Electric vehicles are often held as the end-all-be-all of decarbonizing the auto industry, but they're not filling those shoes as fast as some hope. EV uptake isn't meeting expectations, and momentum isn't expected to pick up again for at least a couple of years at the soonest. That'll leave room for hybrids to spring up in their place, and account for up to a quarter of U.S. market share by the end of the decade.
According to S&P Global Mobility data cited by Reuters, hybrid sales are expected to more than triple over the next five years and make up 24 percent of U.S. new car sales in 2028. Some car companies expect even more, with Ford CEO Jim Farley reportedly forecasting sales quadrupling over the same period in a Q2 earnings call. For reference, hybrids are anticipated to claim only seven percent market share in 2023.
By contrast, EVs are expected to reach nine percent this year, and 37 percent in 2028. As we've previously explored though, their sales have been driven by aggressive tax incentive programs that have returned suboptimal CO2 emissions reductions. And now that EV tax credits aren't as accessible, demand has lagged behind expectations.
That could allow for a hybrid renaissance in the U.S. market, with hundreds of thousands of hybrids expected to be built and sold here over the rest of the 2020s. Major players are expected to be Toyota, Ford, and Stellantis, whose plug-in hybrid Jeep Wrangler and Chrysler Pacifica are already bestsellers in their segments. EVs also spend twice the time on dealership lots before being sold as they did in 2022 according to iSeeCars, whereas hybrids are flying off the lots.
Major gains are expected in both the personal transport and fleet vehicle markets. Many consumers will want to reduce fuel costs, but won't be willing or able to buy an EV. The possibility of battery shortages expected within a few years may also hamstring EV adoption long-term, leaving hybrids to fill in for demand where EVs can't.
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