Most American automakers have pledged to electrify their vehicle lineups as part of global efforts to curb greenhouse gas emissions and mitigate climate change. Battery electric vehicles are ideal transportation for a green economy because they run on electricity rather than fossil fuels and do not produce any emissions at the tailpipe.
Under the notion that electric vehicles will be the dominant form of vehicular transportation over the next couple of decades, car makers have invested hundreds of millions of dollars into electrification initiatives. However, consumers seem to be more interested in hybrid vehicles rather than battery electric cars.
American drivers have purchased more than a million hybrids and 148,000 plug-in hybrids in 2023 alone, 76% more than they bought over the same period in 2022. Hybrids are becoming increasingly popular among American drivers because they tend to be cheaper than electric cars and offer most of the same benefits without the hassles associated with owning an electric car.
In addition, hybrids are more ecofriendly than conventional cars but do not require that drivers change their lifestyles to accommodate their new vehicles. Furthermore, their affordability means they are available to a greater portion of the market, especially younger drivers who tend to be more interested in EVs but aren’t as financially secure as older drivers. Numerous polls show that most consumers are wary of battery electric cars due to the lack of public charging infrastructure and astronomical purchase costs.
Although electric vehicle sales hit a record of a million units sold in 2023, year-over-year growth has begun to slow down. EV demand has been especially low in recent months as premium EV prices coupled with high-interest rates and rising living costs made electric cars even more costly. American car makers are also facing increasing competition from Chinese companies that are using state subsidies to massively discount their EV offerings and price out foreign automakers from their own markets.
With consumer interest in battery electric vehicles faltering, some car makers are scaling back their ambitious plans to develop new electric cars or build battery manufacturing facilities. Furthermore, some companies are now looking at hybrids as an avenue for attracting the average American driver.
Ford, the second-best-selling hybrid producer in the country, expects to manufacture enough hybrids to quadruple its sales in five years, and General Motors has revealed that it is considering bringing hybrids back to the American market after it abandoned the concept several years ago.
Other companies in the space, including Nikola Corporation (NASDAQ: NKLA), may have to weigh whether adding hybrids to their lineups could be a viable strategy or not in the long-term.
