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For years, automakers have been betting big on electric vehicles (EVs), as several governments attempt to phase out the sale of internal combustion engine (ICE) vehicles in favour of cleaner electric alternatives. As governments introduced financial incentives for EV uptake alongside emissions fees and eventual bans on ICE vehicles, automakers expected the sale of EVs to soar. However, due to a range of factors, EV sales are lower than they were expected in many parts of the world, with no sign of increasing significantly any time soon. This has encouraged many automakers to reassess their strategies, with some turning their attention back to hybrid vehicles that offer the best of both worlds.
EV sales are gradually increasing, but not at anywhere near the rate previously anticipated for most automakers. Some of the main reasons cited for the slowdown in the growth in EV sales include the high cost of EVs, difficulties in charging – from the high cost of installing a home charger to the lack of public charging infrastructure, and the low range of many existing EV models. Fears over the inability to charge an EV on a journey, the time wasted at a charging station, and the low range of EVs, as perceived by consumers, have led many to view EVs as a supplement rather than a replacement for ICE vehicles.
In 2023 and 2024, the growth in sales of hybrid vehicles increased while EV sales growth slowed, suggesting that many consumers are looking to make the switch but are more open to a compromise than to taking the leap to fully electric. In the U.S. market, several automakers have increased their hybrid vehicle production capacity over the last year in response to the growing market demand. The global sale of EVs and plug-in hybrid vehicles increased by 29 percent year-on-year in April, with growth in both China and Europe. However, North America recorded the first decline since last September, amid growing economic uncertainty.
One type of vehicle that is gaining increasing attention is the extended-range electric vehicle (EREV). This is a type of plug-in hybrid that is positioned between conventional hybrids and wholly electric vehicles, relying on battery-powered motors for propulsion and containing a small gas engine that can be used as a generator to charge batteries. The batteries are bigger than those of a traditional hybrid vehicle, while the gas engines are smaller.
EREVs appeared to go out of fashion, or perhaps were never in fashion, with low sales figures for the Chevy Volt and Fisker Karma in the U.S. when they entered the market in 2011. GM did manage to sell around 157,000 of its Volt over nine years, making it the best-selling EREV in the U.S., but it is still comparatively low compared to other types of vehicles. Since BMW’s i3 was discontinued in 2022, there have been no new EREVs in the U.S. market, but that is soon expected to change.
There are several EREVs in the pipeline, including a version of the Ram 1500 pickup truck and the Jeep Grand Wagoneer, as well as Volkswagen models under the Scout brand name. Hyundai and Nissan are also reportedly planning to develop their EREV models in response to increased market demand. Some of these models could offer over 560 miles of range, making them much more appealing to consumers concerned about charging restrictions. Because they use smaller batteries than conventional EVs, they are also generally cheaper to produce, bringing the sales price down.
Eric Anderson, the associate director of Americas light vehicle powertrain forecasting for S&P Global Mobility, explained that hybrids, including EREVs, are a “relatively affordable way for consumers to move up the electrification ladder without a significant monthly payment increase.”
And it’s not only in the U.S. that automakers are turning their attention to hybrid vehicles, as Chinese automakers are seeing a rising demand for hybrids at the international level. In 2024, Charles Lester, a data manager at Rho Motion, said China-based EV makers were continuing to increase domestic sales of battery EVs while responding to growing demand for plug-in hybrids offshore. Lester stated, “The plug-in hybrids have almost doubled year to date in the rest of the world, but the main reason for that is the Chinese exports.”
However, hybrid vehicles even appear to be becoming more popular among Chinese consumers. The Chinese automaker BYD announced in January that it had sold around 4.3 million passenger cars in 2024, almost 2.5 million of which were hybrid vehicles. Joe McCabe, the president and CEO of AutoForecast Solutions, said, “We still see growth in the Chinese market in terms of battery electric, but we see it sort of capping.” McCabe expects that by 2031, there will still be demand for ICE vehicles, including hybrid vehicles.
As consumers worldwide battle growing economic uncertainty, particularly in the wake of the U.S. sanctions on a wide range of foreign goods, many are reluctant to invest in a wholly electric vehicle. Meanwhile, EV makers have failed to provide consumers with the confidence needed to invest in EVs, such as ensuring a lower price tag, adequate access to charging infrastructure, and a long range. This has driven many consumers to invest their money in a hybrid vehicle, seeing it as the best of both worlds and showing their openness to gradually shifting away from fossil fuels to electric.
