According to Reuters, with the surge in sales of hybrid vehicles in the United States and a cooling trend in pure electric vehicle sales, automakers and parts suppliers believe that products between pure internal combustion engine models and pure electric models will have lasting demand.
Industry executives and analysts say automakers and suppliers are ramping up production capacity for hybrid and plug-in hybrid vehicles in the U.S. market to meet increased consumer demand. Previously, General Motors and other automakers had planned to phase out such technologies gradually in favor of pure electric vehicles.
Morgan Stanley reported that in February, the growth rate of hybrid vehicle sales in the United States was five times that of electric vehicle sales. Stellantis stated that in the second half of 2023, the plug-in hybrid version of the Jeep Wrangler accounted for half of the model's total U.S. sales, compared to 37% in the first half of last year.
Thanks to demand for the Maverick compact hybrid truck (starting at $25,315), Ford's hybrid vehicle sales grew by nearly 37% in the first two months of this year.
Scott Simmers, general manager of Palm Springs Motors, said, "The hottest vehicle we have right now is the Maverick hybrid version." Currently, hybrids account for about half of Maverick's total sales. Dealerships indicate that sales could increase if Ford increases production capacity. Jim Baumbick, Ford's vice president of product development, told Reuters, "We need to quickly increase capacity for the Maverick. To meet demand, we've added a third production shift."
Toyota's brand head, David Christ, also noted that Toyota plans to significantly increase the number of hybrid models and overall sales of hybrid vehicles. "Last year, 29% of sales were hybrid vehicles. From the beginning of the year until now, this proportion has risen to 37%. We expect hybrid vehicle sales to account for close to 45% of total sales this year." Additionally, Toyota's next-generation Camry sedan, launched in the U.S. this year, will only offer a hybrid version.
As production scales up, Toyota has reduced the price premium for hybrid vehicles compared to internal combustion engine models. Christ mentioned that the price gap was previously $6,000 to $7,000, but now it's $1,500 to $2,000.
Suppliers like Schaeffler are also making long-term investments to expand hybrid vehicle component production capacity. The German company plans to invest $230 million to build a new factory in Dover, Ohio, to increase production of electric axles for hybrid drive systems. Currently, Schaeffler supplies key components for the hybrid system of Ford's F-150 pickup. Ford has stated its plans to double the sales share of the hybrid version of the F-150 to 20%.
Marc McGrath, head of Schaeffler's U.S. business, said they expect hybrid systems to be used more in heavy-duty pickups and large SUV models. McGrath stated, "We are in discussions with all major automakers in this field."
Reuters' report highlights that the shift toward hybrid vehicles in the U.S. automotive industry poses challenges amid the Biden administration's support for electric vehicles through environmental policies and environmental groups' desire to phase out internal combustion engine models quickly. The U.S. government is expected to release carbon dioxide emission standards for vehicles this month, aiming to push automakers to increase the sales share of pure electric vehicles to 60% by 2030.
However, the November U.S. presidential election has brought risks to the government's electric vehicle subsidies and emission regulations. Analysts suggest that if the next administration changes course, most traditional automakers' electric vehicle plans could suffer losses, while hybrid vehicles could be more profitable to achieve emission reductions. Mark Wakefield, global automotive practice leader at AlixPartners, said, "From a regulatory perspective, hybrid vehicles are a significant hedge against government changes."
Data provided by AutoForecast Solutions to Reuters shows that by 2025, led by Toyota, Ford, and Honda, the production share of hybrid vehicles in the North American market could rise to 20% of total light vehicle production, while electric vehicle production share would be 14%. Sam Fiorani, vice president of AutoForecast Solutions, stated, "Despite a drop in electric vehicle sales of around 1 million units last year, hybrid vehicle sales have grown significantly."
