Electric vehicles are creating a ‘halo effect’ for hybrids—and losing prospective customers to them

Interested in buying an electric vehicle? You might end up with a new hybrid instead.

That seems to be happening with many EV-curious car shoppers these days, according to the Wall Street Journal, based on talks with dealers and automotive executives.

One reason is that “customers don’t have to change their habit on hybrid,” Ford CEO Jim Farley said at a recent investor conference.

With hybrids, drivers have little new to learn, yet they save money with better gas mileage—a benefit that accrues over time. “They can immediately do the math,” Farley noted.

Many shoppers, meanwhile, hesitate to buy EVs due to range anxiety and fear of costly repairs and poor resale value. The need to get acquainted with sometimes unfamiliar controls doesn’t help.

Of course, EVs have benefits that hybrids can’t match, beyond the broad environmental ones. EV drivers skip gas stations entirely, and their vehicles don't spew emissions at pedestrians or family members, for example.

But hybrids, compared to traditional vehicles, still mean fewer trip to the gas station and a reduced impact on the environment. Plus, they often sell for significantly less than EVs.

Given this, it’s easy to see why shoppers initially interested in EVs might opt for a hybrid instead.

With hybrids, “I think there is a halo effect from EVs,” Doug Eroh, president of Longo Toyota in El Monte, Calif., told the Journal.

'Hybrids are killing it'

In a new consumer survey by Boston Consulting Group, 38% of respondents were classified as “next-wave adopters,” meaning they intend to buy an EV as their next vehicle if expectations are met. Another 27% were “longer-term adopters,” meaning they’re considering EVs but probably not for their next vehicle. Thirty percent were deemed EV holdouts who intended to never buy one.

Of the next-wave adopters, 56% reported that they’re willing to choose a hybrid if their needs aren’t met by fully electric vehicles, and 43% of longer-term adopters said the same, while 17% for EV holdouts said they’d also consider hybrids.

To be sure, EV sales are expanding, just not as much as automakers expected, spurring Tesla and others to slash prices and boost incentives. Meanwhile hybrid sales are surging. That's despite Tesla CEO Elon Musk, in 2022, saying that hybrids were a "phase" and that it was "time to move on" from them.

He might be right in the long run, but in the U.S. over the first two months of the year, sales of hybrids jumped 50%, compared to 13% for EVs, according to the Journal. And based on Cox Automotive estimates, 14% of the new vehicles sold in the U.S. this year will be hybrids, compared to 10% for EVs.

With demand strong, Toyota and Honda have been able to boost earnings by cutting sales incentives for hybrids, the Nikkei reports. "Toyota's Camry and Corolla hybrids have been selling well without discounts," Toshihide Kinoshita at SMBC Nikko Securities told the Japanese news outlet.

Ford’s hybrid sales in February, meanwhile, were up nearly 32% from a year ago, according to the Detroit Free Press.

"Hybrids are killing it," Michelle Krebs, executive analyst at Cox Automotive, told the paper. "They're just tearing it up."

This story was originally featured on Fortune.com