JP Morgan predicts a 60 per cent drop in cost for petrol-electric engine
20 October 2008

The cost of making hybrid cars will fall by two-thirds within 10 years, claims a report published this week.

Financial consultants JP Morgan Chase & Co predict that the cost of making each petrol-electric engine will drop by more than 60 per cent, and that by 2018 hybrid models will account for 10 per cent of the global new car market.

A hybrid engine is currently estimated to cost around £3000 per unit, a figure that’s expected to fall to nearer £1000.

Analysts expect hybrid sales to total 9.6 million models over the coming decade. They say increased production and greater economies of scale will drive prices down.

Japanese manufacturers currently lead the hybrid market. The Toyota Prius passed one million sales earlier in the year.

Toyota predicts its third-generation car can now be as profitable as one of its saloon models

Engine and battery costs are reported to have halved since the first Prius model was launched, and Toyota expects the latest model to reduce costs by a further 50 per cent.

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Rival firm Honda will launch its significantly cheaper Insight hybrid in the UK early next year, with prices estimated to start at around £15,000.

George Barrow

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