Since about 2004 companies have been offering conversion kits for (mainly) Toyota Prius and Ford Escape hybrid owners to convert their vehicles to plug-in hybrid electric vehicles (PHEVs). This is largely done by replacing the current batteries, management system, and charger in current vehicles. While that’s simple to say, it is actually a fairly complex system, particularly the management system, which helps control the speed and amount of electricity flowing in and out of the battery.

There is essentially a two-tier system to this industry: the first tier includes the companies that actually make the equipment and develop the engineering for the conversion itself. The second tier is the installers - the people that actually install the equipment into your vehicle. In some cases these are all done by the same company, but several companies are now split between the tiers (for example Hymotion has certified several installers across the country to convert hybrids to PHEVs). With these vehicles now converted they can travel for anywhere from 5 to 40 miles without using any gas, as long as the vehicles are plugged in and charged prior to use.

This market has been growing (some would argue slowly), but it is very difficult to size as there are no registration requirements and most companies do not publish their sales numbers. However, an estimate of about 3,000 to 4,000 vehicles (including fleet vehicles) converted over the years may not be too far off. The number of companies offering PHEV conversions is also somewhat tough to estimate because there are many do-it-yourself type operations that help advanced consumers convert their own vehicles. However, the major players in the market are EDrive Systems, EETrex (formerly Hybrids Plus), Hymotion (part of A123 Systems), and OEMtek. Overall the marketplace is still relatively new, largely because of the limited access to the conversions and high costs (conversions have been falling price but remain at least $5,000-$12,000 over the price of the original vehicle, and often higher).

But as automakers begin to join the PHEV marketplace with mass produced PHEVs (such as the Chevy Volt and Plug-in Toyota Prius both in 2010), what will happen to these conversion companies? In most cases the trend has already been toward offering components, for example EDrive Systems is part of EnergyCS, a battery management system company, and Hymotion is part of A123 Systems a battery maker.

Additionally EETrex is offering a vehicle-to-grid product called the Inverger which manages energy flow from a vehicle to the grid - the smart grid technology that is widely expected to become more critical as the volume of PHEVs grows. We anticipate the market for conversions will continue to last beyond the launch of the Volt and Plug-in Prius, particularly for fleet customers - though the launch of these vehicles will definitely have a dampening affect on the Prius conversions currently being completed. Currently, there are a few companies that do conversions for pick-up trucks, large medium duty and heavy duty trucks, as well as full size vans. As additional hybrids are brought to market in other vehicle segments, we expect that companies will continue to develop the engineering to convert them into plug-in hybrids.

Looking further into the future towards the latter half of the next decade, it would not be surprising to see conversion going the other direction, such as adding additional charging apparatus to full EVs (e.g. adding fuel cells or solar arrays) to provide vast or essentially unlimited range. The one thing about the conversion and aftermarket business, imagination is essentially the only limitation.

Reprinted with permission from Pike Research