As Full Electric Cars Struggle, It’s Time for Hybrids to Take Center Stage
Despite big investments, automakers are struggling to sell EVs. Until they overcome China’s grip on battery supplies and convince buyers to fork over $40K+, hybrids offer some serious upsides.
By Emily Dreibelbis
This year has been a wild ride for EVs-highs and lows that chewed up the industry and spit it out into what could be years of uncertainty.
Automakers appear to be lost in the chasm between early adopters and mass-market appeal, the latter of which will require lower prices, higher range, and more places to charge. We’ve seen promising announcements in 2023 that hint at a bright future for EVs, but it’s going to take a while, and some factors are out of automakers’ control, like China’s grip on battery supplies and high interest rates.
In the meantime, hybrids have a chance to take center stage. They’re more environmentally friendly than their fully gas-powered counterparts, and the ability to switch between gas and electric means a better miles-per-gallon (MPG) average. They can be more expensive than fully gas-powered vehicles, but hybrid drivers will save on gas over the years. Sometimes the difference is negligible; the Kia Sportage Hybrid is just $300 more than the fully gas-powered version, with 44mpg instead of 32.
Settling for hybrids is a disappointing outcome for EV evangelists if the goal is to sharply curtail the rise of greenhouse gas emissions. They’re not fully zero-emission vehicles, but in 2024, dealerships should at least consider giving hybrids a larger percentage of lot space, especially given the current state of the EV industry.
The EV Momentum Balloon Slowly Deflates in 2023
At the start of the year, hybrids were not a big topic of conversation; Toyota even forced out a CEO who pushed for them. EV adoption rates were at a record high in the US-7% of new car sales, up from 4% the previous January. Tesla kicked off a price war, finally bringing down prices and inspiring other automakers to follow suit. Q3 showed a slight increase to 8%, but automakers are not expecting adoption to double every year as it has been recently.
Instead, some are pulling back on EV spending. Last week, Ford announced it will delay a $12 billion EV investment amid weakened consumer demand, CNBC reports. The company still plans on building its EV mega-factory in Tennessee, but says the transition to electrics will take longer than expected.
GM is also “moderating the acceleration of EV production in North America to protect our pricing, [and] adjust to slower near-term growth in demand.”
GM and Honda also scrapped plans to make sub-$30,000 EVs, which they say are no longer feasible. GM’s Equinox EV, which it said last fall would be “around $30,000,” debuted at $49,000, Electrek reports.
While these are presumably short-term setbacks, challenges with China still loom large. It controls the world’s supply of critical battery minerals, complicating efforts for automakers to reduce prices. Plus, China is now restricting exports of graphite, which is used in the battery’s anode, as part of the ongoing trade war.
Let’s not forget high interest rates, which are making auto loans more unattractive for buyers, something Elon Musk cited as a major issue hampering demand in Tesla’s Q3 earnings call.
None of these brands are giving up on EVs, they are just admitting that the initial promises touted in commercials, at auto shows, and at dealerships will be harder to realize than expected.
Like what you’re reading? Sign up for our What’s New Now newsletter to get the latest tech news, reviews, and expert tips in your inbox.
The Good News: Some Promising Progress
As challenging as 2023 was for EV makers, it also saw some positive changes. Perhaps the biggest is the shift to Tesla’s charge port.
In 2025, nearly every brand will be able to charge at Tesla Supechargers. This is a game changer for road trippers, as well as those who need more places to charge around town. It’s hard to overstate the importance of this in terms of driver experience-for the better.
Range anxiety is also easing up. Most new models target 300+ miles of range. Combined with better charging options, drivers will find trips much less stressful. Towards 2030, Toyota says it will commercialize solid-state batteries with 900+ mile range. Wireless charging is also in the works, though like solid-state batteries it will likely start out at a premium price.
What most people really need is cheaper cars. Unfortunately, prospects here look grim. Batteries make up 70% of the car’s materials costs, with China controlling the supply and therefore pricing. President Biden has allocated billions to spur a domestic minerals industry, reducing dependence on China, but that could take decades and require a lot of political buy-in.
In the meantime, automakers are turning to a cheaper battery type called lithium iron phosphate (LFP). They’re cheaper but face some range challenges, so automakers don’t want to talk about it. Rivian, Tesla, and Ford have quietly swapped them into their base models, and Chevrolet announced today it will do the same for the revived Bolt.
So battery tech could get worse before it gets better, without a meaningful reduction in the vehicle’s price tag. The only hope for automakers to eke out more profits, and hopefully keep prices down, are through production efficiencies. At least that’s Musk’s plan for making the Cybertruck profitable, as he mentioned on the Q3 call.
Rich, Warm Weather Drivers Can Keep EVs Afloat
Given the millions of Cybertruck pre-orders, it appears there are still deep-pocketed consumers ready to pull the trigger on a full EV-particularly those who live in single-family homes where they can easily charge, and in mild climates where cold weather performance is not an issue.
If the industry can keep its foothold with them for a few more years while battery technology, charging infrastructure, and interest rates catch up, then the current setbacks are indeed just a slowdown, not an extinction.
In the interim, hybrids should be on any budget-minded car buyer’s list. While automakers offer fewer hybrids than fully gas-powered models, they’re not ignoring the market. Ford, for example, says it will start to push them as an EV alternative, Reuters reports. As we’ve seen with EVs, automakers generally follow consumer demand. The more people asking for them, the more we’ll get.
Originally published at https://www.pcmag.com.
