Drivers still interested in hybrids amid volatile EV market

Concerns about prices and limited charging infrastructure have slowed EV sales, leading to slimmed down profits and share prices at Mercedes-Benz and Porsche, and factory closures for Volkswagen

Mercedes-Benz chief executive Ola Källenius said the carmaker will continue to make hybrid vehicles 'well into the 2030s'. Picture: Stollarz/AFP/Getty

Hybrids were supposed to be a way station on the road to electric cars.

Honda Motor and Toyota Motor started pushing them in the late 1990s, using their part electric/part internal combustion powertrains to meet emissions mandates and lower CO2 ratings across their global fleets.

They wagered that hybrid vehicles were an easier sell to consumers than the full-on electric vehicles a few early adopters and tech geeks were driving. Soon everyone would transition and leave gasoline behind for good, the thinking went.

Even luxury brands joined in, with Lexus introducing the RX400h in 2004. By 2013, high-powered halo hybrids such as the BMW i8, Ferrari LaFerrari, McLaren P1 and Porsche 918 had appeared.

But the leap to a world of all-electric driving hasn’t occurred.

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Concerns about high sticker prices and limited charging infrastructure have slowed EV sales, disappointing projections so deeply that it’s prompting factory closures for Volkswagen, generating low order rates at Mercedes-Benz and returning such slim profits that shares at Porsche have slumped by more than a third in the past year.

“EV sales growth today is far less dynamic than it was in 2022,” Cox Automotive director of industry insights Mark Schirmer wrote in an email on July 17.

These days, the hybrid powertrains that were once considered merely a bridge to an electric-only Nirvana are turning out to have a more lasting appeal than expected, with their triple threat of decreased emissions, increased power and do-gooder image.

“All the big [automakers] have already changed their plans to go full electric,” Lamborghini CEO Stephan Winkelmann said.

Lamborghini also announced its $608,358 Revuelto hybrid last year.

Two more Lamborghini hybrids, including the plug-in version of the Urus SUV, will make their debut in August.

“Nobody’s judging and doubting hybridisation,” Mercedez-Benz chief Ola Källenius told Bloomberg in May, adding that the car maker will make hybrids like its Mercedes-AMG S63 E Performance “well into the 2030s,”, a significant reversal of a prior plan to sell only EVs by then.

BMW offers five plug-in hybrids, with two more in the M5 family on the way. Hybrids will continue to play a “meaningful” role at BMW, a spokesperson confirmed.

Defender announced its 626-horsepower Defender OCTA hybrid ($152,000) on July 2, fulfilling what the company described as “surprising” demand for more hybrids.

Porsche will also deliver its first 911 hybrid, the 2025 Porsche 911 Carrera GTS ($165,000) later this year.

“[It is the] next step into our electrification strategy while still offering our customers the choice to stay with an internal combustion engine if they want to,” Timo Resch, president and chief executive of Porsche Cars North America, said.

Hybrid sales across all marques nationwide are up 152% in 2024, with plug-in hybrid sales alone up 59%, according to data provided by Cox Automotive.

In particular, luxury hybrids show strong growth.

As of May, luxury hybrids account for 7.5% of all luxury vehicle sales this year, a 2.1-percentage-point increase from the same period last year, according to J.D. Power. That’s an increase of 20,500 units, up 39%.

Simply put, says Anthony Salerno, the vice president of J.D. Power, “consumer interest in hybrids is rising”.

Ferdinand Porsche himself built the world’s first hybrid in 1899, making more than 300 of them until Henry Ford presented his gas-only Model T as a more affordable and more powerful option.

Combustion engines soon dominated the market.

However, hybrid vehicles slowly re-emerged with General Motors’s experimental EV1 hybrid in the 1990s, Toyota’s Prius that debuted in Japan in 1997, and the Honda Insight, which in 1999 became the first mass-produced hybrid released in the US.

Some, like the mild hybrid Insight, were valued for their no-fuss charger-less practicality and almost imperceptible use of electric motors that improved acceleration.

Plug-in hybrids like the Prius Prime offer electric-only driving, if only for a limited range.

It took another five years after the Insight before the first luxury hybrid debuted, the Lexus RX400h.

The plug-in SUV won fans for its fuel efficiency of 31 miles-per-gallon compared to the 19mpg of the base RX model and an electric-only driving range of nearly 40 miles.

The move to higher-end brands took longer.

Executives agonised over hybrids’ costs and reliability, weighing emissions targets and lack of consumer education against volume, pricing and profitability.

• Bloomberg