• Hybrid Electric Vehicles
  • Vehicle Adoption
  • Automakers
  • General Motors

EVs Are Still Coming, but Hybrids Also Have a Place in the Ecosystem

Sam Abuelsamid
Mar 01, 2024

Aerial view of a car driving on a road through dense forest

Recent months have seen a lot of consternation about the slowing growth rate of EV adoption in North America. Meanwhile, hybrids suddenly seem top of mind again for many automakers. General Motors (GM) is the latest automaker to declare its intention to bring more multi-energy vehicles to market after announcing the cancellation of its existing hybrid EVs (HEVs) in 2018 to focus on the transition to battery EVs (BEVs). During GM’s 4Q 2023 earnings call, CEO Mary Barra announced that the automaker would introduce new plug-in hybrid EV (PHEV) models in the coming years.

While it’s true that the growth rate of BEV adoption slowed in 2023, just as it did in 2022, this is a matter of math rather than an outright rejection of BEVs. BEV sales have been growing at a steady linear ramp rate for more than 3 years, with sales topping 1 million for the first time in November 2023 and market share reaching almost 8%. As the numbers grow linearly, the percent growth naturally declines.

The US market hasn’t yet hit the inflection point where sales take off, and it’s not entirely clear when it will. There are multiple factors behind this, including cost and the continuing poor state of public charging infrastructure. Automakers have introduced a growing number of BEV nameplates in recent years, but most remain more expensive than many people can afford. This is exacerbated by high interest rates that increase monthly payments. For those considering a Tesla, poor residual values are also a problem due the substantial price cuts on that manufacturer’s products in 2023.

The 2024 introduction of point-of-sale tax credits through the Inflation Reduction Act should help reduce monthly payments for buyers. At the same time, however, the tougher restrictions on battery components and material domestic content mean far fewer vehicles are eligible than in 2023.

With consumers unsure about the affordability of EVs and the availability and reliability of charging stations, they are looking elsewhere for efficiency improvements and greenhouse gas (GHG) emissions reductions. At the same time that BEVs are becoming more available, so are HEVs and PHEVs. By the end of 2024, virtually every model sold by Toyota and Lexus will be offered with an HEV or PHEV powertrain as either standard or optional. Ford has also indicated it will launch more hybridized models in the near future. Honda’s two best-selling models are the Accord and CR-V, both of which have a hybrid take rate of at least 50%. BMW and Volvo both have PHEV take rates of more than 8% across their full lineups.

GM was the early leader in PHEVs with the first-generation Chevrolet Volt that launched in 2010. The automaker had been developing a compact crossover based on the same platform called the CrossVolt, but the program was canceled in 2011 in favor of the overpriced and slow-selling Cadillac ELR. If GM had continued with the CrossVolt and created other PHEVs, it could have had viable competitors today for the PHEV variants of the Toyota RAV4, Ford Escape, Hyundai Tucson, and others. Instead, it will now be scrambling to recreate what it abandoned several years ago.

Competitors like Hyundai Motor Group and Toyota have persisted with hybrid powertrains and prospered, while also developing strong mainstream BEV products. Meanwhile GM and, to a lesser degree, Ford put too much focus on more expensive products that were susceptible to macroeconomic vagaries. HEVs are also essential to enable carbon reduction in many global markets that lack the charging infrastructure or affluence to facilitate BEV adoption. With more HEV and PHEV alternatives, GM, Ford, and others will provide a valuable bridge that makes a significant dent in transportation GHG emissions for those not ready to make the BEV transition over the remainder of this decade.