US consumers may not be crossing the chasm to EV ownership just yet, according to new analysis from S&P Global Mobility.

According to return-to-market vehicle registration data, households with gasoline internal-combustion engine vehicles are more likely to migrate to hybrid cars (including both HEVs and PHEVs) than to full battery electric vehicles (BEV). And if Tesla is removed from the equation, other brands' EVs are barely represented in the migration-from-ICE list.

For the period from January through October 2023, 8.3% of gasoline households who returned to the market for a new vehicle acquired a hybrid model. Perhaps more significant, this is a rising trend, reaching 9.9% in October - marking the highest rate of the year and a 3.8 percentage point increase compared to October 2022. By comparison, 5.7% of ICE households acquired a battery electric vehicle in October 2023 - albeit also on a rising trend line.

"The automotive industry's transformation to fully electric may not be as rapid as EV advocates are hoping, as US consumers increasingly opt for more sustainable and energy-efficient vehicles," said Tom Libby, associate director for loyalty solutions and industry analysis for S&P Global Mobility. "This consumer trend of taking a half-step by choosing a hybrid instead of moving directly to an EV may be a sign of tentativeness to fully embrace electricity as the means of propulsion."

% of Gas RTMs Migrating to Hybrid (HEV/PHEV) & Electric Fuel Types

This could be due to several factors. Hybrids offer a compromise between the familiarity of gasoline-powered cars and the environmental benefits of EVs. They also eliminate the range anxiety and charging concerns associated with EVs, as they can switch to gasoline power when the battery runs low.

Even more so, pricing parity between gasoline and hybrid models plays a significant role in this trend. Year to date, gasoline households who acquired another gas model have an average monthly payment of $675 on their new vehicle, according to AutoCreditInsight by S&P Global Mobility and Transunion. Those who bought a full hybrid pay $670, slightly less than their gasoline counterparts. However, households who opted for PHEVs have a higher average monthly payment of $798, and those who chose an EV pay the highest at $828. The data suggest that cost considerations could be a significant factor driving the preference for hybrids over other EVs.

Average Acquired Monthly Payment by Fuel Type - Gas RTMs

When it comes to specific hybrid models, the Honda CR-V Hybrid is most popular among prior gasoline households year-to-date. The next most popular models are the Toyota RAV4 Hybrid and Honda Accord Hybrid. The Jeep Wrangler stands out as the most popular <span/>PHEV model.

However, when looking at household migration to EVs from gasoline, if the Tesla Model Y and Model 3 are removed from the data set, hardly any other brand's EV makes significant inroads among those migrating from ICE to a greener solution.

Top Acquired Electrified Models among ICE household RTMs

This trend toward hybrids is likely to have significant implications for automakers - especially as more<span/>BEVs arrive on showroom floors. It suggests that there may be a substantial market for vehicles that offer a balance between traditional gasoline power and the benefits of electrification. <span/>OEMs like Toyota and Honda, who have refrained from fully committing to EVs while still delivering efficient, reliable hybrid vehicles, are likely to see increased demand. Toyota recently launched a redesigned Prius in hybrid and plug-in options and announced that the next-generation Camry will only be offered as a hybrid.

While the shift toward EVs seems inevitable, the path to full electrification may not be straightforward. The rising trend of gas households migrating to hybrid models suggests that the automotive industry needs to cater to a range of consumer preferences and concerns.

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.