EV leasing ticked down, but hybrids continued to have a moment in January

The US EV transition may be going through some growing pains, but January appears to have been another strong month for car buyers’ new favorite thing: hybrids.

Across major automakers like Honda, Hyundai, and Ford, hybrid vehicles helped boost what otherwise was a lackluster month for the industry.

Hybrid versions of Honda’s Accord and CR-V models, for example, recorded their best-ever January results. And though Ford’s battery-electric vehicle (BEV) sales fell from a year ago, hybrid sales leapt 42.7% YoY.

Even if hybrids’ market share drops, it’s not for lack of demand—it’s that automakers “simply can’t make enough of them,” Ivan Drury, Edmunds’ director of insights, told Tech Brew.

In a January 29 release, Cox Automotive analysts said new-vehicle sales across the industry came in below expectations because of “a likely pullback from hotter-than-expected sales in December,” plus freezing weather in January. They estimated January sales will total more than 1 million units.

“The slow January start—below our forecast—suggests ‘slow growth’ is indeed what the market is in for,” analysts wrote.

In its own release, S&P Global Mobility analysts forecast that battery-electric vehicles’ share of new-vehicle sales would hit 8% in January.

“BEV share is expected to advance over the next several periods,” the release said, “pending the rollouts of vehicles such as the Chevrolet Equinox EV, Honda Prologue, and Fiat 500e, all scheduled for market introductions over the first half of 2024.”

American Honda reported a 10.3% YoY sales increase in January. More than 17,000 electrified vehicle sales—a January record—helped boost results for the Honda brand, per the automaker.

January was also a strong month for Hyundai’s EVs, sales of which were up 42% YoY. Combined with plug-in hybrids, electrified vehicle sales soared 77%. Overall, the South Korean automaker’s January sales fell 9% from a year earlier.

“Coming off a record-breaking 2023, January was a difficult month with economic challenges and interest rates making it a tough retail environment,” Randy Parker, Hyundai Motor America’s CEO, said in a statement. “There were bright spots with sales of electric vehicles and plug-in hybrid achieving substantial year-over-year growth.”

Sister brand Kia’s EV sales were up 57% YoY, bolstered by strong sales of the new EV9 SUV.

“Kia’s sales continually increased over the past few years, and we’ve established a solid foundation to build upon as the industry transitions to electrified models,” Eric Watson, Kia America’s VP of sales operations, said in a statement.

In one somewhat surprising trend, leases made up only around 40% of EV sales in January, down from 59% in December, according to Edmunds data.

Drury chalked up the trend to some automakers knocking $7,500 off the price of their electric models to make up for tighter restrictions on consumer tax credits for EV purchases that went into effect this year.

“That is actually very beneficial for the long term,” he said, “because so many automakers have had such high lease [penetration] rates on their EVs that…when these vehicles come back in three years with their terrible residual values, [it would cause] this downward spiral.”