Hybrids could be key to keeping electrification plans at play, as automakers lean into the alternative powertrains amid slowing demand for fully electric vehicles and the billions already invested in the tech.
The details: With the $7,500 federal EV tax incentive now clear in the rearview, fully electric vehicle sales plunged 30% in the fourth quarter, while hybrid cars have continued to gain traction in the market, reports Bloomberg.
While fully electric cars and trucks made up 10% of all auto sales in the U.S. in the third quarter of 2025, 15% of transactions for the period were for hybrid vehicles.
CarGurus predicts that nearly one in six (nearly 17%) of new vehicles next year will be a hybrid, as automakers green-light more and better machines with the technology.
The fastest-selling car in 2025 was the Hyundai Palisade Hybrid, sitting on dealer lots for fewer than 14 days on average.
What they’re saying: “We have so much investment in EV and battery technology, and we need to figure out the best possible use of it,” said Scott Kunes, COO of Kunes Auto Group. “There’s a lot to be said for hybrids becoming the most dominant powertrain out there and real soon.”
Why it matters: Hybrids are now the sweet spot, offering fuel savings and a lower entry point than many BEVs, while tapping into all the OEM battery investment already in the pipeline. That makes hybrid inventory, training, and marketing a critical focus for stores that want to keep electrification momentum alive without overexposing themselves to slower-moving full EVs.
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Between the lines: Whereas automakers have struggled to turn a profit on fully electric vehicles, they can make money on hybrids, giving fuel-conscious buyers a more affordable option while helping drive broader EV adoption.
Roughly one-third of hybrid drivers transition to a fully electric vehicle on their next car purchase.
70% of hybrid households were considering a fully electric auto in September, compared to 57% of traditional car shoppers, according to a JD Power study.
Edmunds.com estimates that of the 390 distinct car models on the U.S. market, roughly 87 are available with hybrid technology, which is double the options that buyers had five years ago, per Bloomberg.
What they’re saying: “I don’t necessarily think you buy that car and fall in love with that tiny electric motor,” Hardman said. “But after a while, people think, ‘Actually, driving electric is pretty nice. One thing I don’t like about my hybrid is when the engine kicks on, or I have to go to a gas station.’”
Bottom line: Hybrids are emerging as both a profit center and an EV on-ramp, so dealers that stock the right mix, train sales and F&I teams to tell the hybrid value story and treat hybrid buyers as future BEV customers will be best positioned as powertrain preferences continue to shift.
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