The US vehicle market is undergoing a significant shift, with
hybrid vehicles gaining momentum as the popularity of electric
vehicles (EVs) begins to slow.
Although electric vehicles are still gaining popularity in the
US market, the electric vehicle growth rate has slowed
significantly compared to previous years.
Slowdown in Electric Vehicle Growth
S&P Global Mobility new vehicle registration data indicates
that year-over-year EV growth through the first nine months of 2024
has plummeted 80% compared to the same period in 2023.
EVs accounted for 9% of new retail registrations in
January-September 2024, up just 0.6 percentage points from their
2023 market share. However, this increase is less than half the
rise in any of the prior three years.
Incentives and EV Demand
To spur EV retail demand, original equipment manufacturers are
significantly increasing incentives, with the average total spend
per unit reaching $12,527 in September, three times the $4,188
spent two years ago.*
Furthermore, migration data at the fuel-type level (see Table
#1) indicates that households with gasoline vehicles are now
marginally more likely to purchase an EV than they were a year ago.
However, the likelihood of households with hybrid or electric
vehicles purchasing another EV has declined year over year.
The Financial Appeal of Hybrid Vehicles
S&P Global Mobility new vehicle registration data, combined
with financial transaction data from TransUnion, point to hybrids'
value proposition relative to EVs as one influence on EV
demand.
As Tables #2 and #3 demonstrate (one focuses on loan monthly
payments and the other on leases), the average monthly payment for
a hybrid is lower than the monthly payment for a similar EV in
seven of the eight scenarios in the Compact Utility Segment, the
largest segment in the industry.
The one exception is when a RAV4 hybrid is leased; here the
hybrid payment is higher than the gasoline version and the EV
payment is lower.
Hybrids' Success in the Market
The financial advantages of hybrids compared to their gasoline
counterparts, as illustrated in the prior tables, are a key factor
for their recent success in the US market. Hybrids' impressive
market performance includes:
- Retail US market share reached a record 14% in September, up
3.0 percentage points in one year and almost 1.5 points in just
August-September 2024. - Almost half of market leader Toyota's retail registrations in
September were hybrids, a far higher mix than for any other
brand. - September 2024 hybrid loyalty (of the return-to-market hybrid
households in September that acquired a new vehicle, what percent
acquired another hybrid) reached a near-record 44%, second only to
February's 44.3% result. - Migration from all three major fuel types to the hybrid
propulsion system has increased from a year ago, as shown in Table
#4.
The Evolving US Vehicle Industry
The US new vehicle industry is more complex than ever, with over
400 models, 50 active brands, 34 segments, 3 fuel types and
numerous (sometimes conflicting) external influences including an
upcoming change in the federal administration. This landscape makes
it challenging to identify performance drivers, yet the data
addressed above indicates financial factors, such as monthly
payments, still play a role.
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*Incentive data are from Autodata
