Hybrids Get a Second Look from Automakers

As EV sales plateau, automakers are reconsidering hybrids as a critical bridge to an electrified future.  

The Gas-Hybrid-EV Continuum  

2024 Hyundai Kona - hyundaiusa.com
2024 Hyundai Kona - hyundaiusa.com

Carmakers are rethinking their approach to electrification as the once booming market for electric vehicles (EVs) begins to soften. Prices for EVs have dropped over the past year, initiated by Tesla dramatically cutting prices on their new EVs. That has put EV profitability in question for other manufacturers just as the market is graduating from satisfying early adopters to the tougher task of persuading a more skeptical set of remaining shoppers.

Enter hybrids. That twenty-five-year-old bridge technology from internal combustion to full-electric propulsion is getting a second look from automakers trying to meet new and aggressive federally mandated emissions targets while also meeting buyers where they are on EVs.

Why Hybrids Make Sense Now  

2024 Toyota Grand Highlander Hybrid - toyota.com
2024 Toyota Grand Highlander Hybrid - toyota.com

Car buyers cite two major reasons why they might shy away from an EV versus a traditional internal combustion vehicle (ICE). The first is price. Changed to the federal EV tax credit, requiring US manufacture and material sourcing, have reduced the number of cars that qualify. High interest rates have further put a damper on sales. And then there’s the price of an EV itself.

The average price of a new gas-powered vehicle is hovering around $45,000. The average for an EV or plug-in hybrid (PHEV) is closer to $60,000. Meanwhile, the average for a hybrid powered vehicle is roughly $42,000.

2024 Kia Niro Plug-In-Hybrid - kia.com
2024 Kia Niro Plug-In-Hybrid - kia.com

Vehicle segmentation explains a lot of this disparity. The current crop of EVs and PHEVs are largely classified as luxury vehicles with prices to match. (Margins are higher on more expensive vehicles, so as manufacturers have sought profitability for their new EVs, they’ve targeted higher margin luxury segments.) Similarly, gas-powered sales in the US are dominated by full-size trucks and SUVs, driving up those prices as well. In contrast, many of the current hybrids are smaller sedans and crossovers (though this is now changing), keeping their prices comparatively low.

The other major hurdle to wider EV adoption is, broadly, ease-of-use. Range anxiety and a lack of charging infrastructure have buyers used to the simplicity of gas-powered cars reluctant to take on the unknowns and headaches of adapting to life with an EV. Hybrids and plug-in hybrids solve for both problems. Ranges for hybrid and PHEVs rival those of marathoner diesel trucks and hybrids fill up just as quickly as gas-powered cars at any of innumerable corner gas stations.

Spreading Resourcing 

2024 Toyota Prius - toyota.com
2024 Toyota Prius - toyota.com

A final note in favor of hybrids comes from Toyota, who pioneered the segment with the Prius. As most of the automotive industry was leaping headlong into EVs in recent years, Toyota was slow-walking their own move toward EVs, delivering half-hearted efforts like the bZ4X EV and emphasizing the value of hybrids and PHEVs. Chairman Akio Toyoda had come in for criticism for the stance, but the company explained their reasoning with what they called their 1:6:90 rule. According to Toyota, the same amount of battery material that goes into one EV can produce either six plug-in hybrids or be spread across a full 90 traditional hybrids. The potential emissions savings are, therefore, greater by deploying hybrid technology throughout their lineup versus attempting a wholesale swap from gas to electric power, especially given current EV adoption rates.

New Hybrids Planned by GM and Genesis 

2025 Cadillac Escalade IQ - media.cadillac.com
2025 Cadillac Escalade IQ - media.cadillac.com

GM has been among the most aggressive legacy US carmakers when it comes to electrification. CEO Mary Barra has said GM is “all in” on electric vehicles while their flagship Cadillac brand is set to go fully electric by 2030. That enthusiasm is now being tempered by slowing growth in the EV market.

In a recent earnings call with investors Barra said GM plans to incorporate new plug-in hybrids among “select vehicles” to help diversify their powertrain offerings and bridge the gap for buyers looking to reduce their carbon footprint yet uneasy about making the jump to an EV. Barra said, “deploying plug-in technology in strategic segments will deliver some of the … environmental benefits of EVs as the nation continues to build this charging infrastructure.”

GM isn’t the only carmaker giving hybrids a second look. According to The Korean Economic Daily, Hyundai’s luxury arm Genesis has plans to introduce new hybrid cars in an effort to attract EV skeptical buyers, starting in 2025. Such hybrids would represent a mid-point for buyers between Genesis’ current mix of internal combustion and electric vehicles. The most likely candidates for hybridization are the Genesis G70 and G80 sedans. Genesis will have their pick of powertrains as the Hyundai and Kia brands already offer a wide swath of hybrids and plug-in hybrids (PHEVs). Genesis dealers have reportedly asked for a plug-in hybrid version, but it remains to be seen whether Genesis will heed that call.

Ford F-150 Powerboost Hybrid - ford.com
Ford F-150 Powerboost Hybrid - ford.com

Other manufacturers like Mazda are diversifying their hybrid options as well, with that company poised to release two new plug-in hybrids later this year. Ford, meanwhile, will reportedly double their production of the hybrid powered F-150 at the same time the scale back the rate of production on their fully-electric F-150 Lightning. Indeed, GM, Ford, Volkswagen, Stellantis, and other carmakers are scaling back their plans for a rapid transition to EVs.

Regulators Weigh Easing EV Transition Targets 

Cars on the road
Cars on the road

A recent letter from the Alliance for Automotive Innovation (AAI), which is comprised of GM, Ford, Stellantis, Toyota, Volkswagen, and other carmakers, called on the Biden Administration to ease currently ambitious emissions targets.

Current EPA targets call for an overall reduction in emission of 56 percent by 2032 and that EVs constitute 60 percent of new vehicle sales by 2030 (67 percent by 2032). It’s now rumored that the Biden Administration is indeed considering scaling back those targets to something closer to those proposed by the AAI, somewhere around a ten percent reduction in those targets.

2024 Jeep Wrangler 4xe - media.stellantisnorthamerica.com
2024 Jeep Wrangler 4xe - media.stellantisnorthamerica.com

Even those targets may be difficult to hit. Currently, EVs make up eight percent of the US auto market while hybrids constitute another nine percent. With EV growth slowing amid the adoption headwinds outlined above, it’s hard to see how the industry meets even a 40 percent target, especially if that percentage is married to full EVs and PHEVs as it is currently.

As carmakers, business stakeholders, and policy makers work to improve battery technology, improve charging networks, and build out electrical infrastructure, the bridge technology exists in the form of hybrids to get us from A to B to C. Reality has come for the EV transition. Prices, public skepticism, and the inevitable challenges of broad electrification need not prevent a “greener,” less polluted future. Build hybrids, buy hybrids; they’re the right technology for the moment we find ourselves in.

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Chris Kaiser

With two decades of writing experience and five years of creating advertising materials for car dealerships across the U.S., Chris Kaiser explores and documents the car world’s latest innovations, unique subcultures, and era-defining classics. Armed with a Master's Degree in English from the University of South Dakota, Chris left an academic career to return to writing full-time. He is passionate about covering all aspects of the continuing evolution of personal transportation, but he specializes in automotive history, industry news, and car buying advice.

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