Bentley is the latest automaker to signal an increased desire for PHEVs

News Analysis

2

Apr

2024

Bentley is the latest automaker to signal an increased desire for PHEVs

Bentley is the latest automaker to mention a desire for plug-in hybrid electric vehicles (PHEVs), as it announced that it has pushed back plans to go all-electric to 2030. 

The luxury carmaker is expected to reveal its first full EV model in 2026 and deliver these vehicles in 2027, although technical issues and software problems have delayed plans thus far. Challenges in successfully bringing an EV to market have resulted in the British automaker turning a large portion of its attention towards PHEVs instead. Bentley is not the only manufacturer reigniting a focus on PHEVs, however. In the US, Stellantis announced that 2023 PHEV sales increased 124% over 2022 sales, whilst Mazda announced that it will pull the plug on certain full electric models and focus on PHEV models in the short term instead.

EV sales are still increasing substantially year-on-year, signalling that demand for pure EVs is still gaining momentum. So, what is going on within the electric vehicle market and what are the implications?

Firstly, demand growth for pure EVs was lower than previously anticipated in 2023, which is in part what led to a substantial fall in many underlying raw material prices last year. This sentiment appears to have made its way into the early part of 2024, with many reports of sluggish EV growth persisting in multiple markets. Despite this, it is important to point out that although demand growth appears weaker than anticipated, total demand for pure EVs is still increasing year-on-year and plans for EV expansion remain strong across the board.

On the back of this subdued sentiment, PHEVs, which can be seen as a transition technology between ICE vehicles and EVs, seem to be gaining recent traction in the US and Europe. These vehicles are an attractive option for many prospective EV buyers who aren’t quite ready or able to make the switch over to full electric but still want a slice of the electric vehicle trend. In addition, the typically longer driving distances in the US result in a reduced appetite for the mid and lower-range EVs that simply wouldn’t be suitable for some use cases. This leaves PHEVs in a favourable position to cover this portion of the market, where limited electric range is a dealbreaker without ICE assistance. Although ICEs will be phased out of transport, PHEVs offer many consumers advantages in the interim period, especially in the lower-price region of the vehicle market where many EVs cannot currently compete.

This stronger consumer desire for PHEVs is compounded by delays and difficulties in scaling up EV operations for many automakers. Although EV sales have risen substantially for automakers in recent times, the road to achieving this has been a challenging one, with delays and setbacks being a common theme among many. The sourcing of upstream raw materials and downstream components remains a hurdle for many in Europe and the US as the domestic processing and manufacturing infrastructure just isn’t there currently to support the scale of EV production and plans. Although the European and North American battery supply chain has seen a monumental increase in investment over a number of years, the upstream processing facilities, midstream manufacturing facilities and downstream gigafactories will take time to come to fruition.  This has undoubtedly led to key automakers turning attention towards PHEVs as a means to ease some of the pressures that would otherwise be felt with full-speed EV scale-up.


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