FYI: The average price of PHEVs in the U.S. rose significantly in July, exceeding the cost of electric vehicles.
## Demand for Plug-In Hybrids Drives Up Prices, Surpassing Electric Vehicles
Car buyers in the U.S. are increasingly gravitating towards plug-in hybrid vehicles (PHEVs) due to their advantageous blend of electric range and the backup of a combustion engine, effectively mitigating range anxiety. This growing preference has now driven the average price of PHEVs higher than that of electric vehicles (EVs).
### PHEVs Now Costlier Than EVs
Business Insider reports that the average plug-in hybrid sold for just under $63,000 in July, approximately $4,400 more than the average electric vehicle. This represents a significant price shift since the spring of 2022, when EVs were about $4,000 more expensive than PHEVs.
### Market Shares and Price Trends
According to the U.S. Energy Information Administration, PHEVs accounted for 2% of the light-duty vehicle market in the first quarter of 2024, up from 1.7% the previous year. Meanwhile, hybrid sales surged by over 30% compared to 2023, holding a market share that grew from 8.6% in the first quarter to 9.6% in the second.
EVs, on the other hand, saw their market share stagnate at 7.1% throughout 2024. Their average price decreased modestly from $57,405 in January to $56,371 by mid-year, a figure that remains 21.1% higher than the average for all light-duty vehicles.
### Automakers Adjust Strategies
In response to the apparent slowdown in EV sales, several major automakers are recalibrating their strategies. Brands like Toyota, Ford, Volkswagen, General Motors, and Aston Martin have announced plans to either delay the rollout of new electric models, scale back current EV production, or increase their focus on building more hybrid and plug-in hybrid vehicles.
Even Volvo, a company previously committed to going fully electric by 2030, has reconsidered its immediate plans. Despite these adjustments, Volvo continues to perform well, with EVs making up 26% of its sales in the second quarter and the combined share of BEVs and PHEVs reaching 48%, surpassing many of its premium competitors.
### Conclusion
The automotive industry’s transition to electric is far from straightforward, with consumer preferences and market dynamics continuously evolving. As PHEVs grow in popularity and outperform EVs in average sale price, automakers are adapting their strategies to meet current demands.
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Authored by: William Kouch, Editor of Automotive.fyi
