Automakers are turning to hybrids in the midst of the EV revolution

DETROIT – As all-electric sales grow more slowly than expected, major automakers are increasingly moving their customers into the middle.

More and more companies are reviewing the use of cars and trucks to meet the needs of customers and avoid costly penalties associated with federal fuel economy and emissions standards.

The shift in strategy is counter to the EV message in the industry in recent years. Many car companies have begun to spend billions of dollars on all-electric vehicles, and the Biden administration has pushed for more EVs on American roads as quickly as possible.

But hybrid vehicles — those with traditional engines combined with EV battery technology — can help automakers reduce reduce fuel consumption and emissions in the short term, while satisfying consumers with electrified vehicles.

Sales of conventional electric vehicles, or HEVs, such as the Toyota Prius, are set to outpace all electric vehicles by 2023, according to Edmunds. HEVs accounted for 8.3% of US vehicle sales, with approximately 1.2 million vehicles sold through November of this year. That share is up 2.8 percent compared to last year’s total sales.

EVs accounted for 6.9% of sales through December, about 976,560 units, up 1.7 percent compared to last year’s total sales. Sales of plug-in electric vehicles, or PHEVs, accounted for just 1% of US sales in November.

“There’s been a lot of talk over the past few years about going electric and kind of abandoning hybrids, but … hybrids aren’t dying,” said Jessica Caldwell, Edmunds general manager of understanding. “There are many customers who are interested in electrification, maybe they are not ready to go completely electric”.

It can also reduce costs and alleviate many of the concerns often associated with EVs such as excessive stress and lack of regulation. The average hybrid this year is $42,381, according to Edmunds. That’s below the $59,400 average for an EV; $60,700 for the PHEV; and $44,800 for the standard car.

Morgan Stanley earlier this month said that Toyota Motor, Honda Motor and Hyundai Motor, including Kia, are 9 out of 10 buyers in the US. and hybrid car sales in the US.

“While the transition to full electric power will take time, hybrids and plug-in hybrids will be equally important to Kia’s American and mid-market goals,” said Eric Watson, vice president of sales for Kia America, in a statement. on CNBC.

And other companies, like the Detroit automakers, are following suit.

Detroit Auto has different strategies for hybrid vehicles.

Ford Motor offers PHEVs but relies on HEVs, announcing plans in September to double sales of the V-6 hybrid model by the 2024 model year to about 20% in the U.S. Part of the plan Ford CEO Jim Farley doubles the company’s production. gas-electric hybrids.

Ford’s sales through November of this year are 23% over the same period in 2022 at more than 121,000 units, or 6.8% of total sales at that time. In comparison, Ford’s EV sales were up 16.2% to about 62,500 units, accounting for 3.5% of its total sales.

Chrysler parent Stellantis, for its part, is relying on PHEVs for its electric strategy, before introducing more EVs starting next year. The company is the largest seller of electric vehicles in the US, and the vehicles account for 10% of the company’s third-largest sales, led by the Jeep Wrangler and Grand Cherokee SUVs.

But General Motors isn’t ready to change its EV plans, which include a goal to offer only all-electric vehicles by 2035.

GM led the way for electric vehicles with the Chevrolet Volt in the 2010s. The company discontinued the car in early 2019, citing demand and cost concerns.

Since then, the automaker hasn’t offered another crossover in the US other than the recently launched Chevrolet Corvette E-Ray, a example of the famous popular game. GM offers hybrids, including PHEVs, in China.

“We still have a plan to be an all-electric EV by 2035,” GM CEO Mary Barra said Monday at the Automotive Press conference. Association in Detroit. “We will adjust based on where the customer is and where the need is. The customer will guide us.”

His comments came after GM President Mark Reuss told CNBC in August that he was “flexible” about hybrids as a way to meet federal regulations.

“If that means we have to do that by law, then we have to do that by law,” he said. “If there are regulations to be imposed on us, we will look at everything in our toolbox to deal with it.”

Major auto companies, including Detroit automakers, have been eyeing EVs to help offset the emissions and poor fuel economy of large SUVs and trucks could cost hundreds of millions of dollars in federal fines.

GM and Stellantis were forced to pay a combined $363.8 million in penalties for failing to meet federal fuel-economy standards for cars and trucks they produced in previous years, according to the report. published information by the National Highway Traffic Safety Administration in June.

Those fines would increase significantly under the Biden administration’s current proposals to improve fuel efficiency and move toward EVs, according to lobbying groups.

The American Automotive Policy Council, a group that represents the Detroit Three, earlier this year said that automakers will face more than $14 billion in noncompliance penalties in between 2027 and 2032 to prevent major changes in the overall oil level. US automakers have warned of fines of $6.5 billion for GM, $3 billion for Stellantis and $1 billion for Ford, according to Reuters.

The NHTSA in July recommended increasing fuel efficiency requirements by 2% per year for passenger cars and 4% per year for pickup trucks and SUVs from 2027 through 2032, resulting in fuel consumption at 58 mpg.

With EVs playing a smaller role than expected in increasing those average fleets, hybrids could save millions of car owners.

“Even if there are no electric cars, there is the expectation that an electric motor inside will be needed to meet the regulations,” said Stephanie Brinley, the main car researcher. in S&P Global Mobility.

The revival of hybrids is very important for Toyota. The largest car in the world is considered the pioneer of hybrids, and the Prius.

The company became a target of environmental groups last year for its plan to move forward with a mix of hybrids, PHEVs and EVs, which critics considered a lack of commitment to a future. all electric.

Toyota’s argument at that time, and still is, is to meet the needs of customers and plan for a gradual process of global adoption that often involves some markets being introduced more quickly than others.

The company also says it takes into account the overall environmental impact of producing EVs compared to electric cars, arguing that it can get eight 40-mile plug-in hybrids for every 320-mile electric car and save up to eight times the carbon. propelled into the air.

“People are finally realizing the truth,” Toyota chairman and former CEO Akio Toyoda, who has been widely criticized for the slow pace of EV adoption, said. October. about EV, according to The Wall Street Journal.