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Hybrid Cars Enjoy a Renaissance as All-Electric Sales Slow

As Teslas and other electric vehicles dazzled car buyers with futuristic technology and dreams of a gasoline-free future, hybrid cars began to seem like yesterday’s news. Sales of the Toyota Prius, the standard-bearer for hybrids, fell 85 percent over a decade.

Now, a slowdown in the growth of electric car sales has led General Motors, Ford Motor and Volkswagen to walk back ambitious targets for those vehicles. And sales of hybrids are robust, underscoring what may be the enduring reality check of 2023: Many Americans are hugely receptive to electrification, but they’re not ready for a fully electric car.

“Consumers want the same experience they’ve had” with a combustion engine car, said Stephanie Valdez Streaty, director of industry insights for Cox Automotive. “And we are not there yet. Price is still the top barrier for most consumers.”

Americans bought a record 1.2 million electric vehicles last year, a gain of about 46 percent and a 7.6 percent share of all new car sales, according to Cox. But hybrid sales rose even faster, up 65 percent to more than 1.2 million, lifting their market share to 8 percent from 5.5 percent, according to Edmunds. Throw in plug-in hybrids, and nearly one in 10 new cars pairs a gasoline engine with electric motors to save fuel and boost performance.

Analysts say stubbornly high electric car prices and worries about public charging are pushing some car shoppers to hybrids, including renters or urbanites who can’t charge a battery-powered car at home. Hybrids deliver savings at the pump with no need to plug in for hours or plan trips around charging stops. Their batteries are much smaller and cost a lot less than the batteries in fully electric vehicles.

Buyers paid about $42,500 on average for hybrids in November, according to Edmunds, compared with $60,500 for electric vehicles and $47,500 for a conventional models. There is a smorgasbord of affordable hybrid models, many starting around $30,000 — including a stylishly redesigned Prius that returns a model-record 57 miles per gallon. The electric vehicle market, by contrast, remains top-heavy with luxury offerings.

Jim Farley, Ford’s chief executive, said mainstream consumers were fundamentally different from early adopters who flocked to electric vehicles with little encouragement or education from automakers.

“E.V.s continue to grow with spectacular numbers, but what’s changing is that people buying them are not willing to pay a premium,” Mr. Farley said in an interview. “Now we have to get costs under control and even — surprise, surprise — advertise.”

Ford is trimming its planned production of the F-150 Lightning pickup truck and increasing output of the more-affordable F-150 Hybrid by 20 percent. The automaker plans to quadruple overall hybrid production in hopes of selling 100,000 this year. They include the red-hot Maverick compact pickup, whose 37-m.p.g. hybrid version has exceeded Ford’s most optimistic sales forecasts.

So why doesn’t Ford make all Mavericks hybrids? Mr. Farley said the company remained committed to offering a full range of powertrains, including electrified trucks that can double as mobile generators to power equipment, homes or even the electrical grid. Securing battery supplies also takes a long time, Mr. Farley said, sometimes longer than building a new assembly line.

“We didn’t know a $30,000 truck would be this popular,” he said of the Maverick. “Ford has struggled to make money on small cars since the beginning of time.”

The hybrid resurgence is mainly benefiting Toyota, Honda and Hyundai Motor, including its Kia sister brand.

Those automakers account for roughly 90 percent of U.S. hybrid sales, followed by Ford. All continue to invest in the technology even as G.M., Volkswagen and other automakers vow to pivot entirely to electric vehicles.

Honda outdid itself in 2023, nearly tripling hybrid sales to 294,000 units. Hybrid versions of the Honda Accord sedan and the CR-V sport utility vehicle now account for more than half those models’ sales. That Accord combines luxury-level comfort, quality and amenities with up to 44 m.p.g. in overall driving, for $33,290 to start.

En route to record U.S. sales in 2023, Hyundai, Kia and their Genesis luxury brand together sold more electric vehicles in the United States than any automaker save Tesla. Yet Hyundai Motor remains bullish on hybrids, even after the Biden administration proposed regulations that would require two-thirds of new cars to be fully electric by 2032.

