Hybrid costs expected to drop by two-thirds over next decade

One of the biggest hindrances to the rollout of more hybrid vehicles is the high relative cost of their petrol-electric powertains over standalone internal combustion engines. A petrol-electric hybrid vehicle on average costs about $6,000 more than a comparable petrol model, but according to a new report this premium could be reduced to as little as $2,000 in the next ten years.

A report by Bloomberg claims that a drop in hybrid costs will come from technological improvements, economies of scale due to rising production numbers and a greater amount of experience with hybrids. At the same time, demand will rise on the back of higher fuel prices and tightening emission standards.

While the price of hybrid systems will fall, sales of the eco-friendly vehicles are expected to balloon to over 16 times their current level, or around 10 million units, by 2018. Analysts from global financial services firm JPMorgan Chase & Co. predict that hybrid sales will grow to 10.2% of the overall market, with North America being the biggest and strong growth expected in Europe and China after 2013.

Almost every major carmaker is rushing to develop a new generation of hybrid and plug-in hybrid vehicles. General Motors has unveiled its new Chevrolet Volt plug-in hybrid, and images of Toyota’s next-generation Prius recently hit the web. Other carmakers with important hybrid models in the works include Honda, BMW, Mercedes-Benz, and Nissan.