Hybrids Surge as Gas Prices Climb and EV Tax Credits End
Hybrids made up 16 of every 100 new cars sold in the United States in the third quarter, a record share, according to data the U.S. Energy Information Administration released Monday. Over the same period, battery electric vehicles fell to 6 percent of sales from 10 percent a year earlier, and plug-in hybrids dropped to 0.7 percent from 1.8 percent. In the luxury market, electric vehicles’ share was cut by more than half, to 12 percent from 31 percent.
A hybrid pairs a gasoline engine with an electric motor. The battery charges while the car is moving, so there is nothing to plug in, and fueling works the same as it always has. A battery electric vehicle runs on electricity alone, while a plug-in hybrid sits between the two, able to charge from an outlet or run on gasoline.
The first reason for the hybrid surge is the price of gasoline. U.S. gasoline averaged $4.48 a gallon in September, a record for the month, as the conflict in the Middle East pushed oil prices higher. Gasoline also jumped 9.1 percent in a single month in September’s consumer price data. New hybrid sales are up 24 percent this year, according to CarGurus, and used hybrid sales rose 19 percent. “We’ve been seeing an uptick in demand for hybrids even before gas prices started to accelerate in March,” said Kevin Roberts, director of economic and market intelligence at CarGurus.
The second reason is the end of electric vehicle subsidies. Two federal tax credits that took $7,500 off the price of an electric vehicle expired on Sept. 30, 2025. Hybrids were never eligible for the credits, but once the price advantage of expensive electric vehicles disappeared, hybrids emerged as the reasonable alternative. “Hybrid vehicles continue to be the clearest growth story in the electrified market,” said Stephanie Valdez Streaty, director of industry insights at Cox Automotive, adding that hybrids give consumers better fuel efficiency without requiring a major change in how they fuel. Tiago Castro, Nissan’s senior vice president of U.S. marketing and sales, said hybrids were a safer choice for consumers concerned about electric vehicle range, and that “the situation was different when the government was still offering incentives for electric vehicles.” Nissan has moved up the launch of a new hybrid system for its Rogue SUV.
Price plays a part as well. A hybrid costs on average $1,300 to $2,400 more than its gasoline counterpart, far less than the typical electric vehicle premium. “Americans are interested in fuel-efficient vehicles. They just aren’t willing to pay a huge premium to get that fuel efficiency,” Roberts said. “In this environment, I would rather have 20, 30 extra miles per gallon right now.” Thad Szott, a Detroit-area dealer who sells Ford, Stellantis and Toyota vehicles, said demand for electric vehicles has not disappeared, but most consumers now prefer hybrid technology.
Toyota dominates the best-seller list. The company accounts for 47.2 percent of hybrid sales and holds four of the top five spots among top-selling hybrids. The Camry sedan is the top-selling hybrid, at an average price of $35,900. The RAV4 family SUV averages $41,300 and sells within about 16 days of reaching a dealer lot. The Honda CR-V became America’s best-selling SUV this year, and more than half of those sales were hybrids. The Ford Maverick, at $34,200, is among the cheapest hybrids on the market.
Korean automakers are climbing fastest. Hyundai’s hybrid sales rose 35 percent in the third quarter, and the Tucson set a quarterly sales record at 64,075 vehicles. Elantra sales rose 18 percent and Sonata sales 34 percent. As Toyota’s share slipped by more than four percentage points and Ford’s fell from nearly 10 percent to 6 percent, Hyundai and Kia gained ground the fastest, according to Cox Automotive. Hyundai’s electric Ioniq 5, however, saw sales cut in half.
Growth is starting to slow, the EIA noted. The average new vehicle transaction price passed $50,000 this year for the first time, and more consumers are putting off buying a car altogether.
