Hybrids aren't a bridge to EVs anymore - they're winning on function and price
The Toyota Camry is now a hybrid-only model.
Americans are rediscovering hybrid vehicles, which have turned into a bright spot for the U.S. car market - far outshining electric-only vehicles.
The hybrid electric power train is now the fastest-growing power train in the U.S., with volume up 82% in the past three years, according to Cox Automotive. And experts elsewhere predict continued market-share growth for hybrids over the next five years, while EV sales could be stagnant.
Experts point to a confluence of factors - and, primarily, that consumers want choices. More car models than ever offer a hybrid-engine option, and some models have transitioned fully - Toyota's $(TM)$ popular Camry and RAV4, for example, are now offered only as hybrids.
Until relatively recently, there weren't that many hybrids to choose from besides the Toyota Prius - which, since its launches in 1997 in Japan and three years later globally, has not generally been known for its cool factor. Range was also an issue, with some of the first hybrids only able to go a few miles on a battery charge.
"It's all just happening at once: better products, longer range, more choices," said Tu Le, a managing director at consultancy Sino Auto Insights. "I think that all these things together create this environment where hybrids have now become a thing."
The share of hybrids among all vehicle power trains sold rose to a record 14% in the first quarter, up from 12% in the first quarter of 2025, according to Cox Automotive. Meanwhile, there's been a contraction for EVs, which accounted for about 5% of the power-train mix in the most recent quarter, down from 8% a year before.
Gas-powered vehicles continue to be overwhelmingly popular in the U.S., increasing to 80% of all power trains from 78% in the year-ago period, Cox said.
But that dominance may not hold. John Murphy, founder of advisory firm Murphy Automotive Partners and a former industry analyst at Bank of America Securities, sees hybrid power trains gaining ground over both pure EVs and internal-combustion-engine vehicles.
In a recent white paper, Murphy predicted that internal-combustion power trains would slide to about 66% of the power-train mix, while hybrids could almost double to about 27% of that mix by 2031. Pure EVs will remain below a peak of 8%, he wrote.
"The hybrid advantage on cost, practical use, and consumer acceptance is structural. For most of the mass market, hybrids are the answer, not a bridge to a pure EV future," he said in the note.
For most Americans, a practical use case leans heavily toward traditional hybrids, Murphy added.
Hybrids have relative pricing power and carry healthy profit margins, while most pure EVs still lose money. On top of that, there's uncertainty around policy, tariffs, emissions rules and consumer incentives, all of which raise the cost of betting on any single power-train strategy, Murphy said.
Manufacturers including General Motors $(GM)$ and Ford $(F)$ have recently deferred, shrunk or canceled some of their EV programs, writing off billions of dollars, as demand dried up after federal tax credits on new and used EVs ended last year.
Rising gas prices - and familiarity - are also making a case for hybrids
Some of the popularity of hybrids is rooted in familiarity. Buyers get fuel efficiency, are more familiar with the technology and don't have to worry about infrastructure and where to charge an EV, said Stephanie Valdez Streaty, a director of industry insights at Cox.
"I do think the future still is electric," she said, but the timeline for EVs has "definitely" shifted to further in the future, and the U.S. is likely to have a mix of power trains on the roads for longer.
Automobile makers are pursuing hybrid strategies in different ways. Some have gone all in, as Toyota did with the Camry and the RAV4, while others are offering hybrids as an engine option, not unlike the days when people could choose between a V6 engine or a more expensive V8. Choosing a hybrid power train will typically bump up prices by between $1,000 and $3,000, depending on the model.
EVs, meanwhile, usually come with a steeper step-up in price. They are generally about 10% to 20% more expensive than gas-powered cars, a difference made starker by the end of those U.S. tax incentives.
Broadly, EVs have always been a harder sell in the U.S., and the deepening of an affordability crisis for U.S. car buyers has not helped.
The average monthly new-car payment reached a record $777 in the second quarter, with record levels of buyers lengthening their loan terms past six and seven years, recent data from Edmunds.com show.
Buyers have never borrowed as much for a vehicle purchase as they did in the second quarter of this year - the average amount financed for a new car rose to an all-time high of $44,156, up $1,768 from the second quarter of 2025.
It remains to be seen whether gas prices, notably elevated since the U.S. and Israel launched attacks on Iran at the end of April, will play a part in boosting hybrid sales further.
The average retail gas price in the U.S. topped $4 a gallon in April, as the war with Iran disrupted Middle East crude-oil flows. The national average has been under $4 a gallon for the past two weeks, after the U.S. and Iran agreed to a temporary cease-fire last month.
Rising gas prices make people in the market for new cars consider alternative power trains, but that doesn't always translate into sales.
Americans don't typically change their car-buying habits based on gas prices, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. "In many consumers' minds, [more expensive gas] is just a temporary thing," he said.
But that could be changing as more hybrids come to the market. According to Cox, 56% of people shopping for a new car in May said that rising gas prices made them more likely to buy either a hybrid, which does not use external charging sources and instead relies on its gas engine and braking to generate electricity, or a plug-in hybrid, which can be plugged into a power source.
Gas prices are at least "some of the reason we're seeing growth" in hybrids, Cox's Valdez Streaty said. That's not the only reason, she added, but it is one of the factors buyers may be weighing.
-Claudia Assis
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(END) Dow Jones Newswires
July 05, 2026 09:03 ET (13:03 GMT)
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