Japan Automakers Stepping on Gas for PHVs as EV Sales Hit Brakes

By Daisuke Narahashi / Yomiuri Shimbun Staff Writer

12:38 JST, November 29, 2024

Amid a global deceleration of sales of electric vehicles (EVs), major automakers are stepping up investment into plug-in hybrid vehicles (PHVs), which are winning over customers for using both gasoline and electricity in a practical and environmentally friendly way.

With overseas makers developing their own models, competition is expected to intensify both at home and abroad.

On Nov. 1, Mitsubishi Motors Corp. announced the first change in three years of the PHV version of its popular Outlander sports utility vehicle,

The new PHV Outlander will have a battery-only range of 100 kilometers, an improvement of 20 kilometers on the previous model. The price starts from ¥5.26 million including tax, and it is scheduled for release into the U.S. and European markets in 2025.

“While the shift to electric vehicles picks up in line with decarbonization, I am sure that PHVs are the optimal solution in current times because they alleviate concerns about charging,” Mitsubishi Motors President Takao Kato said.

Other automakers are not standing idle. Toyota Motor Corp. added a new PHV model to its flagship Prius lineup priced at less than ¥4 million including tax in October, while Mazda Motor Corp. did likewise with its CX-80 SUV also in October.

Honda Motor Co. is reportedly considering launching a PHV under an original equipment manufacturer (OEM) arrangement with Mitsubishi Motors.

According to market research firm Fuji Keizai Group Co., the number of PHVs sold globally is expected to double from 5.45 million units in 2024 to 10.31 million in 2030.

Up to now, PHVs have been regarded as a way-station on the road to a world of EV domination. However, Kato said, “I think [PHVs] will stay around a bit longer. Attitudes in society are changing.”

Abandoning an EV-only strategy

Behind the sudden rise in popularity of PHVs is the falling fortunes of EVs. The combination of high prices and lack of charging stations have led to stagnation in EV sales around the world.

In China, the largest market for EVs, sales in 2024 are expected to decrease by 7% to 5.32 million units from the previous year, according to Fuji Keizai.

Amid this trend, Chinese automaker BYD, which saw explosive sales of EVs, began expanding its PHV lineup. In the July-September quarter, BYD’s sales of EVs remained flat while those of PHVs surged by 76% to 680,000 units.

In Western economies, Swedish automaker Volvo Car abandoned its plan to only produce EVs of all models by 2030, and is proceeding with development of PHVs. U.S. auto giant General Motors is following suit.

Toyota and many other Japanese automakers distanced themselves from the EV-only strategy of their foreign rivals, and continued to work on developing vehicles with various power sources, including hybrid cars. The current popularity of PHVs may provide tailwinds for Japanese companies.

“We are still not sure which electric technologies will garner support [from customers],” Mazda Motor President Masahiro Moro said. “It will be good to be in an era where customers can make choices based on their needs.”

However, an “all-around” strategy can lead to ballooning development costs that can be quite taxing for a company.

“Many still firmly believe that the shift to EVs will proceed in the long run,” said Masahiro Fukuda of the private research company Fourin Inc. “It looks like automakers will have a difficult path ahead for some time from the perspective of allocating financial resources.”