Toyota
- Hybrid sales are booming in the US.
- Once dismissed as a "phase," many drivers are now choosing them over EVs.
- One Toyota exec told BI there are "no compromises" to buying a hybrid anymore.
Hybrids are having a moment.
Sales of partially battery-powered vehicles, once ridiculed as a "phase" by the likes of Elon Musk, are increasing even as EVs stutter, with hybrid sales growing by 50% in the first two months of the year, while EV sales grew 13% in that time, according to research site Edmunds.
The booming popularity of hybrids has benefited companies like Toyota who have hedged their bets on EVs and continued to invest in their hybrid lineups.
Other auto companies are following Toyota's lead, with General Motors pledging to sell hybrids again in North America and Ford delaying its latest electric SUV to focus on its own hybrid lineup.
Even Tesla, which famously doesn't sell hybrids and is unlikely to do so anytime soon, is taking notice. In his latest earnings report, the company blamed demand for hybrid vehicles for depressing global EV sales.
"The EV adoption rate globally is under pressure, and a lot of other auto manufacturers are pulling back on EVs and pursuing plug-in hybrids instead," said CEO Elon Musk in an earnings call.
"We believe this is not the right strategy, and electric vehicles will ultimately dominate the market," he added.
Business Insider spoke to hybrid owners, experts and industry execs to discover why hybrids are gaining popularity.
Lack of affordable EVs
Nick O'Brien, who teaches auto tech at Jefferson Community College in Kentucky, took delivery of a hybrid 2024 Ford Maverick in February, and told Business Insider he was more than happy with his purchase.
He said the hybrid perfectly balanced excellent fuel economy with a reduced environmental impact.
"I love it — it's very quiet, very smooth, and more than double the fuel economy of my previous vehicle," he said.
O'Brien told BI that he believes EVs are the future, but the lack of affordable options meant that he decided to buy a hybrid instead for his next vehicle.
"The biggest barrier for me personally is the cost of a new EV," he said. "I think there just aren't many EV options yet that regular people (as opposed to rich people) can afford."
The lack of affordable EVs has been cited as one of the biggest reasons why drivers are reluctant to go electric.
Hybrids, which tend to be more affordable than pure EVs, appear to be reaping the benefits.
Buyers paid $42,500 for hybrids in November 2023 on average compared with $60,500 for electric vehicles and $47,500 for gas cars, according to data from Edmunds reported by the New York Times.
"The additional costs associated with fully electric vehicles is definitely higher than hybrids," Mark Singer, a senior transportation analyst at the National Renewable Energy Laboratory, told BI.
"A lot of hybrid electric vehicles now are not far off from their internal combustion engine alternatives. So I think that the lower incremental costs associated with hybrids at this point are driving some interest towards hybrid versus fully electric vehicles," he added.
Soaring gas prices
Singer said that gas prices, which have remained high since the pandemic in the US, could also be having an impact on consumers' decision to opt for more fuel-efficient vehicles versus gas versions.
"What we've seen historically is that when gas prices rise, hybrid electric vehicle price or acquisitions rise as well," he told BI.
"Since we came out of the pandemic period, gas prices have seen an increase and I think that's probably a significant reason why hybrid electric vehicles have grown in popularity over the last couple of years," he added.
Charging hurdles
One of the big winners of the latest hybrid craze is Toyota, which has taken a more skeptical approach to EVs than many of its rivals.
The Japanese carmaker beat out Tesla in a recent survey charting most the brands most considered by EV shoppers, despite releasing only one battery electric car in the US.
Toyota vice president of sales, Jeff Buchanan, told Business Insider that customers are now looking for a choice between hybrids, EVs, and combustion engines, and that Toyota was reaping the benefits of having options in "virtually every segment."
"With hybrids now that there's no compromises anymore — they're super efficient, they're powerful, the styling is great," he said.
Toyota is expecting around 40% of its total US sales to be in hybrids this year, Buchanan said, with sales of partially and fully electrified vehicles up 70% in the first four months of the year.
He described the relative affordability of hybrids as a "huge" factor swaying consumers towards hybrids, especially as interest rates have risen over the past few years — but added that lingering concerns over charging were also putting customers off from going fully electric.
"There's no doubt that for some people a concern," Buchanan said.
"There's just not enough public charging out there to make all customers comfortable with it, and I do think that probably is driving more customers back towards hybrids and plug-in hybrids," he added.
Singer agreed, pointing to affordability and charging as the biggest factors swaying consumers from taking the plunge and buying a pure EV.
"Those are the two issues that are proving the biggest barriers to adoption," he said.
With neither barrier an issue for hybrids, it seems that the hybrid boom is unlikely to die down anytime soon.