Transportation Deployment Casebook/Analyzing the Life Cycle of US Hybrid Electric Vehicle Sales

Although the automobile has been in production since the early 1900s, and even early forms of hybrid vehicles around the same time, it was until recently that the hybrid electric vehicle (HEV) has (re)evolved and emerged in society in a major way. Although only comprising of a small amount of the automobiles that are driven today it has still appeared in quite a significant way since the late 1990s, especially in the United States. A hybrid electric vehicle, as the name implies, is a hybrid of an electric vehicle and the standard internal combustion engine seen in most cars today. Hybrids use an internal combustion engine and an electric engine that uses energy stored in a battery. The combination of both allows the vehicle to have same power and range as other vehicles while getting better fuel economy and lowering negative emissions because the combustion engine is able to be smaller in size and magnitude.

Life Cycle of the Hybrid Electric

The following data was retrieved from the Research and Innovative Technology Administration (RITA). It indicates the total number of sales of hybrid vehicles in the United States. This variable is the number of individual vehicles sold which is displayed as the total for that year.

Table 1:RITA Data of US Hybrid Sales

Year	HEV Vehicles Sold	Predicted Sales
1999	17	51
2000	9350	254
2001	20282	1254
2002	22335	6124
2003	47566	28386
2004	84199	106674
2005	205828	240706
2006	253518	322522
2007	352862	346286
2008	315688	351515
2009	290740	352590
2010	274421	352808
2011	269178	352852

In order to analyze the data a three parameter logistic model was used: S(t) = K[1+exp(-b(t-to)] Where: t= time (yrs) To = the inflection time K = saturation status level b = coefficient The methodology used in this report was the method of least squares to fit a curve to the data. In this the logistic model above was used and the values for K, b, and t0 were manipulated using the solver function in excel to minimize the sum of the square roots of the data vs. the resultant. The following tables shows the results:

Table 2: Data and S-Curve Values

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Table 3: S-curve Model Parameters

K value	351788.71
b	0.9339668
t0	2004.9853

The data was then plotted. The blue line represents the total number of sales of hybrid electric vehicles in the US from 1999-2011. The red line is the predicted sales based on the logistic function that was used. Predicted sales come from the regression model used plotted as time progresses.

Figure 1: Plotted sales and Predicted Sales

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A regression analysis using the Data Analysis tool in excel was also performed and is shown is Tables 4-6.

Table 4: Regression Statistics for Predicted Model

Multiple R	0.97041075
R Square	0.941697024
Adjusted R Square	0.936396754
Standard Error	37849.61047
Observations	13

Table 5: ANOVA Statistics for Predicted Model

	df	SS	MS	F Score	Significance F
Regression	1	2.54528E+11	2.54528E+11	177.6696152	3.92358E-08
Residual	11	15758523141	4.210E+14
Total	12	2.70287E+11

Table 6: Statistical Results for Predicted Model

	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	-1590.635654	1679.19022	-.093691479	.927046766	-38961.58135	35780.31005
X Variable 1	1077574765	.080842704	13.32927662	3.92358E-08	.899641173	1.255508357

Interpretation of Results

The values that best fit the three-parameter logistic function that was provided are as follows; K = 351788.71, b =.9339668, and t0 = 2004.98. The K value here signifies the maximum value which is expected or a saturation level. This value is given as the exact value that was determined using the method of least squares but realistically it is representing a number of vehicles sold. There is no such thing as 0.71% of a vehicle so this doesn’t have a realistic meaning so this number should be rounded to 352789 vehicles. The variable t0 is the inflection time. This is the point where the exponentially increasing growth starts to dip and although it is still rising, that growth level is now on the downfall. The results tell that this happened at the end of 2004. The S- curve seems to suggest that the birthing, growth, and maturity phases were all about 1/3 of the time provided, meaning 4 years at each stage; birthing from 1999–2003, growth from 2003–2007, and maturity from 2007 to 2011.

There is, of course, disagreement within the actual data and the predicted model. The actual data seems to have spiked up until 2007 and then declined from 2007 to 2011 instead of just leveling off as would be expected. Realistically the economy change, demand changes, and precise predictions of where a technology will be from year to year are quite hard to accomplish through a model. These discrepancies will be discussed in a later section.

