Experts Predicted All Cars Would Be Hybrid by 2020. Why Were They Wrong?

Twelve years ago, researchers for IBM asked 125 auto industry executives about their predictions for what cars would be like in 2020. The resulting report predicted every car by 2020 would be a hybrid. 

Not quite. About three percent of new cars sold in the U.S. in 2020 were hybrids, according to the Bureau of Transportation Statistics. Not only was this a fair bit shy of 100 percent, it was barely even an increase from the 2.4 percent of new vehicle sales in 2008, the year the report was authored. 

This was hardly the only auto industry prediction from the Great Recession era off the mark. Reviewing popular articles and industry studies from the heady time of auto industry bankruptcies, bailouts, and $4 per gallon gas prices, a recurring theme is just how wrong everyone was about what the future would look like. And as we climb out of another economic slump replete with predictions of massive paradigm shifts in how we work and live, including bold predictions about the future of the auto industry's shift to electric cars, it's worth reminding ourselves of the shaky ground on which these predictions are founded.

"Human beings are terrible at prediction generally, and maybe especially at technological prediction," Lee Vinsel, a historian of technology at Virginia Tech, told Motherboard. "We are just so bad."

It wasn't just the one IBM report that failed to accurately predict the future of cars. Auto companies themselves made big bets that didn't pay off. In 2008, Ford prominently declared it was betting its future on "small, efficient cars." They weren't the only ones. A year later, the AP ran a story about how "Big cars and trucks are out. Smaller ones that offer more for your dollar are in" and "automakers are banking on the shift being permanent." A New York Times story about Ford's pivot from big SUVs and trucks to small, affordable cars quotes David E. Cole, chairman of the Center for Automotive Research: "Trucks and S.U.V.'s have been so central to their strategy for so long, but the bottom line is that consumers have moved on."

A quick glance at the nearest parking lot will demonstrate how wrong this was. Just as quickly as the economy recovered and gas prices fell, consumers returned to buying the biggest trucks and SUVs they could find. No company illustrates this more than Ford. A decade after supposedly going all-in on small cars as the company's future, Ford killed them off because it makes all its money on F-series pickups and large SUVs.

There was even optimism that affordable electric vehicles were just around the corner. In 2009, Chrysler said it was going to sell its first EV by 2010 and expected to have 500,000 on the road by 2013. Not only did this not happen, but Chrysler has yet to even reveal a future electric car for sale, much less put one on the market.

At the end of 2008, NPR's Talk of the Nation held a roundtable about the future of electric cars. J.B. Straubel, then CTO of Tesla, was asked if all cars in the U.S. could be plug-ins in 10 years. "Well, I think all cars would be a bit of a stretch within 10 years," he replied. But, he added, "well over a quarter of new vehicles sold could easily be plug-in vehicles of one form or another within 10 years." In 2018, the actual number was less than 2 percent. To be fair, that prediction looks better elsewhere, where emissions regulations and point-of-sale subsidies have juiced the market in Western Europe to be not terribly far off from that quarter-of-sales mark.

Of course, no recounting of failed auto industry predictions would be complete without a mention of Elon Musk. In a 2009 New Yorker profile, Musk forecasted Tesla will sell an electric car for "less than $30,000 by 2014" and "we could be selling a million cars a year in 10 years." Tesla has yet to release a car for less than $30,000—the cheapest Tesla for sale today is $40,000—and sold about 500,000 units globally last year. 

Why were all of these predictions so off? To answer that, I asked one of the few people who got the future right. 

That would be Dan Sperling, professor at University of California, Davis and founding director of the Institute for Transportation Studies. During the NPR roundtable in 2008, Sperling cautioned that Nissan had recently announced it hoped to have 10 percent of its sales as battery electrics in 2020, saying, "I think that's probably the upper level of what we can expect in that timeframe." He also warned that at the time hybrids had been on the market for eight years and sales had only risen to 2.5 percent of the market. "And when you go to a plug-in hybrid, you're adding more cost, it's more complex and more difficulties [sic]."

Why did hybrids not catch on like others predicted? Sperling told Motherboard there were two major factors: The extra cost of hybrids, through the relatively large battery and regenerative braking systems, added $4,000 or more to the retail price, and as gas prices came down, consumers didn't see it as worth it. One reason the costs remained stubbornly high was because Toyota, which dominated the hybrid market with the Prius, had a virtual lockdown on hybrid technology patents. Any other automaker that wanted to make hybrids had to either invent its own system through costly research and development or license it from Toyota. This might have been a counterproductive long-term strategy by Toyota, since it prevented hybridization from becoming widespread, pushing the industry faster toward full electrification, something Toyota itself resists. In 2019, Toyota saw the writing on the wall amid lagging Prius sales and released 24,000 of its hybrid technology patents for royalty-free use. 

As the hybrid costs remained stubbornly high, automakers were able to meet fuel economy regulations enacted by the Obama administration through cheaper methods like using lighter materials, turbo charging engines, and auto shutoff features. The Obama regulations were supposed to get tougher the closer we got to 2026, which would have pushed automakers beyond those quick and cheap solutions, but the Trump administration rolled them back, effectively ending any incentive automakers had to go hybrid.

Vinsel thinks there are other reasons why hybrids and early electric cars didn't catch on. In the mid-to-late-2000s, two cultural events occurred within the political Left related to automobiles. The first was the 2006 release of Al Gore's An Inconvenient Truth, a breakthrough moment for American political awareness of human-caused climate change's impact on the planet. The following year, Prius sales skyrocketed, from 106,000 units in 2006 to 181,000 in 2007. Although a small number of conservatives trumpeted Priuses as a way to decrease the U.S.' dependence on foreign oil—they were briefly dubbed "Prius Patriots"—the distinctive-looking vehicles largely attracted progressives who wanted to signal their concern about the environment. Some even falsely believed "our cars aren't polluting the air." When most people thought of Priuses, they thought of Larry David in a 2004 Curb Your Enthusiasm episode saying, "I waved to a guy in a Prius and he didn't wave back… We're Prius drivers; we're a special breed." The smug Hollywood elitism rubbed many Americans the wrong way, and the word "Prius" remains derisive among conservatives to this day and a stumbling block for the adoption of electric vehicles more generally.

Given how wrong most everyone was about what 2020 would look like, should we be equally skeptical of predictions of what 2030 or 2040 will look like? What should we make of widespread predictions of EV-dominated sales by 2035 or 2040?

Sperling, who threw cold water on hybrid-dominated sales predictions a decade ago, says this time is different. He's also a board member of the California Air Resources Board, a key regulator for the auto industry given California's sizable market share. He said the combination of reduced battery costs and future regulations both in the U.S. and abroad will ensure auto companies follow through on these EV plans. Even if the federal government doesn't enact EV mandates, California will, Sperling said, and many states will likely follow. He predicted the needle won't move much before 2026, but after that, expect the market to take off.

For his part, Vinsel says his biggest takeaway from how wrong the 2020 predictions were is that "we cannot rely on the market alone to move these things." It will take regulations to do it, no matter how many industry sages predict otherwise.