Why Plug-in Hybrids Could Be the Future of the Auto Industry

PHEVs can save on fuel costs while going the distance.

Lawrence Ulrich | 

Feb 15, 2024 | 5 min read

Volvo

Compared with the sales of battery electric vehicles since 2019, the sales of plug-in hybrids (PHEVs) in the United States have not indicated nearly as much consumer demand, according to data-insights website Statistica. These versatile models can cover shorter distances on plug-in electricity alone, then switch to combined gas-electric operation like any conventional hybrid. The arrival of Tesla and its flashier electric vehicle (EV) technology that precipitated an industry shift to a fully electric future seemed to wash away the need for more pedestrian PHEVs.

Between fluctuating gas prices and the heightened costs of fully electric cars — which may not be practical for every customer — the perennially misunderstood hybrid technology might be worth a second look.

Since 2019, Statista reports, PHEV sales have more than doubled, with forecasts for steady increase into 2028. Despite this trend toward PHEV resurgence, some automakers aren't responding. General Motors is one of several automakers that intends to stop building any gasoline-powered cars between now and roughly 2035, including PHEVs, in favor of a revolutionary leap to full EVs.

Plug or Pump, PHEV Savings Add Up

Hybrid vehicles such as the Toyota RAV4 Prime and Hyundai Santa Fe PHEV highlight the versatility of this technology, plus they carry federal tax credits that can rival those of full EVs.

The 2024 RAV4 Prime starts at around $45,000 for the base model, and can cover 42 miles on plug-in electricity alone. Once those electric miles are depleted, the RAV4 can travel up to 600 miles in total, without stopping to recharge or refuel. After its battery is depleted, the 2024 RAV4 Prime still sees an EPA-rated 38 mpg in combined city/highway driving on gas alone. The EPA estimates a typical owner will spend $1,000 a year to charge and refuel the RAV4 Prime, and save $4,250 in energy costs over five years.

Since the Prime carries a relatively small and lightweight battery, when it's plugged into a 240-volt outlet, it should recharge in fewer than three hours. Using a standard 120-volt outlet, it will likely take about 12 hours.

With experts sounding warnings over a dire shortage of batteries and their raw materials, smaller batteries could let automakers build vastly more PHEVs than EVs, and spread the financial and environmental benefits to more owners.

Compared with the Toyota, the 2023 Santa Fe Hybrid has less EV range, at 30 miles of pure electricity and 440 miles of total range. It can travel up to 33 miles on gas alone, with an EPA-estimated annual fuel cost of $1,250 and savings of $3,000 on fuel costs over five years. As with other PHEVs, the gains can multiply for owners who charge faithfully at home or work.

Still Waiting for Price Parity

For years, analysts and media outlets predicted that more players and competition in the EV arena, along with reduced battery costs, would bring EV prices in line with conventional cars. That oft-promised price parity hasn't happened — at least not yet. For many buyers, EVs remain out of reach. The price disparity is evident among automakers such as Volvo, which sells both gas and electrified vehicles. The 2024 Volvo XC90, for example, starts at around $58,000 for the gas-only base trim, while a hybrid XC90 Recharge comes in at nearly $15,000 higher, with a starting price of around $73,000. Similarly, the XC40 — the least expensive Volvo you can purchase today — has a nearly $12,000 difference between the base trim gas-only option (about $42,000) and the fully electrified Recharge (about $54,000).

Karl Brauer, executive director of iSeeCars.com, said the brutal sales climate for EVs, and a lack of reliable charging options, has boosted his longstanding view that PHEVs are the smarter solution for mainstream buyers.

"At some point, pure electric vehicles may prove a viable, affordable alternative to internal combustion," Brauer said. "But right now they're not a realistic option for most consumers."

For PHEVs, "the ability to drive a car as a pure EV nearly all the time, but still have long-distance use without range anxiety or belabored refueling, is the best use of today's technology."

Brauer also noted that while PHEVs' shorter electric ranges can seem a fatal disadvantage versus EVs, PHEVs proven less vulnerable to battery shortages and other disruptions.

The PHEV Trailblazer Reinstates the Tech

GM originally led the cheers and charge for PHEVs in 2011 with its then-groundbreaking Chevrolet Volt, but Tesla's world-changing Model S EV became the smash hit in sales and critical appeal. The Volt steadily lost sales momentum, and GM ceased production in 2019. GM then turned its attention to full electrification with the Volt's successor, the Chevy Bolt EV in 2017, and has placed a $35 billion global bet on EVs. The company's goal is to build nothing but EVs by 2035, and it plans to build up to four new battery factories to supply them. Those electrified models can also help meet the Biden administration's toughened fuel-economy and emissions requirements.

Tim Grewe, GM's general director of electrification strategy, said GM's about-face was the result of EV and battery tech improving faster than anyone had imagined. EVs that can travel 300 miles and more on a charge tend not to need the range-extender gasoline engine of a PHEV, Grewe said.

However, PHEVs can still be an ideal option for people who lack handy access to home garages or other charging locations.

"The last time I checked, I saw a wide array of personal transportation use cases, not one," Brauer said. "Why do we have to universally pick one powertrain solution over all others?"

All vehicle pricing includes MSRP plus destination charges (set at the time of publication), and will be rounded to the nearest thousand.

Lawrence Ulrich

Lawrence Ulrich is an award-winning auto writer and regular contributor for a variety of national newspapers, magazines, and web sites. He and his territorial cat are Brooklyn-based. Lawrence is also the proud owner of a fast-but-frustrating 1993 Mazda RX-7 twin-turbo R1.