Hybrid cars are having a banner year

Hybrids are quickly becoming the go-to for many drivers making the switch from gas-powered cars. 

Driving the news: After many automakers admitted to overreaching on their EV plans, hybrids offer a practical middle ground. 

• Hybrid car sales doubled in Q1 compared to last year, and plug-in hybrids are up nearly 60%. Owners are also sticking with the hybrid love, with loyalty rates at a seven-quarter high.

• Over the past three years, hybrids have steadily gained ground, outpacing EVs, and now claim 11% market share – a record high. EVs only captured 8% of the market in Q1.

• While EV inventory has outpaced its market share, indicating oversupply, hybrids have a healthy balance between inventory and demand. 

Behind the growth: Unlike EVs, hybrids don't have the same range anxiety or price tag. 

• Most can run on electric power for short trips, which covers the majority of daily commutes. 

• On top of that, plug-in hybrids qualify for the same tax incentives as EVs.

• Hybrids are also the most reliable cars according to Consumer Reports' annual reliability survey.

Why it matters: Faced with the uncertainties of a full-scale EV transition, automakers have switched gears. By combining the best of both worlds - fuel efficiency and performance - hybrids cater to a wider consumer base while mitigating the risks of overproducing costly EVs. And it’s paying off.

Ford hybrids now make up close to 10% of the automaker’s global sales. Its Q2 hybrids sales increased 56%  to 53,822 – a new quarterly sales record.

• The automaker is bullish on hybrids with plans to offer options across its entire North American lineup by 2030. And it might not end up costing that much.

• Ford has already calculated hybrid investments into its yearly spending plan. “I think we’re in really good shape. It doesn’t require wholesale inventing new powertrains,” said CEO Jim Farley. “But it does involve some engineering and investment in capacity. I would say kind of modest investments.”

Hyundai has posted two consecutive quarters of double-digit growth in its hybrid segment.

• Hyundai’s hybrid sales jumped 26.4% from a year ago to 122,421 units.

• Anticipating sustained demand, the automaker is expanding its hybrid lineup and production, including a shift in plans for its new Georgia factory, which will now produce both hybrid and EVs.

Toyota is not new to the hybrid game. 

• The first production Prius only in Japan in 1997 had a fuel economy higher than anyone had ever seen before. Two and a half decades later, Toyota has sold roughly 6 million of them and has continued to expand its hybrid lineup.

• Last year, Toyota outsold all competitors with over 11 million vehicles sold last year. Hybrids made up a third of sales, while EVs accounted for less than 1%.

Bottom line: While some critics say hybrids are only a temporary stop-gap from a fully electric future, it’s hard to argue with the numbers. Producing EVs or hybrids (or anything really) is always a gamble. But automakers see hybrids as one worth betting on.

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