How Shifting Regulations and Market Dynamics are Elevating Hybrids as the Current Eco-Friendly Choice for OEMs and Consumers
Cloud Theory has written extensively about the electric vehicle market, most notably in its comprehensive eBook entitled “Charging Ahead: Hybrids Come into Sharper Focus as EV Aspirations Meet Reality”. That report provides an in-depth analysis of how the changes in regulatory requirements and timelines have had a significant impact on how OEMs are planning for and investing in their vehicle lineups. Those regulatory shifts not only lowered 2032 EV production targets from 67% to 35%, but also created a pathway for hybrid vehicles to play a more prominent role in the industry’s eco-friendly future.
Hybrids are already well entrenched in many OEM portfolios, and others are moving to bolster their offerings in response to these new parameters. And unlike EVs, which have been subject to range anxiety, charging infrastructure limitations, and pricing concerns, consumers are embracing hybrids as a comfortable and relevant alternative to gas powered vehicles.
Consider the following:
In the latest 30 days, hybrid vehicles have significantly higher turn rates, lower days-to-move timeframes, and a better Inventory Efficiency Index score (which measures whether a make, model, or fuel type is getting its fair market share given its relative inventory position in the marketplace) than gas powered and electric vehicles.
It is clear that while hybrids will serve as a bridge to a more mature electric vehicle future, they are also acting as the “wave of the present”.
OEMs are acknowledging this sentiment through their actions and comments. Ford CEO Jim Farley was quoted in a recent Automotive News article saying that “a year ago, we weren't covering the cost premium for hybrids with the price that customers paid us. We are now. Customers are voting. They like these in-between solutions."
Ford’s hybrid metrics are somewhat mixed when compared to the industry at large, with lower turn rates, longer days-to-move, and lower market share—and a higher Inventory Efficiency Index. But overall, Ford has a more-than-solid foundation upon which to build a consumer base as it rounds out its full lineup with hybrid offerings. Coupled with Jim Farley’s comments regarding profitability, it points to a compelling present-day opportunity for Ford to catch this “wave of the present.”
Toyota, meanwhile, is putting a full court press on its already-dominant hybrid lineup, as evidenced by the 2025 Camry being available only with that fuel type. As it says on the Toyota Newsroom website, “Industry-leading hybrid technology has become synonymous with the Toyota brand and the ninth-generation Camry brings its A-game.” With those new model year vehicles already hitting dealer showrooms, the Camry is proving to be a hot seller, with extremely strong early sales figures, as well as a very high turn rate and low days-to-move performance.
As was written in Cloud Theory’s extensive EV report, other OEMs such as Hyundai, Honda, and Stellantis are already relatively well positioned in the hybrid space, and others such as General Motors are moving quickly to shore up their positions within it. Supply is likely to ramp up as OEMs shift gears and support this vehicle sector as a viable means to be more sustainability-oriented and regulatory-compliant.
And the good news is that, as evidenced by the hybrid Inventory Efficiency Index score of 137, there is excess demand to soak up that supply growth.
A wave of the present, indeed.
