                                                              • Certain groups are more likely to own a standard car…
                                                                                                                • …than own a hybrid/electric car
                                                                                                                • Interest in Owning a Hybrid/Electric car

                                                                                                                  • Potential for hybrid and electric cars could be significant
                                                                                                                    • Figure 40: Interest in owning a hybrid/electric car, September 2016
                                                                                                                  • Young men have an especially strong interest in ownership
                                                                                                                    • Affluent adults are another important target market
                                                                                                                      • Older adults and less affluent need some convincing
                                                                                                                        • Could targeting parents stimulate demand?
                                                                                                                          • Non-car owners are much less interested in hybrid and electric vehicles
                                                                                                                          • Sources of Information on Hybrid/Electric Cars

                                                                                                                            • Internet and manufacturers are seen as the best sources of information
                                                                                                                              • Figure 41: Sources of information on electric/hybrid cars, September 2016
                                                                                                                            • Dealers popular with older women while men prefer the web
                                                                                                                              • Young adults more likely to seek information from informal sources
                                                                                                                                • Specialist motor websites favoured by the most wealthy
                                                                                                                                  • Family and friends are an important communication channel for those who don’t own a car
                                                                                                                                    • TV and adverts are of interest to specific groups
                                                                                                                                    • Purchasing a Hybrid/Electric Car

                                                                                                                                      • Cost, availability and performance dominate as key features
                                                                                                                                        • Figure 42: Factors associated with purchasing a hybrid/electric car, September 2016
                                                                                                                                      • Older adults appear more concerned about costs and performance
                                                                                                                                        • Despite overall low level of importance, image is an issue to some
                                                                                                                                          • Wealthy appear an especially demanding group
                                                                                                                                          • Concerns About 100% Electric Vehicles

                                                                                                                                            • Practicality and cost dominate ownership worries
                                                                                                                                              • Figure 43: Concerns about owning 100% electric vehicles, September 2016
                                                                                                                                            • Wealthy have a number of concerns about EV ownership
                                                                                                                                              • Costs and image dominate thinking for the youngest adults
                                                                                                                                                • Costs dominate the thinking of urban drivers
                                                                                                                                                  • Image is more of a disadvantage for non-car owners
                                                                                                                                                  • Statements Associated with Hybrid/Electric Vehicles

                                                                                                                                                    • Ways to improve usability are most attractive
                                                                                                                                                      • Figure 44: Statements associated with hybrid/electric vehicles, September 2016
                                                                                                                                                    • Young adults are more hopeful on charging
                                                                                                                                                      • Londoners want extra
                                                                                                                                                        • Wealthy more likely to view electric vehicles as a second car
                                                                                                                                                          • Wireless technology is especially important to those interested in purchasing a hybrid or electric vehicle
                                                                                                                                                            • Four customer groups identified
                                                                                                                                                            • Awareness of Fuel Cell Electric Vehicles (FC-EVs)

                                                                                                                                                              • Benefits from vehicles powered by fuel cells are not fully understood
                                                                                                                                                                • Figure 45: Awareness of fuel cell electric vehicles (FC-EVs, September 2016
                                                                                                                                                              • Men have a higher level of awareness than women
                                                                                                                                                                • Wealth and location are also notable factors in affecting awareness
                                                                                                                                                                  • Awareness of FCEVs is low amongst drivers without a car
                                                                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                    • Data sources
                                                                                                                                                                      • Exclusions
                                                                                                                                                                        • Abbreviations
                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                                            • Forecast methodology

                                                                                                                                                                            Companies Covered

                                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                                            Hybrid and Electric Cars - UK - December 2016

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