Even as U.S. consumers continue to feel burdened by inflation, many fuel-conscious car buyers are looking at hybrids — despite steep discounts on electric vehicles from manufacturers, along with tax credits from the Biden administration and the fact that used EVs are now cheaper than used hybrids.
The problem, it seems, isn’t with electric cars themselves. Instead, even though U.S. charging infrastructure has developed quickly — growing by 55% in 2021 alone — it continues to disappoint many EV drivers. In a 2023 survey by J.D. Power, EV owners’ satisfaction with public charger availability was 32 points lower than it was in 2022. This is “a critical issue that requires decisive action” by industry executives, Brent Gruber, executive director of the EV practice at J.D. Power, said in a statement.
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The result is that 46% of EV owners now say they plan to buy a traditional gas-powered car as their next vehicle, according to new survey findings from McKinsey & Company. These findings mirror J.D. Power’s survey, in which 39% of EV owners said they would consider hybrid or internal-combustion-engine vehicles in the future.
“I didn’t expect that,” Philipp Kampshoff, leader of McKinsey’s Center for Future Mobility, told Automotive News. “I thought, ‘Once an EV buyer, always an EV buyer.’”
For now, car shoppers are turning back to hybrids. Data provided to MarketWatch by the car-shopping app CoPilot show that because of strong interest in hybrids, dealer lots currently have a 58-market-day supply of new hybrids, compared with a 104-day supply of new electric cars and a 69-day supply of new gas cars.
Shoppers for hybrids will find a number of carmaker incentives this month, according to Edmunds. Buyers can get up to $3,070 off the 2023 Kia KR:000270 Sorrento hybrid (which sells for $36,690), up to $2,500 off the 2024 Audi VWAGY SQ7 ($90,400) and up to $2,150 off the 2024 Kia Niro ($26,940).
Buyers can also get up to $2,000 off the 2024 Toyota TM Tundra ($57,625), the 2024 Ford F Escape ($33,340) and the 2024 Ford F-150 ($68,035). (These deals may not be available nationwide, and prices can vary.)
Car shoppers can also get up to $1,000 off highly rated hybrid vehicles such as the Toyota Prius ($27,950), which was named Motor Trend’s car of the year, as well as the Corolla ($23,500) and the Camry ($28,855).
As interest rates remain high and consumers continue to be price-sensitive, “we expect that incentives and discounts are here to stay and may increase, especially with the latest [Federal Reserve] decision meaning there will be no relief on interest rates,” Cox Automotive wrote in a recent market report.
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For new cars, demand for hybrids exceeds EVs
Two years ago, the market share for hybrids and electric vehicles was roughly equal, at 5.8% and 5.2% respectively, according to Edmunds. By May this year, hybrid vehicles had pulled ahead to 9.1% market share — up 16.9% year over year — while EVs were at 6.8%.
It now takes about 29 days for dealers to sell a hybrid vehicle, according to Edmunds — less than half the 74 days it takes to sell an EV and about half the 53 days it currently takes to sell a gas-powered car.
Hybrids “let consumers have the best of both worlds with gas and electric, eliminating issues like range anxiety. They’re slightly less expensive [than new EVs]; and they’ve been around for two decades and people are more familiar with them,” said CoPilot CEO Pat Ryan.
Buying a hybrid may also be more cost-effective than buying a new EV, said Joseph Yoon, Edmunds’ consumer-insights analyst. Not only is the cost of the vehicle lower — $43,379 on average, compared with $59,783 for EVs — but hybrids don’t require changes to a home’s electrical systems, which is sometimes the case with EVs. “You won’t have to make plans for home-charger installation or rely on public charging infrastructure,” he said.
Most chargers cost $300 to $800, and installation runs from $550 to $1,380 but can rise to thousands of dollars if a homeowner needs to upgrade wiring or have a charger installed far from their main electrical panel, according to Consumer Reports.
Because EV technology is changing so quickly, those cars “take bigger hits to their residual values,” Yoon added.
For used cars, the supply across types is more even
While there are large gaps in the supply of different kinds of new vehicles, the used-vehicle supply is more even: Dealer lots have a 40-day supply of used EVs (which cost about half what they used to), a 42-day supply of gas cars and a 43-day supply of used hybrids, according to CoPilot.
One major factor boosting interest in used EVs is their price: $37,834 on average, compared with an average $41,058 for used hybrids, according to CoPilot.
Even with these savings, cost-sensitive consumers interested in going electric may want to consider leasing, which may give them “the best deal at varied price points across a variety of vehicle body types,” Yoon said.
Those considering an EV lease should be sure they don’t expect to drive more than 10,000 or 15,000 miles per year, “as there are mileage restrictions similar to any other lease,” Yoon said. “Secondly, make sure to think through the logistics of the EV-ownership lifestyle, including access to charging infrastructure if you can’t easily or affordably install a charger at home.”
