The Decade Of The Hybrid Is Here

When I heralded 2024 as the “Year of the Hybrid” in The Morning Dump back in 2023, it was timed precisely to a huge increase in hybrid car sales. It seemed obvious at the time that EV sales weren’t going to increase at some geometric rate, even though many still acted as if that was the case. I feel safe in saying that the rest of the decade is going to go to the hybrid.

The limited sales data we get from some automakers in October is out, confirming the massive negative swing in electric car sales due to the expiration of the EV tax credit. At the same time, hybrid sales are exploding and are likely to continue for the foreseeable future.

Do you want some great news? The chip shortage I wrote about on Friday may have a political solution, although I wouldn’t count my wafers until they’ve been fabricated. Also, Škoda is having a great year. That’s something to celebrate.

S&P Projects A Huge Share For ‘Electrified’ Cars

If I’m being 100% real, I did initially want to call this the “Decade of the EREV” given what’s coming from various automakers. America loves big trucks, and big trucks either require massive batteries or some other tradeoff in order to do big truck things. An obvious solution is to pair a generator engine with a battery pack that isn’t the equivalent of four Nissan Leafs.

I still think EREVs and, to a smaller extent, PHEVs will be a part of the picture. It’s just that full hybrids (FHEV) and mild hybrids (MHEV) solve so many problems at so low a relative cost that it seems like a no-brainer for almost every car out there. S&P Global Mobility is out with a fancy new chart showing the potential future mix, broken down by region:

S&P Global does great infographics.

As you can see, this is how much of the total share of various markets will be electrified in some sort of way. This ranges from 48v MHEVs all the way up to full BEVs. I can’t think of a single vehicle for sale that couldn’t be at least an MHEV, so it’s interesting to see that this isn’t the biggest area of projected growth. It’s hybrids.

There are a few reasons for this. Mostly, it’s just the cheapest way to solve the following problem: Electric cars are way more efficient than gasoline-powered cars, but gasoline has a way higher energy density than current batteries, which are not cheap.

My current CR-V Hybrid is floating around its 37 MPG combined average, and I never have to think about it. When it’s puttering around town, it’s mostly using stored energy. When I get going on the highway, it turns the motor on when necessary.

The other reason for hybrids coming in strong, as S&P Global Mobility notes, is that the regulatory environment in the United States is too unpredictable. We have a system wherein the Executive branch can dramatically change the universe in which carmakers exist. Flexibility is key, and while you can make a vehicle that can accept EV and ICE powertrains (this is what’s interesting about the BMW iX3), it does create some compromises:

Overall, manufacturers are shifting their focus toward flexible powertrain system strategies that can accommodate regulatory uncertainty and changing consumer preferences. The US market is likely to witness increased experimentation with transitional technologies such as REEVs and hybrids, as the industry navigates the complex interplay of incentives, policy, and consumer demand.

It’s all about flexibility going forward, although most companies will likely still create EV-only platforms to address the growing market for EVs. Looking ahead to 2030, if this projection is correct, then an increase in BEVs will be dwarfed by EREVs (they call them REEVs), MHEVs, PHEVs, and just plain old hybrids. That sounds right to me. [Ed Note: I think this study is underestimating EREVs/REEVs, but we’ll see. -DT]. 

October Sales Back Up The Trend

It was always clear that this month was going to see a massive reduction in EV sales as buyers stocked up on EVs while the $7,500 discount was still in play. So far, Hyundai, Kia, and Ford are out with October sales data, and this seems to support the “Decade of the Hybrid” thesis.

Let’s talk Hyundai, which saw its ongoing year-over-year sales streak finally come to an end as year-over-year sales dropped by a nominal 2%.

“Hybrid vehicles led the way in October with a 41% increase, and electrified sales were up 8%,” said Randy Parker, president and CEO, Hyundai Motor North America. “We saw strong EV demand leading up to the expiration of federal tax credits, and while that shift has temporarily disrupted the market, we’re confident it will reset. Hyundai’s momentum remains strong, and we’re on pace for record retail and total sales for the year. Solid fundamentals, smart inventory strategy, and an exceptional team and dealer network power us.”

I’m not a math genius, but if hybrid sales were up 41% and “electrified sales” were only up 8%, that means EV sales had to drop. Yup! The Ioniq 5 was down 63% year-over-year, and the Ioniq 6 dropped 52%. The cheap Venue was the biggest winner, up 49%, but the most important number for Hyundai was the 15% increase in Tucson sales.

