It’s going to take a lot more than price cuts to sway some consumers to pick an electric vehicle over a hybrid alternative. “[EVs are] a huge shift from the internal combustion engine world, and it’s this whole lifestyle change,” said Stephanie Valdez Streaty, director of mobility research and development at Cox Automotive. “The reality is infrastructure reliability is a challenge.” Hybrid vehicle market share has picked up pace in 2023 despite all the investment pouring into EVs. From October 2022 to October of this year, total vehicle market share for hybrids grew from 6.5% to 11.4%, according to data from Edmunds. Over the same time period, EV market share growth was more sluggish, expanding from 6% to 7.5%. Valdez Streaty said concerns over EV range and price have remained front of mind for consumers hesitant to make the switch to all-electric vehicles — especially in parts of the country where charging stations are not as robust. Hybrids are more comforting given that the vehicles have been on the road longer and still have a gas option, she said. Deep price cuts for EVs Rising hybrid sales have persisted even as EV makers, from Tesla to legacy auto companies like Ford and General Motors , increasingly slash prices on electrified vehicles. The average discount off the manufacturer’s suggested retail price (MSRP) of an EV last month was $2,601, the Edmunds data shows , down from $3,092 in January. Hybrid shoppers, meanwhile, only saw incentives of roughly $400 in October. While analysts on Wall Street remain bullish on the long-term prospect of EV adoption, the speed bump of slower sales is hard to ignore. The more nuanced picture could mean companies including Ford and Toyota are better positioned to simultaneously stay the course toward full-electrification while also taking advantage of the rise in hybrid market share. Still, the transition to full-electric adoption seems inevitable, according to Goldman Sachs. “With some geographies banning the sale of ICE [internal combustion engine-powered] vehicles from the 2035 timeframe, and autos being a long-cycle industry, we do not believe the management teams and boards of traditional OEMs can plan to rely on ICE businesses for the next 10-20 years, and EV market leaders such as BYD and Tesla have shown the potential profitability of EVs,” analyst Mark Delaney said in a Nov. 13 note. Leaders in the hybrid game have stayed the course. Toyota ‘s 2024 Prius, often called the “gold standard” in hybrid vehicles, was named MotorTrend’s car of the year. Toyota also has taken the bold step of announcing its 2025 Camry , the company’s best-selling vehicle in the U.S., would only be available in a hybrid option. David Christ, head of sales for Toyota Motor’s North American segment told the Wall Street Journal in October that hybrids remain ” a smoking-hot market .” Honda , meanwhile, recently debuted the hybrid Prelude Concept at the Los Angeles Auto Show. ‘A bridge to EVs’ Hybrids, which mix a traditional internal combustion engine with at least one electric component to power the vehicle , have long outpaced EVs in terms of sales and popularity, according to Cox Automotive executive analyst Michelle Krebs. She posits that sales of hybrids could be even higher if players like Toyota faced fewer supply headwinds . Toyota’s hybrid lineup also includes both sports utility vehicles and minivans like the RAV4 and the Sienna, and the company also produces a full-electric option in the bZ4X model. TM YTD mountain U.S. listed shares of Toyota have added more than 37% from the start of 2023. “Toyota and others believe hybrids are a bridge to EVs,” Krebbs added. U.S. listed-shares of Toyota have added roughly 38% from the start of the year, while about 70% of analysts polled by FactSet maintain a buy rating. Consumers seem to be taking advantage of that bridge, forcing automakers to reevaluate EV plans. Ford , General Motors and Tesla have all rolled back ambitious EV production targets due to the slower pace of consumer adoption. Ford at the end of last month delayed about $12 billion in further EV manufacturing investments over concerns that consumers aren’t willing to pay a premium to go all-electric. At the same time, Ford saw a 41% jump in third-quarter hybrid vehicle sales, amounting to 34,861 cars, obliterating EV growth of roughly 15% over the June to September period. Ford sold a total of 500,504 vehicles throughout the quarter. Ford stock has slumped 11% from the start of 2023, and analysts’ takes on the stock are mixed. About 50% of analysts polled by FactSet have a buy rating on Ford, while roughly 40% maintain a hold. Barclays analyst Dan Levy said in a mid-October note that both Ford and GM remain favored stocks in the EV transition space as the overall sector deals with slower adoption and sales. Ford is the only company of the two that offers hybrid vehicle options. “[The] EV transition remains a significant overhang,” Levy said. “Investors generally prefer Ford/GM to pull back on EV plans — which could support near/mid-term earnings.” F YTD mountain Ford’s fleet of vehicles also includes hybrid options on top of EVs. Levy also pointed toward yet another dilemma for legacy automakers scaling back EV investments, which is allowing Tesla to gain even more ground as the market expands over the long-term. “However, this reinforces the EV dilemma for OEMs — pulling back gives Tesla more time to extend its lead, and implies a longer path to breakeven,” he said. To be sure, EVs remain meaningfully more expensive than hybrids. Edmunds’ data shows the average MSRP for an EV was $61,665 in October. Hybrids by comparison were roughly $19,000 cheaper at $42,653. Consumer preference for hybrids remains higher than EVs even as the overall cost of a hybrid has increased 5.3% from October 2022 to October 2023. There had been hope that tax credits would narrow the gap. The Biden administration’s Inflation Reduction Act allowed for a $7,500 tax credit for consumers purchasing, or leasing, a new electric vehicle. The rules were structured to coerce manufacturers to produce more vehicles in the U.S. But the ramification has been that a swathe of EVs don’t qualify for the incentive. Some consumers have taken advantage of a loophole in the guidelines, however, which applies the credit to certain leased EVs even if they weren’t fully made in the U.S. The uptick in hybrid sales won’t likely spell doom and gloom for the EV market over the long-term. The sector, while slowing down in recent months, is still a focal point of automakers across the globe, and headwinds tied to cost and production should ease over time. “As we look out, the number of BEV offerings by OEMs increases and encapsulates a wider range of vehicle segments and price ranges. Meanwhile, costs should decline, while factors such as range, efficiency and fast charging improve. Further, many governments aim to ban ICE vehicles,” BMO Capital Markets analyst Tom Narayan wrote in a Nov. 20 note. “The combination of these vehicle factors means that BEV demand ultimately becomes a consumer-led one.”
Sumber: www.cnbc.com
