FYI: Plug-in hybrids are becoming more costly than electric cars, yet hybrids are seeing unprecedented demand.
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### Plug-in Hybrids: The Middle Ground in the Green Car Market
If you’re eyeing a plug-in hybrid vehicle, it might be time to tighten your budget.
These vehicles, equipped with both an internal combustion engine and a rechargeable battery, are designed to switch seamlessly between the two power sources. This makes them an appealing option for practical, eco-conscious buyers seeking the best of both worlds: electric efficiency and petrol reliability.
### A Renaissance for Hybrids
The hybrid vehicle market, once seen as lagging, is now experiencing a significant revival. Automakers are investing more into this segment to cater to a growing interest among consumers. According to data firm Wards Intelligence, hybrid sales surged nearly 31% in the second quarter.
Recent policy updates have also been a boon. Following successful lobbying by automakers and their unions, the Biden administration’s final rule on boosting electric vehicle sales allows plug-in hybrids to account for at least 13% of new car sales by 2032, a move seen as a substantial win for manufacturers.
In response, automakers have altered their strategies. Ford, for instance, recently axed its long-planned three-row electric SUV in favor of a hybrid model. This pivot, though initially costing the company nearly $2 billion, aims to replace an unprofitable vehicle with one anticipated to be much more financially viable. “It goes back to understanding the customer,” Ford CFO John Lawler emphasized.
### The Price Point Challenge
However, plug-in hybrids come with a hefty price tag. In July, the average plug-in hybrid cost around $62,985, which is $4,366 more than the average fully electric vehicle, as reported by Edmunds. Just a year prior, this dynamic was reversed, with electric vehicles being the pricier option.
### Balancing Cost and Demand
Despite a hot market for hybrids, plug-in models tend to linger longer on dealership lots compared to their fully electric counterparts. In July, electric cars were sold within an average of 81 days, while plug-in hybrids took about 84 days.
This isn’t merely a sign of reduced interest but a testament to the financial priorities of potential buyers. Simply put, affordability is key. Traditional hybrids, which lack plug-in capability, are much cheaper yet still attract strong eco-friendly buyer interest. These vehicles, selling for an average of $43,142 in July, spend significantly less time on lots—just 30 days on average.
### Conclusion
While the allure of plug-in hybrids lies in their dual utility, the rising costs are making them less of a bargain compared to fully electric or traditional hybrid vehicles. As automakers continue to adapt and pivot in this evolving market, it remains to be seen how the economics of green car buying will further shift.
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Lawrence Jacobs, Editor of Automotive.fyi