“Anyone who wants to survive in this business is making these electric investments,” said Steve Center, chief operating officer at Kia America. That includes Hyundai, which has committed to investing $12 billion in factories in Alabama and Georgia.

But Mr. Center added that an electric vehicle might not serve the needs of a “cowboy in Montana with a pickup truck.” Hybrids can help reduce emissions from those kinds of vehicles faster, he said.

Mr. Center offered a bold prediction: As combustion engine cars fade into obsolescence, all remaining gasoline models will adopt electrification in hybrid form. Gasoline cars won’t be able to compete without it, as consumers and regulators alike demand better fuel economy and reduced emissions.

“Everything should be hybrid to start with, because everyone can drive a hybrid, everywhere,” he said.

Toyota, the world’s largest automaker, seems to be treading that path. Within a few months, Toyota will offer nine hybrid-only models, including one from its Lexus luxury brand. The company sold more than 640,000 hybrids in America last year, 29 percent of its total U.S. sales; it sold about 15,000 fully electric vehicles.

David Christ, general manager of Toyota’s North American division, said the automaker expects to crack 40 percent electrified sales in 2024. He echoed Mr. Center’s view on the prospects for combustion engine cars.

“Over time, we’re not opposed to going all-hybrid to make a faster step to a greener future,” Mr. Christ said.

Toyota’s faith in democratizing hybrid technology turned the company, once an environmental darling, into a whipping boy as it was widely accused of foot-dragging over electric vehicles. If Toyota is feeling vindicated, Mr. Christ won’t admit it.

“A year ago, we were getting roasted in the media for not being an E.V. believer,” he said. “We thought that was unfair, that we weren’t in on electrification. We started it. We have eight million hybrids on the road today, and every one reduces greenhouse gas emissions.”

But Mr. Christ added that the charging infrastructure for electric vehicles was not yet ready for many millions of battery-powered cars, which is why sales of such vehicles have slowed.

“At the end of the day, the consumer drives this industry, not the manufacturer,” he said.

Toyota will plant its biggest flag yet in June. The redesigned 2025 Camry will be offered only as a hybrid. That may seem to be a major gamble for the nation’s perennially best-selling sedan. Toyota sold about 290,000 Camrys last year, and just 35,000 were hybrids. If the new Camry can maintain its sales, Toyota will convert a few hundred thousand buyers to a roughly 50-m.p.g. hybrid in one swoop. If not, the Camry franchise will take a huge hit.

Yet Toyota isn’t taking a shot in the dark. When Toyota switched the Sienna to an all-hybrid lineup for the 2021 model year, it immediately became America’s best-selling minivan, up from fourth place.

But some auto experts said hybrids could do only so much.

Dave Cooke, senior vehicles analyst for the Union of Concerned Scientists, said hybrids were a critical, affordable tool that allowed millions of drivers to use less gasoline but remained a transition technology. Long-term climate change goals still demand a shift to electric vehicles powered by a renewable energy grid, he said.

“In our comments to the E.P.A. and industry, it’s ‘Hey, put a hybrid on everything,’” Mr. Cooke said, referring to the Environmental Protection Agency. “But we still need stricter standards to ensure automakers face rules on what’s technologically achievable.”

Mr. Cooke noted that the fuel economy of the nation’s fleet had held flat for years, in part because of the shift to pickups and S.U.V.s. Recent gains are entirely attributable to the rise of electric vehicles, with hybrids playing a negligible role.

Chris Harto, transportation and energy policy analyst for Consumer Reports, agreed with that assessment. “Hybrids buy some time, but E.V.s are where we need to go” to achieve climate goals, he said.

Yet Mr. Harto bemoans the popular narrative that pits hybrids and electric vehicles against each other.

“They’re both taking market share from less efficient I.C.E. vehicles,” Mr. Harto said, referring to internal combustion engines. “And there’s a lot of market share to take.”

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