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Hybrid cars enjoy a renaissance as sales of all-electric vehicles decline

As Teslas and other electric vehicles dazzled car buyers with futuristic technology and dreams of a gas-free future, hybrid cars began to seem like yesterday’s news. Sales of the Toyota Prius, the standard-bearer of hybrids, fell 85 percent in a decade.

Now, a slowdown in electric car sales growth has led General Motors, Ford Motor and Volkswagen to back away from ambitious goals for those vehicles. And hybrid sales are strong, underscoring what could be the enduring reality of 2023: Many Americans are hugely receptive to electrification, but not ready for an all-electric car.

“Consumers want the same experience they’ve had” with a combustion-engine car, said Stephanie Valdez Streaty, director of industry insights at Cox Automotive. “And we’re not there yet. “Price remains the main barrier for most consumers.”

Americans bought a record 1.2 million electric vehicles last year, an increase of about 46 percent and a 7.6 percent share of all new car sales, according to Cox. But hybrid sales rose even faster, up 65 percent to more than 1.2 million, raising their market share from 5.5 percent to 8 percent, according to Edmunds. Add to that plug-in hybrids, and nearly one in 10 new cars combines a gasoline engine with electric motors to save fuel and improve performance.

Analysts say persistently high prices for electric cars and concerns about public charging are pushing some car buyers to opt for hybrids, including renters or urban dwellers who can’t charge a battery-powered car at home. Hybrids offer savings at the pump without needing to plug in for hours or plan trips around charging stops. Their batteries are much smaller and cost much less than batteries in all-electric vehicles.

Buyers paid about $42,500 on average for hybrids in November, according to Edmunds, compared with $60,500 for electric vehicles and $47,500 for conventional models. There’s a smorgasbord of affordable hybrid models, many of which cost around $30,000, including a stylishly redesigned Prius that returns a model-record 57 miles per gallon. The electric vehicle market, on the other hand, remains packed with luxury offerings.

Jim Farley, Ford’s chief executive, said traditional consumers were fundamentally different from early adopters of electric vehicles with little encouragement or education from automakers.

“Electric vehicles continue to grow at spectacular numbers, but what is changing is that the people who buy them are not willing to pay a premium,” Farley said in an interview. “Now we have to control costs and even (surprise, surprise) advertise.”

Ford is cutting its planned production of the F-150 Lightning pickup truck and increasing production of the more affordable F-150 Hybrid by 20 percent. The automaker plans to quadruple total hybrid production with hopes of selling 100,000 this year. They include the popular Maverick compact pickup, whose 37-mpg hybrid version has surpassed Ford’s most optimistic sales forecasts.

So why doesn’t Ford make all Mavericks hybrids? Farley said the company remains committed to offering a full range of propulsion systems, including electrified trucks that can function as mobile generators to power equipment, homes or even the electrical grid. Securing the supply of batteries also takes a long time, Farley said, sometimes longer than building a new assembly line.

“We didn’t know a $30,000 truck would be so popular,” he said of the Maverick. “Ford has struggled to make money on small cars since the beginning of time.”

The hybrid resurgence is mainly benefiting Toyota, Honda and Hyundai Motor, including its sister brand Kia.

Those automakers account for about 90 percent of U.S. hybrid sales, followed by Ford. Everyone continues to invest in the technology even as GM, Volkswagen and other automakers promise to shift entirely to electric vehicles.

Honda outdid itself in 2023, nearly tripling hybrid sales to 294,000 units. Hybrid versions of the Honda Accord sedan and CR-V sport utility vehicle now account for more than half of those models’ sales. That Accord combines comfort, quality and luxury-level amenities with up to 44 mpg in all-around driving, for $33,290 to start.

On track to post record U.S. sales in 2023, Hyundai, Kia and their Genesis luxury brand together sold more electric vehicles in the U.S. than any automaker except Tesla. However, Hyundai Motor remains bullish on hybrids, even after the Biden administration proposed regulations that would require two-thirds of new cars to be fully electric by 2032.

