Everyone wants a plug-in hybrid, and it's sending prices soaring

• Plug-in hybrids were way more expensive than electric vehicles in July.

• Hybrids are having their best year.

• Plug-in hybrids are a good compromise, but shoppers are still following the deals.

You might want to start saving up if you're looking for a plug-in hybrid.

These cars, equipped with an internal combustion engine to take over when the battery powering the vehicle runs out of juice, have become an alluring compromise for a new group of more-practical green-car shoppers.

That's giving new life to the once withering hybrid segment. Car companies are leaning into this segment, changing production and sales strategies to meet the growing demand for hybrid cars.

For drivers who can't commit to a fully electric car because of range anxiety for longer trips, a plug-in hybrid offers the best of both worlds. These cars can run on battery power alone before a gas-powered engine kicks in. A daily commute might have zero emissions, but a longer trip can include a mix of battery-powered and gas-powered miles.

But there's one problem: Plug-ins are getting expensive.

The average plug-in hybrid sold for about $62,985 in July, according to data from the car-shopping website Edmunds. That was $4,366 more than the average purely electric car sold for, the firm found.

It wasn't always this way. As recently as the spring of 2022, the imbalance tipped in the other direction, with the average EV selling for about $4,000 more than a plug-in hybrid, according to Edmunds' data.

A new day for hybrids

Hybrid cars, once considered a relic of the pre-Tesla EV market, are having their best year. The data firm Wards Intelligence found that sales were up by nearly 31% in the second quarter.

After lobbying from car manufacturers and their unions, the Biden administration wrote the newly popular plug-in hybrids into its finalized rule designed to boost electric-car sales, aiming for these vehicles to account for at least 13% of new-car sales by 2032 to meet new emissions standards.

This was considered a big win for car companies, who had argued that rules that excluded partially electric cars were unrealistic.

Manufacturers are responding in kind.

In late August, Ford announced it was canceling long-held plans for electric three-row SUVs and replacing them with hybrid models. The company estimated this strategy shift would initially cost it nearly $2 billion, but it's designed to replace unprofitable cars with ones Ford knows it can make money on.

"It's coming back to understanding the customer, " Ford's chief financial officer, John Lawler, told reporters, emphasizing the need for its battery-powered cars to be profitable within two years of launch.

The pivot adds to Ford's strategy of prioritizing hybrids to attract new customers.

Green-car shoppers still follow the deals

Despite rabid demand for hybrids, the plug-in varieties of these cars sat around on dealer lots for longer than their fully electric counterparts in July, according to Edmunds: EVs spent about 81 days on a dealer lot before being sold, while plug-in hybrids sat about for 84 days.

While plug-in hybrids appeal to people who are nervous about access to charging, affordability appears to supersede all for electric-car shoppers.

You can see that reflected in the popularity of hybrids without the plug-in feature, which are much less expensive than both battery-electric cars and plug-in hybrids.

These cars, which spent a relatively low average of 30 days on a dealer lot in July, had an average transaction price of $43,142, according to Edmunds. That was $4,574 cheaper than the overall average price of a new car that month.

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