Thanks to subsidies and fear of running out of gas, sales of hybrids are picking up. GM, Toyota, and Jeep are adding models.
The Plug-In Hybrid Car Starts to Win Over Buyers
The Wall Street Journal reports The Plug-In Hybrid Car Starts to Win Over Buyers
As automakers slow-walk plans to roll out more fully electric vehicles in response to lighter-than-expected consumer interest, more are embracing plug-in hybrids, which run on battery power for about 20 to 40 miles before reverting to a gas engine.
The technology has been on the market for more than a decade, but sales hadn’t taken off until recently. Some automakers shied away from offering them because of the added cost and engineering complexity—they essentially require two ways to power the car, packed under one hood. The relatively small number of models available also were pricier than gas-powered cars, limiting their appeal.
Now, car companies are finding more reasons to offer plug-in hybrids, which provide another path beyond full EVs to meet tougher U.S. tailpipe-pollution rules.
Ford Motor said this past week that it canceled plans for a fully electric large SUV and instead will offer hybrid versions, potentially including plug-ins.
A few years ago, plug-in hybrids seemed destined to fade as the industry rushed to develop full EVs. Now some automakers are giving them another look, partly because EV demand has been lighter-than-expected.
For example, General Motors GM was one of the first companies to offer a plug-in hybrid with its 2010 launch of the Chevrolet Volt. The Detroit automaker phased out the Volt in 2019, declaring its future in EVs. Now GM plans to bring back plug-in hybrids, starting in 2027.
Plug-in hybrid sales in the U.S. jumped 59% in the first quarter of this year from a year earlier, and their share of the overall market—while still small—has roughly doubled since 2022, to 2.4%, according to research from Cox Automotive.
The Jeep Wrangler and Grand Cherokee alone accounted for about one-third of U.S. plug-in hybrid sales during the first half of 2024, according to data from research firm Motor Intelligence.
Yet, there is “limited natural demand” among Jeep customers for electric range in their rugged SUVs, said John Morrill, who owns Planet Chrysler Jeep Dodge in Franklin, Mass. Sales of the plug-in Jeeps are supported by “very aggressive” manufacturer discounts of up to $12,000 a vehicle, plus a $7,500 federal tax credit if the vehicles are leased, he said.
“A lot of people come in and say, ‘I don’t want a hybrid,’ ” Morrill said. But after the salesperson explains it is $70 cheaper a month than the gas version, “they say, ‘I’ll take the hybrid.’ ”
Mainly because of the EPA rules, Toyota will expand its plug-in hybrid lineup from the RAV4 and Prius, while making plug-ins more widely available, said David Christ, group vice president at Toyota Motor North America.
German auto giant Volkswagen VOW3 is strongly considering plug-in hybrids for its U.S. lineup, said Lyndon Lie, executive vice president of Volkswagen Group of America. For now, it is a better business than EVs, he said.
“You can make money on a [plug-in hybrid] or at least break even…and give the customer something that they are more comfortable with,” he said.
Leasing Loophole
CNBC reports ‘Loophole’ may get you a $7,500 tax credit for leasing an EV, auto analysts say
This EV tax credit “leasing loophole” has likely been a key driver of increased leasing uptake in 2024, Barclays auto analysts said in an equity research note published in June.
About 35% of new EVs were leased in the first quarter of 2024, up from 12% in 2023, according to Experian.
“Want a good deal on buying a car today? Your best bet may be leasing an EV,” Barclays said.
The new goal now for car manufacturers is to break even on clean vehicles. With hybrids and leasing subsidies at least the dealers have a chance.
Government at its Best and Worst
Worst: Government is at its worst when it mandates something then tells business how to do it.
Best: Government is at its best when it stays of out of things.
Middle: The middle ground is letting businesses determine how to reach government mandates.
Spotlight on the Worst
A number of solar installers have gone bankrupt because they still cannot make a profit with subsidies. The Biden administration insists on US-made parts despite the fact they are so expensive that nobody wants them.
Ford is losing a mere $132,000 thanks to Biden mandates.
As a result of insisting on clean energy, then mandating wind on top of it, New Yorkers will pay four times the going rate for energy at a subsidized cost of billions of dollars that will go to foreign corporations.