Automakers turn to hybrids in the middle of the EV transition

DETROIT — With sales of all-electric vehicles growing at a slower pace than expected, major automakers are increasingly meeting customer demands in the middle.

A growing number of companies are rethinking the viability of hybrid cars and trucks to meet consumer demand and avoid costly penalties associated with federal fuel economy and emissions standards.

This shift in strategy runs counter to industry-wide EV messaging in recent years. Many car companies have begun investing billions of dollars in all-electric vehicles, and the Biden administration is pushing to get more electric vehicles on U.S. roads as soon as possible.

But hybrid vehicles—which combine traditional internal combustion engines with electric vehicle battery technology—could help the auto industry reduce fuel consumption and emissions in the short term while making it easier for consumers to embrace vehicle electrification.

Edmunds says that by 2023, sales of conventional hybrid electric vehicles (HEVs) such as the Toyota Prius will exceed those of all-electric vehicles. As of November this year, hybrid vehicles accounted for 8.3% of U.S. car sales, with about 1.2 million units sold. Compared with total sales last year, this share increased by 2.8 percentage points.

As of December, electric vehicle sales accounted for approximately 976,560 units, accounting for 6.9% of sales, an increase of 1.7 percentage points over last year’s total sales. As of November, plug-in hybrid electric vehicles (PHEVs) accounted for just 1% of U.S. sales.

“There’s been a lot of talk over the past few years about moving to electrification and moving away from hybrids, but … hybrids are not dead,” said Jessica Caldwell, executive director of Edmunds Insights. “There are a lot of consumers who are interested in electrification, but may not be there yet. Get ready to go completely electric.”

Hybrids also cost less and alleviate many of the concerns typically associated with electric vehicles, such as range anxiety and lack of charging infrastructure. Edmunds says the average hybrid sales price this year is $42,381. That’s lower than the average price of an electric vehicle, which is about $59,400; a PHEV, $60,700; and a conventional vehicle, which costs $44,800.

Morgan Stanley said earlier this month Toyota Automotive, honda cars and Hyundai Motor, Including Kia, it accounts for 9 out of 10 U.S. hybrid sales.Representatives of the automakers said they are actively trying to increase production and sales of hybrid vehicles in the U.S.

Eric Watson, vice president of sales for Kia Americas, said in a statement: “While the transition to all-battery electric transportation will take time, hybrid and plug-in hybrid vehicles will be part of Kia America’s near- and mid-term goals. play an equally important role.” to CNBC.

Other companies, including Detroit automakers, are following suit.

Detroit automakers have a different strategy for hybrid vehicles.

Ford Offering a plug-in hybrid but leaning more towards hybrids, the company announced in September that it plans to double U.S. sales of V-6 hybrids to about 20% in the 2024 model year. It’s part of Ford Chief Executive Jim Farley’s plan to quadruple the company’s gasoline production. Electric hybrid vehicle.

General Motors and Stellantis were reportedly forced to pay a total of $363.8 million in fines for failing to meet federal fuel economy standards in cars and trucks built in previous years. Information release Approved by the National Highway Traffic Safety Administration in June.

Automaker lobbying groups say such fines would increase significantly under current proposals from the Biden administration to improve vehicle fuel efficiency and shift to electric vehicles.

The Automotive Policy Council, which represents the Detroit Three, said earlier this year that without major changes to the overall fuel efficiency of its fleets, the automakers would face more than $14 billion in violations between 2027 and 2032. Reuters reported that U.S. automakers separately warned that General Motors would be fined $6.5 billion, Stellantis would lose $3 billion, and Ford would lose $1 billion.

NHTSA proposed in July that from 2027 to 2032, fuel efficiency requirements would increase by 2% annually for passenger cars and 4% annually for pickup trucks and SUVs, resulting in an average fuel efficiency of 58 mpg for the entire fleet. gallon.

Hybrid vehicles could save automakers millions of dollars as electric vehicles don’t do as well as expected in raising fleet averages.

“Even without electric vehicles, people expect the electrification of internal combustion engines to be necessary to meet regulatory requirements,” said Stephanie Brinley, chief automotive analyst at S&P Global Mobility.

The resurgence of hybrids is particularly important for Toyota. The Prius, the world’s largest automaker, is considered a pioneer of conventional hybrids.

Ironically, the company became a Last year, environmental groups set out a strategy for hybrid, plug-in hybrid and electric vehicles that critics said lacked a commitment to an all-electric future.

“People are finally seeing reality,” Akio Toyoda, Toyota’s chairman and former chief executive, said in October. Akio Toyoda, who has been heavily criticized for being slow to move on electric vehicles. Regarding electric vehicles, according to Wall Street Journal.