Hybrid cars are back in as electric vehicle sales slow

Hybrid cars are back in as electric vehicle sales slow

Hybrids are becoming all the rage in the U.S. as the electric vehicle market suffers from slowed sales growth and automakers refocus their operations.

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U.S. hybrid sales shot up 45% last quarter while plug-in hybrid deliveries grew 34%, according to Motorintelligence.com. Meanwhile, electric vehicle sales growth slowed to 2.7% across the first three months of 2024. Overall, sales of new vehicles grew nearly 5%.

“Hybrids will play an increasingly important role in our industry’s transition and will be here for the long run,” Ford CEO Jim Farley said on a February earnings call. “Hybrid just hit specific customer use cases.”

There are many reasons consumers don’t want to jump headfirst into buying an EV; charging stations are still relatively difficult to come by, models can be expensive, and a particularly bad winter left many Americans cautious. Plus, charging can take much longer than filling up a tank of gas.

The average new EV cost $52,314 in February compared to $47,244 overall, according to Cox Automotive. Although that’s down almost 13% compared to the same time in 2023, high price tags are still a major turn-off for consumers.

“Our research continues to show that price remains a significant barrier for consumer adoption,” Stephanie Valdez Streaty, director of industry insights at Cox Automotive, said in a statement. She added that EVs “remain priced above mainstream non-luxury vehicles by nearly 19%.”

As a result, several automakers have homed in on hybrid vehicles to generate revenue. For some, like Toyota Motor, hybrids are a core part of their identity; for others, like General Motors, hybrids are a stop-gap while consumers warm up to EVs and more charging infrastructure is developed.

Ford Motor Co. Thursday announced a major shakeup to its electrification plans, delaying scheduled production for a new electric pickup and three-row electric utility vehicles. In recent months, the company has also slashed production of the F-150 Lightning and delayed or pulled some spending on EV battery production.

By the end of the decade, Ford expects to offer hybrid versions of its entire gas-powered lineup in North America. Hybrid sales surged 42% in the first quarter of 2024 to 38,421 units sold and accounted for almost 7.5% of all cars sold by Ford during that period. The automaker sold 19,660 Maverick hybrid trucks last quarter, up 77% year-over-year.

Earlier this week, GM disclosed that first-quarter EV sales were down 20% year-over-year. CEO Mary Barra has said the carmaker plans to sell between 200,000 and 300,000 EVs in North America this year but would “build to demand.” In the short-term, the company will focus and rely on hybrid vehicles.

“[I]n the interim, deploying plug-in technology in strategic segments will deliver some of the environment or environmental benefits of EVs as the nation continues to build this charging infrastructure,” she told investors in January.

Hyundai Motor is getting in on the action too, reevaluating its plans to exclusively make full EVs at its planned $7.59 billion facility in Georgia. Honda said its electrified models made up more than 25% of all sales in the U.S. last year, led by record deliveries of the CR-V hybrid SUV and Accord hybrid sedan.

Toyota on Tuesday said it delivered almost 178,00 electrified vehicles, including plug-in hybrid vehicles, and hybrids accounted for 36% of total sales. The Japanese carmaker’s Lexus brand sold 29,027 electric models, which accounted for 37% of its deliveries.

Since pioneering the hybrid decades ago, the technology has been a core part of its lineup. Although Toyota has recently moved to make EVs account for about a third of its current sales by 2030, it’s been reluctant to move into the market.

“There are many ways to climb the mountain that is achieving carbon neutrality,” Toyota chairman Akio Toyoda told reporters in October.

However, the company has been criticized by environmental groups and activists for its stance on the technology. Hybrids, they argue, are a short-term solution, but aren’t as good for the environment as fully electric vehicles.

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