Hybrid-Electric Vehicles (re)Introduced to the World

Before Hybrid-Electric there was the idea of the electric motor

Electric vehicles take advantage of electrical power supplied by an on-board battery. The main advantage of this is that it doesn't rely on fossil fuels as an energy source and is considered a much cleaner form of energy, only producing a fraction of the pollutants and emissions of an internal combustion engine. It is also considered much quieter to the alternative.

Electric vehicles are able to use a battery in series or parallel. Parallel increases the current while keeping the voltage the same, and series increases voltage while the current remains the same. This allows the batteries to switch to various connections depending on speeds. Lower voltages are preferred for lower speeds and higher voltages for higher speeds.

The electric motor first came into play in 1835 when Thomas Davenport of Vermont built the first rotary electric motor and by 1851 Charles Page built an electric locomotive. Electricity first appeared in streetcars around 1880. Many early vehicles took advantage of electric technology. It was quiet, clean, and did not have to be cranked as with gasoline powered cars because the starter was also electric. As faults were recognized and not able to be overcome the electric vehicle slowly gave way to gasoline powered cars and by the time of the 1924 automobile show, no electric or hybrid cars were on display. This announced the end of the Golden Age of electric powered cars.

Gasoline Powered Cars and the Internal Combustion Engine (ICE)

Gasoline cars in the early days were noisy, smelly dirty, sometime unreliable, and as opposed to the electric vehicle required the user to manually start the car using a crank which was quite difficult. They did have one main advantage though, the use of petroleum based gasoline allowed the vehicle to be more powerful and go much further distance between “refilling” its source of energy. The main goal of any form of transportation is to get someone or something from one place to another. This becomes a big problem if that has to be halted one or multiple times throughout the trip, especially for extended periods of time as with charging a battery. Burning gasoline as an energy source and quickly being able to fill back up was a major advantage to get vehicles much further. The world is still quite reliant on gasoline and oil because of this advantage.

Hybrid Electric Vehicles

The concept of a hybrid-electric vehicle has been around as long as the automobile itself. In 1901 Ferdinand Porsche developed the Lohner-Porsche Mixte Hybrid which was the first hybrid vehicle in the world. Henri Pieper of Germany shortly after released a hybrid with an electric motor, batteries, as well as a petroleum based engine which was able to power the battery supply and in turn help the electric motor.

Despite early attempts to enable vehicles to run off electric power, there just wasn’t the capability to run the vehicle any amount of distance on a single charge and this quickly became a downfall. Although early attempts to run vehicles off electric or hybrid-electric were very apparent the internal combustion engine running off gasoline soon quieted this and by WWI “These early hybrid vehicles could no longer compete with the greatly improved gasoline engines that came into use”. It wasn’t until recently; starting in 1997 in Japan and 1999 in the US that hybrid technology was looked into again and became widely popular although not without its own downfalls.

Classifications of Hybrid

There are two main classifications of hybrid and one that is a combination of both;

Series Hybrid: Sole propulsion is by the battery-powered motor. The purpose of the internal combustion engine is that the power coming to the battery is generated from another energy source such as an ICE. The engine only operates with the purpose of keeping the battery charged, and thus acts as a portable battery charger.

Parallel Hybrid: The battery and engine are both used for transmission which means multiple sources, or just one, can be used to power the vehicle. This indicates that the vehicle can act as an internal combustion vehicle, an electric vehicle, or a combination of both. In this case the engine can be smaller because internal combustion and electric can work together.

Series-Parallel: This type of engine combines the series and parallel engines described above.

Features

Idle Stop: Engine turns off when stopped and reengages when the brake is released.

Regenerative braking: The braking system is able to capture energy while the vehicle is braking and store it in the batteries. The batteries then power the electric motor.

Power assist: An electric motor draws power from the battery supply and assists the internal combustion engine. This enables the ICE to be smaller and use less energy.

Issues related to the Hybrid Electric Vehicle

Although the recent rise of hybrid-electric vehicles has been apparent, sources saying as many as 5.2 million hybrid electric vehicles have been sold in the last 15 years, it is in no way a new market. Automobiles have been around since the early 1900s and a network of roadways, highways, and bridges has been set in place to connect the entire country. As the automobile gained popularity this network had to increase to meet demand. By 1921 the Federal Aid Highway Act had been set up to start a federal highway system. The Federal Highway Act of 1956 furthered this advance, allocating $25 billion for the construction of 41,000 miles (66,000 km) of Interstate Highway over the next 20 years.