“Anyone who wants to survive in this business is making these electric investments,” said Steve Center, chief operating officer of Kia America. That includes Hyundai, which has committed to investing $12 billion in factories in Alabama and Georgia.

But Center added that an electric vehicle might not meet the needs of a “Montana cowboy with a pickup truck.” Hybrids can help reduce emissions from such vehicles more quickly, he said.

Center offered a bold prediction: As combustion engine cars become obsolete, all remaining gasoline models will embrace electrification in hybrid form. Gasoline cars will not be able to compete without it, as both consumers and regulators demand better fuel economy and reduced emissions.

“Everything should be hybrid to begin with, because anyone can drive a hybrid, everywhere,” he said.

Toyota, the world’s largest automaker, appears to be following that path. Within a few months, Toyota will offer nine hybrid-only models, including one from its Lexus luxury brand. The company sold more than 640,000 hybrids in the United States last year, 29 percent of its total sales in that country; sold around 15,000 fully electric vehicles.

David Christ, CEO of Toyota’s North American division, said the automaker hopes to reach 40 percent of vehicle sales electrified by 2024. He echoed Mr. Center’s view on the outlook for cars with combustion engine.

“Over time, we are not opposed to going fully hybrid to take a faster step toward a greener future,” Christ said.

Toyota’s faith in democratizing hybrid technology turned the company, once an environmental darling, into a scapegoat as it was widely accused of dragging its feet on electric vehicles. If Toyota feels vindicated, Christ will not admit it.

“A year ago, the media was criticizing us for not believing in electric vehicles,” he said. “We thought it was unfair, that we were not involved in electrification. We started it. We currently have eight million hybrids in circulation and each one of them reduces greenhouse gas emissions.”

But Christ added that the charging infrastructure for electric vehicles was not yet ready for many millions of battery-powered cars, which is why sales of such vehicles have slowed.

“At the end of the day, the consumer drives this industry, not the manufacturer,” he said.

Toyota will plant its largest flag yet in June. The redesigned 2025 Camry will be offered only as a hybrid. This may seem like a big gamble for the country’s perennially best-selling sedan. Toyota sold about 290,000 Camrys last year, and only 35,000 were hybrids. If the new Camry can maintain its sales, Toyota will convert a few hundred thousand buyers to a roughly 50 mpg hybrid in one fell swoop. Otherwise, the Camry franchise will take a big hit.

However, Toyota is not taking action blindly. When Toyota shifted the Sienna to an all-hybrid lineup for the 2021 model year, it immediately became the best-selling minivan in the United States, up from fourth place.

But some auto experts said hybrids couldn’t do much.

Dave Cooke, senior vehicle analyst at the Union of Concerned Scientists, said hybrids were a critical and affordable tool that allowed millions of drivers to use less gasoline, but they remained a transitional technology. Long-term climate change goals still require a shift toward electric vehicles powered by a renewable energy grid, he said.

“In our comments to the EPA and the industry, it’s, ‘Hey, put a hybrid in everything,'” Cooke said, referring to the Environmental Protection Agency. “But we still need stricter standards to ensure that automakers comply with the rules on what is technologically achievable.”

Cooke noted that the fuel economy of the country’s fleet had been stable for years, in part due to the shift toward pickup trucks and SUVs. Recent gains are entirely attributable to the rise of electric vehicles, with hybrids playing a negligible role.

Chris Harto, energy and transportation policy analyst at Consumer Reports, agreed with that assessment. “Hybrids buy us some time, but electric vehicles are where we need to go” to meet climate goals, he said.

However, Harto laments the popular narrative that pits hybrid and electric vehicles against each other.

“Both are taking market share away from less efficient ICE vehicles,” Harto said, referring to internal combustion engines. “And there is a lot of market share to be taken.”

 

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