- As sales of all-electric vehicles are growing slower than expected, major automakers are increasingly meeting their customers with hybrid vehicles.
- Automakers are rethinking the feasibility of hybrid cars and trucks to satisfy consumer demand and avoid costly penalties related to federal fuel economy and emissions standards.
- By November this year, the share of hybrids in American car sales was 8.3%, that is, about 12 lakh vehicles were sold. This share is 2.8 percentage points higher than last year’s total sales.
2023 Prius Prime on display, April 6, 2023.
Scott Millin | cnbc
DETROIT – As sales of all-electric vehicles continue to grow slower than expected, major automakers are increasingly meeting their customers in the middle.
More and more companies are rethinking the feasibility of hybrid cars and trucks to satisfy consumer demand and avoid costly penalties related to federal fuel economy and emissions standards.
The changing strategies run contrary to industrywide EV messaging of recent years. Many auto companies have begun investing billions of dollars in all-electric vehicles, and the Biden administration has pushed to get more EVs on American roads as quickly as possible.
But hybrid vehicles – those with conventional internal combustion engines combined with EV battery technologies – could help the automotive industry reduce fuel consumption and emissions in the short term, while consumers will ease into vehicle electrification.
According to Edmunds, sales of traditional hybrid electric vehicles or HEVs like the Toyota Prius are set to overtake all-electric vehicles in 2023. As of November this year, HEVs accounted for 8.3% of US car sales, i.e. approximately 12 lakh vehicles were sold. This share is 2.8 percentage points higher than last year’s total sales.
The share of EVs in total sales in December stood at 6.9% or about 976,560 units, which is 1.7 percentage points higher than last year’s total sales. Sales of plug-in hybrid electric vehicles, or PHEVs, accounted for just 1% of U.S. sales as of November.
Jessica Caldwell, Edmunds executive director of insights, said, “There’s been a lot of talk over the past few years about the move toward electrification and the types of hybrids going forward, but … hybrids are not dead.” “There are a lot of consumers out there who are interested in electrification, they may not be ready to fully electrify.”
Hybrids can also cost less and relieve many of the concerns typically associated with EVs, such as range anxiety and lack of charging infrastructure. According to Edmunds, the average hybrid this year costs $42,381. This is less than the average of about $59,400 for an EV; $60,700 for a PHEV; and $44,800 for a conventional vehicle.
Morgan Stanley said earlier this month that Toyota Motor, Honda Motor and Hyundai Motor, including Kia, account for 9 out of 10 hybrid sales in the US. Representatives from those automakers said they are actively trying to increase production and sales of hybrid vehicles in the US.
“While the transition to full battery electric transportation will take time, hybrids and plug-in hybrids will play an equally important role in Kia America’s near- and mid-term goals,” Eric Watson, vice president of Kia America Sales, said in a statement. To CNBC.
And other companies, like Detroit automakers, are following suit.
Detroit automakers have different strategies for hybrid vehicles.
Ford Motor offers PHEVs, but is leaning toward HEVs, announcing in September plans to double sales of V-6 hybrid models to about 20% in the U.S. through the 2024 model year. It’s part of Ford CEO Jim Farley’s plan to quadruple the company’s production. Gas-electric hybrid.
Ford’s hybrid sales through November this year are projected to increase 23% to more than 121,000 units compared with the same period in 2022, or 6.8% of its total sales by that time. In comparison, Ford’s EV sales grew 16.2% to about 62,500 units, accounting for 3.5% of its total sales.
Hybrids and plug-in hybrids both feature a conventional engine combined with EV technologies. Traditional hybrids such as the Toyota Prius contain electrified parts including a small battery to assist the engine to provide better fuel economy. PHEVs typically have a large battery that provides full-electric driving for a certain number of miles until the engine is needed to power the vehicle or the electric motor.
Chrysler’s parent company Stellantis is banking on PHEVs for its electrification strategy, ahead of introducing several EVs starting next year. The company is the top seller of plug-in hybrid electric vehicles in the US, and these vehicles accounted for about 10% of the company’s third-quarter sales, led by the Jeep Wrangler and Grand Cherokee SUVs.
But General Motors still isn’t ready to change its EV plans, which include a goal of offering exclusively all-electric vehicles by 2035.
GM led the way for plug-in electric vehicles during the 2010s with the Chevrolet Volt. The company discontinued the vehicle in early 2019, citing demand and cost concerns.
Since then, the automaker has not introduced any other hybrid vehicle in the US other than the recently launched Chevrolet Corvette E-Ray, a hybrid version of the famous sports car. GM offers hybrids, including PHEVs, in China.
2024 Chevrolet Corvette E-Ray Hybrid Sports Car
“We still have a plan that allows us to make all light-duty vehicles EVs by 2035,” GM CEO Mary Barra said during the Automotive Press Association meeting in Detroit on Monday. “We’ll make adjustments based on where the customer is and where the demand is. It won’t be like, ‘If we build it they will come.’ “We will be customer led.”
His comments come after GM President Mark Reuss told CNBC in August that he was “flexible” regarding hybrids as a way to meet federal regulations.
“If that means we have to do it according to the law, then we have to do it according to the law,” he said. “If there are rules that apply to us, we will look at everything we have in our toolbox to meet them.”
Major auto companies including Detroit automakers were relying on EVs to help offset the emissions and poor fuel economy of large SUVs and trucks, which could lead to millions of dollars in fines from the federal government.
To fine GM and Stellantis a combined $363.8 million for failing to meet federal fuel-economy standards for cars and trucks produced in previous years, according to information published by the National Highway Traffic Safety Administration in June. was forced.
According to automaker lobbying groups, such fines would increase significantly under the Biden administration’s existing proposals to improve vehicle fuel efficiency and move toward EVs.
The American Automotive Policy Council, a group representing the Detroit Three, said earlier this year that automakers could face $14 billion in non-compliance penalties between 2027 and 2032 unless they make significant changes to the overall fuel efficiency of their fleets. Will have to face more than. US automakers have separately warned that GM will be fined $6.5 billion, Stellantis $3 billion and Ford $1 billion, according to Reuters.
NHTSA in July proposed increasing fuel efficiency requirements by 2% per year for passenger cars and 4% per year for pickup trucks and SUVs from 2027 to 2032, resulting in average fuel efficiency across the fleet to 58 mpg.
Since EVs are playing a smaller role than expected in boosting those fleet-wide averages, hybrid vehicles could save manufacturers millions.
“Even without electric vehicles, it is expected that electrification of the internal combustion engine will be necessary to meet regulations,” said Stephanie Brinley, chief automotive analyst at S&P Global Mobility.
The resurgence of hybrids is especially important for Toyota. The Prius, the world’s largest automaker, is considered the pioneer of traditional hybrids.
Ironically, the company became the target of environmental groups last year for its strategy of moving forward with a mix of hybrids, PHEVs and EVs, which critics saw as a lack of commitment to an all-electric future.
Toyota’s argument both then and now is that it is meeting consumer needs and planning for more gradual global adoption, in which naturally some markets will shift to EVs sooner than others.
The company further says it takes into account the overall environmental impact of producing EVs compared to hybrid electrified vehicles, arguing that it produces eight 40-mile plug-in hybrids for every 320-mile battery electric vehicle. And can save up to eight times carbon. Emitted into the atmosphere.
Toyota Chairman and former CEO Akio Toyoda, who has been heavily criticized for his slow approach on EVs, said in October, “People are finally seeing reality.” According to The Wall Street Journal, regarding EVs.
Toyota CEO Akio Toyoda speaks during a small media roundtable in Las Vegas on September 29, 2022.