Sales of Hybrid Vehicles Are Rising While PHEV, EV Sales Stagnate

Analysis published by Wards Intelligence has revealed that hybrid vehicle sales in the U.S. have continued to rise while battery electric vehicle (BEV) and plug-in hybrid vehicle (PHEV) sales stagnated and stayed flat. BEVs, hybrids, and PHEVs accounted for roughly 22% of the light-duty cars sold in the U.S. in Q1 2025, up from 18% during the same quarter in 2024, indicating a slight increase in demand for alternative energy vehicles in the U.S.

Wards Intelligence data show that while the market share for hybrids in the U.S. is increasing, plug-in hybrid and battery electric vehicles haven’t made any market share gains. Unlike BEVs and PHEVs, hybrid cars are not equipped with plugs and don’t draw energy directly from the grid. They feature both a combustion engine and an electric motor, which is charged by the engine or via regenerative braking.

Consequently, hybrids have little to no direct effect on grid electricity demand, and their increased adoption doesn’t require public charging infrastructure investments. Hybrid owners don’t have to plan their trips around public charging stations and never have to worry about being stranded when their batteries run out, making range anxiety a non-factor for hybrids.

Furthermore, hybrids also tend to be cheaper than BEVs and PHEVs. Cumulatively, all these factors may make hybrids the better choice for many American drivers.

The fall in EV sales was largely driven by decreasing sales of BEV models like the bestselling Tesla Model Y as well as the Chevrolet Equinox and Honda Prologue. While rising sales of other battery electric vehicle models such as the Toyota bZ4X and Volkswagen ID.4 partially offset these declined BEV sales, the BEV segment didn’t gain any extra ground in the U.S.

This may be because average drivers, who make up the vast majority of the U.S. auto market, still haven’t begun transitioning to electric cars, while premium buyers account for most of the electric vehicle market. Electric cars comprised 23% of all luxury vehicle sales in the U.S. in Q1 2025, down from over one third in 2023 and 2024 (before the Tesla Model 3 was reclassified as non-luxury by Wards Intelligence).

BEVs are still, on average, more expensive than gas-powered cars, with EV purchase prices rising from $55,500 last December to $59,200 this March. In comparison, average prices for new internal combustion engine cars have fallen from $49,700 to $47,500, making ICE cars the obvious choice for drivers with limited budgets.

Now that the Trump administration is looking to halt federal EV tax credits, we may see more American drivers opting for more affordable hybrids over premium BEVs and PHEVs. These evolving market conditions present headwinds to EV industry players like Mullen Automotive Inc. (NASDAQ: MULN), and they will have to come up with strategies to navigate this difficult landscape in order to thrive.

NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN

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