Kia managed to keep its sales streak going by selling an extra 94 cars! That’s tight. The cheap Niro saw a huge 75% year-over-year increase, but the real winner in my heart is the now-hybrid Kia Carnival, up 35% over the same period. Ford’s total sales were up by about 2% in October, with electric vehicles down 25% and hybrids down 4%.

What’s up with hybrids? Ford is winding down sales of the Escape, which had a hybrid model, and hasn’t yet replaced it with a Bronco Sport Hybrid. Maverick sales were still up year-over-year, though I’m not sure of the breakdown of hybrids v. ICE for that or the F-150.

The Chip Shortage That Maybe Just Went Away

Full disclosure time: Our co-founder, Beau, has a few other businesses in addition to being a part of this one. Remarkably, there has been little to no editorial pressure or conflict of interest. There was some over the weekend, and I just feel the need to call it out when it happens, for the sake of journalist integrity. On Friday, I wrote about the Nexperia chip shortage that threatened to derail the auto industry. I made a joke about the film Breakin’ 2: Electric Boogaloo, noting that the film “was neither very good nor popular.”

Beau let me know via a stern text that not only did he think the film wasn’t so bad, but that he actually saw it in the theater. The only time I’d seen the film was projected on the wall of a house party in college, and was therefore not fully paying attention.

Taking any critique of my work seriously, I watched more of the film this weekend and looked up contemporaneous reviews. Roger Ebert actually gave it three stars, and made it clear he liked it better than Annie, which he didn’t like:

Remember all the self-importance of “Annie“? That’s why a modest, cheerful little movie like “Breakin’ 2: Electric Boogaloo” is so refreshing. Here is a movie that wants nothing more than to allow some high-spirited kids to sing and dance their way through a silly plot just long enough to make us grin.

Perhaps I was being too glib. I regret the error, but I also want you to know that we take editorial independence seriously here and that the Morning Dump will not be caving to pressure (from a certain North Carolinian taillight enthusiast) regarding my belief that “Son in Law” is the best Pauly Shore movie.

Oh, right, chips. Yeah, that whole thing with the politically-charged chip shortages seems to have resolved itself, according to this Bloomberg report:

Following the trade truce agreed by presidents Donald Trump and Xi Jinping at their summit last week, the US said on Saturday that Beijing will take steps to allow the Chinese facilities of Nexperia to resume shipments. This move, which confirms an earlier Bloomberg report, will likely ease worries about chip shipments that had threatened auto production as a trade fight between China and the US escalated.

The Dutch and Chinese arms of the same company are still beefing, but it sounds like they’ll keep doing their respective jobs and not disrupt a whole industry while they work out their issues.

Škoda Stays Singularly Superlative

My favorite modern Czech automaker (suck it Kaipan!) is the one arm of Volkswagen that doesn’t seem to be sweating it all that much. It doesn’t sell cars in North America, it never earned a huge stake in China that it’s suddenly losing, and it makes the kind of nice and cheap cars that consumers want.

According to a company sales release, through Q3 the company’s sales are up 14.1% year-over-year, and its balanced portfolio of ICE, EV, and hybrid vehicles is leading the company to big sales in Europe. Only Cupra is doing better, but that’s a relatively new automaker with less than half the volume.

It’s also expanding in markets like Vietnam and India, which are so far not as impacted by the global trade war:

Klaus Zellmer, CEO of Škoda Auto, commented: “Škoda’s strong nine-month results prove that our strategy is working: We are growing profitably, electrifying faster, and expanding globally. Holding firm as Europe’s No. 3 car brand while doubling deliveries in India shows the power of our team, our partners, and our customer’s trust. We’re driving forward with confidence, efficiency, and the courage to shape the future of mobility.”

Superb!

What I’m Listening To While Writing TMD

My wife put on “November Rain” by Guns N’Roses to celebrate the dawning of a new month, and I remembered that she wasn’t an MTV kid and had therefore not seen the extravagant video. If there’s a better way to start this month than Stephanie Seymour taking a luxurious pull of a cigarette, I’d like to know it.

The Big Question

Decade of hybrids, PHEVs, MHEVs, BEVs? What do you got?

Top photo: Honda