People have noticed that EV sales growth is softening. Some have taken this to mean that EV adoption is stalled, and that the answer is to bet on plug-in hybrids (PHEVs). That’s not necessarily true. New data from research firm Bloomberg NEF shows that the relationship between PHEVs, EVs and overall demand is a little more complicated than what appears at first glance. PHEVs sales are growing, but EV sales are a much larger percentage of the market and growing even faster.
“It is true that plug-in hybrids, also known as PHEVs, have been gaining traction. These vehicles, which have both a battery and an internal combustion engine, saw sales figures grow a whopping 48% from 2022 to 2023,” wrote Corey Cantor, EV analyst for Bloomberg NEF. “Yet even that impressive acceleration failed to keep up with battery-electric vehicles (BEVs), which saw sales grow 51% in 2023 – and from a far higher base,” he continued. In the U.S., full EV sales crested 1.1 million units, compared to only 281,000 PHEVs.
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EVs are still gaining market share, but some buyers are hesitant to make the full switch. Manufacturers like GM, Ford, BMW and more are pursuing PHEVs as a way to bridge the gap between ICE cars and full EVs.
The report also shows that Stellantis group products account for a staggering 46% of overall PHEV sales; Options like the Jeep Wrangler 4xe, and Chrysler Pacifica Hybrid take up a huge portion of that number. Toyota and Lexus PHEV models are a distant second place, comprising 15% of total PHEV sales. Kia, Hyundai, and Volvo (Geely) models make up the rest, but their EV sales numbers surpass their PHEV sales.
Does that mean PHEVs are a non-starter? No, but sales numbers show that the PHEV question hasn’t been fully answered. PHEVs are often sold as a solution to an EV intender’s hesitance due to range anxiety. Yet, in practice, it’s not clear if PHEVs can quite fit the bill all of the time, or if they make financial sense. For example, Bloomberg BNEF’s battery price survey showed that PHEV batteries are nearly three times pricier per kWh compared to an EV, $343/kWh in 2023, compared with $128/kWh for EVs. The $7,500 IRA tax credit could help defray some of those costs, but cars like the Toyota Prius Prime and RAV4 Prime are made in Japan and do not qualify. Considering that PHEVs make up less than 2% of Toyota’s sales numbers, I can’t see Toyota reconfiguring its manufacturing logistics to court such a small amount of sales.
Still, the PHEV technology feels somewhat underdeveloped, even compared to BEVs and non-plug-in hybrids. For instance, models like the Jeep Wrangler 4xe don’t have much range or good economy when out of full EV mode. More options of sophisticated, well-priced PHEVs with larger EV range coupled with proper education on how to use the vehicle effectively could get more buyers behind the wheel.
Contact the author: kevin.williams@insideevs.com
