The automobile industry still largely believes that developing profitable battery electric vehicles (BEVs) will take priority over the long-term, but the rising popularity of hybrids is prompting some to change their plans.
Automakers across the board
are scaling back or delaying their BEV plans. At the same time, many are
boosting their hybrid offerings. Ford this month announced plans to offer
hybrid options across its entire gas-powered lineup by 2030.
A combination of stubbornly
high prices and concerns about range anxiety—the fear of running out of power
with nowhere to plug in—is weighing on sales of BEVs and pushing EV-curious
buyers towards hybrids. Sales of hybrids jumped 49% in the US in Q1 2024,
compared to 6% growth for BEVs.
BEVs are facing a number of growing pains. While
price cuts have helped to make BEVs more competitive on price, they have also tanked
the resale value. The average price of a BEV in the US fell 31.8%, compared to
just 3.6% for ICE vehicles or 6.5% for hybrids.
Carmakers are a fan of
hybrids as they allow them to meet tighter emissions standards, while extending
the life of the profitable combustion engine. Toyota’s sales of hybrids grew by
1m to 3.4m last year. The shift helped boost its operating profit estimate to a
record JPY4.9tn (US$33bn) for the year to March.