Despite the market’s heavy shift towards electric vehicles over internal combustion engines, hybrid models are gaining ground. Before the pandemic, some of the world’s largest car companies attempted to win over drivers by offering plug-in hybrids. These cars were meant to use electricity for short distances, and then switch to gasoline engines for longer drives. But these cars, such as the Chevy Volt, did not quite take off as many had hoped. Instead, more and more consumers opted for fully electric options, like Tesla’s Model S. As such, models like the Chevy Volt were discontinued in 2019.
Strangely enough, those plug-in hybrids are making a strong comeback. Perhaps they were the right product at the wrong time. Pushed by surging gasoline prices, automakers sold more than 176,000 plug-in hybrids in the United States in 2021, a jump of over 100,000 in just one year. Sales are expected to continue to climb in spite of the overall fall in sales in 2022 versus 2021. Right now, fully electric vehicles comprise roughly 5 per cent of new cars sold. Hybrids represent 7 per cent. And while experts predict that EVs will replace hybrids in the long run, it has taken longer than expected for EVs to close that gap entirely. What’s more, given recent trends, the gap in sales may even widen in the next few years.
One reason that EVs are struggling to keep up with the pace of hybrid sales is that the supply of batteries is insufficient to cover the demand. And with demand high and supply low, the cost of these batteries continues to grow. Due in part to these surging costs, the average cost of a new electric car is 66,000 USD. This high price point means that plug-in hybrids have a place in the market for less affluent consumers. The key critique of hybrids is that they historically have been unable to rely completely on batteries. That is, they needed some propulsion from their internal combustion engines. Plug-in hybrids, however, can rely completely on battery propulsion. They do not have to switch to their IC engines, unless they go beyond certain distances. Since their batteries are much smaller than standard EV engines, their costs are also far lower. Their main point of appeal versus EVs is their ability to charge faster and not be completely reliant on charging stations for long trips. EV owners often report “range anxiety”, where they are concerned that they will not be able to reach charging stations in time before their batteries run out.
Perhaps General Motors’ decision to phase out the Volt was premature. One of the main reasons that people do not buy electric cars is the perception that there is not yet the infrastructure necessary to recharge vehicles. Moreover, the need to stop for 30 minutes to an hour at a public charging station is too tough of a pill to swallow for most consumers. Plug-in hybrids were meant to be a transitional technology while countries build up their EV infrastructures. That transition is taking longer than many people expected, so the time might still be ripe for plug-in hybrids, especially given how filling up a gas tank easily costs more than 100 USD these days in the United States. And in Europe, given the supply uncertainties due to the Ukraine conflict, plug-in hybrids seem like an ideal option.