The main market that has been set up is for those that are both trying to be more “green” and cut down on emissions and those trying to use less fuel and thus save money. The catch 22 is that usually these vehicles are more expensive because they have components of an internal combustion engine vehicle and an electric vehicle as well as more technological features and components to make it all run smoothly together. The Energy Policy Act of 2005, which was signed by George W. Bush on August 8, 2005, attempted to subsidize this additional cost and promote use of these ecofriendly vehicles by providing buyers. This act granted $3,400 as a tax credit for the most efficient hybrid cars. This act lasted until December 31, 2010.

Modern Phases of Growth

Gasoline has served as the main source of energy for the past century, but it is a fossil fuel of limited supply at the current rate of consumption it will not be around for much longer. Keeping this in mind many scientists and engineers have looked into alternatives to the standard internal combustion engine. The oil embargo in 1973 made this need to stray from reliance of foreign oil very apparent. On October 16, 1973, OPEC announced a decision to raise the posted price of oil by 70%, to $5.11 a barrel. Due to this oil embargo congress enacted public law 94-413, the Electric and Hybrid Vehicle Research, Development, and Demonstration Act of 1976. The goal they wished to look into was improving things such as the electric motor, batteries, and other components of a hybrid electric vehicle.

The Birthing Phase

It wasn’t until the late 1990s that hybrid vehicles started to come into play again initially in Japan with the release of the Toyota Prius. A couple years later in 1999 the U.S. was introduced to the Hybrid-Electric in the form of the Honda Insight and in 2000 the Toyota Prius also came to US in the US.

It can be seen from the raw data as well as the graph that the hybrid-electric had a slow start for the first few years before its rapid growth. The first year only 17 vehicles were sold and the following years until 2002 only saw a maximum sale of 22,335 vehicles. At this point in time the interest, although still small, exceeded what they could produce. It is possible that manufacturers weren’t originally sure how well hybrid-electric vehicles would go over with the public but during the growth phase the consumer would typically have to order the vehicle months ahead of time and wait for the vehicle to be produced as opposed to the other way around as sales typically are with personal vehicles.

The Growth Phase

The raw data and the regression model follow very closely through the rapid growth of the hybrid-electric. By this time the vehicles had been seen by the public and manufacturers had a better sense of the market and demand. Both of the factors contributed to the growth of sales during this period.

As the public was able to see the benefits in gas mileage that a hybrid electric is able to achieve, popularity grew but nothing seems to have contributed more to the number of sales than the price of gasoline at this time. Comparing hybrid sales with gas prices in the figure to the right it can be seen that as gas prices rise the desire for higher mileage in a vehicle also rises and thus more hybrids are being sold during this time. When gas prices suddenly dropped from the peak at around $4.12 as the national average, the sales also appear to drop in the raw data.

The Maturity Phase

The maturity stage of HEVs is hard to define from the data at hand. The raw data would appear to say that around 2007 the sales of hybrids actually reached its peak and already went onto the next stage past maturity which is a decline. The regression model tends to disagree with this, appearing to say that a predicted peak (based on original growth) should have peaked by now, but not until very recently. The leveling off in the raw data in recent years can probably be accounted for by both the rise of gas prices again and a slow recovery of the economy. If both of these trends continue it may be expected that hybrid sales once again will increase higher than the 269,178 vehicles sold in 2011 but whether it continues to rise past its projected peak or quickly levels off is unknown.

The results of the “maturity” of this technology can be looked at in a couple ways:

• The actual data could have peaked and could be on the decline. In this case there is typically another technology that is taking its place, especially with such a short life cycle. “Hybrids are looked upon by many as a short-term solution until the range limitation and infrastructure problems of purely electric vehicles is solved”. If the hybrid was only a stage between the internal combustion engine and going fully electric (or even moving on to other alternative fuel energy sources), then this could in fact be the case.

• The other way to look at it is that there is not enough data to properly analyze sales of the HEV. Sales in the U.S. have only been around since 1999, and didn’t really spike until around 2003/2004. The technology is relatively young and anything could still happen. The recent decline in the economy has resulted in minimal spending for the past 4 or 5 years which is where the data shows a drop and as the economy picks up sales of HEVs could easily pick up too. Looking at other forms of technology and transportation there are always rise and fall points throughout but the general trend in the end tends to follow closely with an S-curve. The regression model performed would suggest that sales of the hybrid will pick up but may reach a peak very soon. Time will only tell.