The biggest news out of General Motors' Q4 2023 earnings call today wasn't the earnings themselves, or the announcement that it's still targeting profitable electric vehicles by the middle of this year, or that it expects another profitable year thanks to strong sales of gas-powered trucks and SUVs. No, the big news is literally between those things: GM is returning to the hybrid market it walked away from years ago.
The news comes a mere day after the Wall Street Journal published a story about GM's dealer network urging the automaker to return to electrified gas engines. Those dealers say the car shoppers they serve are looking for a "middle ground" between fully electric vehicles—an area where GM has consistently struggled with production and quality—and the gas-powered vehicles collectively paying everyone's bills. After all, 2023 represented a record year for hybrid sales in the U.S., as more and more people saw the value of electrified power but found themselves too put off by range and charging concerns to go fully battery-driven.
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GM's flip-flop on hybrids represents a conundrum faced by the entire auto industry. Tough environmental rules push OEMs toward EVs, but consumers still have range, price, and charging concerns. In the meantime, offering more hybrids will give buyers more options to cut gas and CO2 emissions.
The rise in hybrid sales last year suggests that people do want to cut their dependence on gasoline, if they're given the chance. Now, GM wants to give them that opportunity after years of insisting the right move was to skip a "half-step" and go straight on to an all-EV lineup by 2035.
Granted, GM says it's still doing that. "GM remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035," spokesperson Phil Lienert told InsideEVs via email today, repeating some of the talking points made by CEO Mary Barra on today's earnings call. "But in the interim, deploying plug-in technology in strategic segments will help us meet customer demand, and deliver some of the environmental benefits of an EV as the nation continues to build its charging infrastructure."
In doing so, GM joins automakers like Ford, which also ramped up hybrid production on the success of the F-150 Hybrid and the uneven sales of the F-150 Lightning, and Toyota, which seems poised to basically hybridize its entire lineup. Hybrid cars are indeed having a moment, and it's a moment GM plans to seize, too; we just don't know when or how.
Few details about this plan are known at the moment, including, most crucially, which GM cars and brands could get hybrid technology. And it is specifically plug-in hybrid technology, not the standard kind more widely deployed by Toyota (which makes PHEVs too, but they are vastly outnumbered by non-plug-in hybrids.) We also do not know if hybrids will proliferate across GM's lineup of cars or be limited to just a few models; Lienert declined to offer up any officials for interviews right now. But he did concede that GM will make use of hybrid tech as fuel economy and emissions rules get tougher in the coming years.
"We are timing the launches to help us comply with the more stringent fuel economy and tailpipe emissions standards that are being proposed, and we plan to deliver the program in a capital and cost-efficient way because the technology is already in production in other markets," he said. "We will have more to share about this down the road."
GM officials never explicitly say it, but by "other markets," they mean China. Much of the GM-related lineup in China is, in fact, electric or hybrid. That includes its other brands, like Wuling and Baojun, and the handsome Buick Velite 6 pictured above and the new Wuling Starlight sedan.
But as well-intentioned and promising as this announcement is, countless questions remain.
Presumably the main thing that will determine what PHEVs will be offered isn't where they make sense, but where GM can implement the technology without having to substantially re-engineer on-sale or in-development vehicles. This might be easy if GM had planned for it for years, but we get the sense that’s not the case. Are its current cars, like the Tahoe, even designed for a hybrid powertrain? Where would the battery even go? Sure, you could argue GM could add this to models by the end of this decade or the start of the next, but by then it wants to be done with internal combustion—or close to it.
So we have a weird situation where the brand was among the first to bring PHEVs to mass market America, then gave up the institutional knowledge, then has to recover it within 10 years. If that wasn't hard enough, it will phase it out in 11 years. (You could argue something similar happened with GM after the EV1, but this is just an unfortunate trend with this company.)
In that case, it’s left with a few tricky options: burn cash to get several new PHEVs to market in a few years, import some from other markets like China (which has tariff concerns too) or only make a few hybrid models and hope that's enough to placate customers and dealers. But while there are tough questions to be asked, and are surely being asked with the halls of GM itself, this does represent a good move. And one that should’ve been the play all along.
After all, GM once had a sizable following with its Chevrolet Volt plug-in hybrid, still offers incredible performance with the Corvette E-Ray hybrid and previously sold hybrid versions of the Cadillac CT6, Chevrolet Tahoe and more. In other words, hybrids are a well-trodden path for GM. It was a pioneer in the plug-in field, too. It should know what it's doing here. And the move should help buyers who want to cut their fuel budgets and experience electric power, without having constant concerns about long lines and uptime at fast-charging stations.
It's also great news for emissions and the environment. While GM has indeed said it plans on going all-electric by 2035, it's also building a new small-block V8 engine for future trucks and SUVs—one of the few automakers willing to announce new internal combustion motor development right now. How many of those future V8-powered Tahoes, Suburbans and Escalades would create fewer emissions and use less gas if they had hybrid power as well? It seems like a no-brainer to equip this on GM's thirstiest vehicles, assuming that refitting them to support a PHEV option isn't too costly.
But the choice to focus on plug-in hybrids specifically is an intriguing one. After all, that's an area where we've seen several automakers have scaled back in recent years, even if they've done so quietly. Plug-in hybrids are expensive to engineer and manufacture, just as they are to repair; they may have the advantages of gas engines and EVs, but they have the drawbacks of both, too. Profit margins around these cars tend to be quite slim, and there's certainly no guarantee that buyers will charge them as they should.
The lack of proper PHEV charging habits in Europe—often with company and fleet vehicles, where people had corporate gas cards and thus no incentive to charge their batteries—led many green groups and NGOs to label them as thirstier and more polluting than expected. After all, if you don't charge a PHEV's battery, expect more fuel consumption as you carry around literal dead weight.
But in the best-case scenario, GM's move to PHEVs could teach a more mainstream American buyer—the kind of person who was never really the target audience for a Volvo S60 Recharge—about the many benefits of plugging in. There's a behavioral change associated with EVs that's been missing from a lot of the conversation here, and part of that means being less dependent on faulty public fast charging than people have been led to believe. The owner of a GM PHEV, in other words, could use that car as their gateway drug to the full-EV lineup the General says it wants to create someday.
The writing remains on the wall for internal combustion. PHEVs have an eventual expiration date as fuel economy standards get tighter and closer to zero-emission goals. Just look at how Volvo and others are phasing those hybrids out of their lineups ahead of the European Union's 2035 internal combustion ban (contentious as it may be.) GM may not operate as much in Europe as it used to, but every automaker wants as close to global consistency on these rules as it can get.
But this move seems likely to buy GM some time to meet U.S. emissions and fuel economy rules as it ramps up electric vehicles on its Ultium platform, something that pretty clearly seems to need more baking time. If GM is able to bring over some hybrids from China or deploy those powertrains in new models here, it can be cleaner and greener until the day when it's more ready to enter the all-electric era it's been touting so long.
Hybrids may end being a "half-step" after all, as Barra once put it. But they are not a step worth skipping.
Contact the author: patrick.george@insideevs.com
