Yahoo Finance Move over, Tesla, as Canadians favour hybrid vehicles amid fading EV demand
Hybrid cars and trucks are a hit with Canadian buyers amid slumping interest in pure electric vehicles (EVs) from Tesla (TSLA) and its rivals.
A report from AutoTrader found the number of Canadians interested in buying an EV as their next vehicle has dipped significantly since 2022, falling from 68 per cent to 46 per cent in 2024. Consumers maintain long-held gripes about limited travel range, scarce public charging options, and higher purchase prices, according to the online automotive marketplace.
“There’s more and more interest in hybrids and plug-in hybrids,” Baris Akyurek, AutoTrader’s vice-president of marketing intelligence, told Yahoo Finance Canada. “It feels like this whole thing is shifting now.”
That shift, he notes, is taking place despite new EV prices falling 17.6 per cent year-over-year in 2023, and used prices dropping 11.4 per cent. Meanwhile, dealer inventories have climbed as supply challenges eased, shortening wait times for customers.
On Tuesday, slowing Tesla sales prompted CEO Elon Musk to reassure investors with promises of cheaper models and artificial intelligence-powered autonomous vehicles. The company’s stock has been roiled in recent trading sessions as investors weigh Musk’s optimism against disappointing earnings and diminished growth prospects.
In Canada, AutoTrader’s data show hybrids overtaking interest in pure electric vehicles. Akyurek says plug-in hybrids specifically are the top choice among the 46 per cent of Canadian consumers who would consider an EV for their next vehicle in 2024.
Hybrid electric vehicles use a gasoline engine to power an electric motor. Plug-in hybrids have larger batteries that can be charged externally. These vehicles can run on electricity only over certain distances.
In January, an article by the New York Times described a hybrid “renaissance,” following a decade where they seemed like yesterday’s news next to zippier pure electrics.
According to Statistics Canada, combined hybrid registrations climbed more than 107 per cent year-over-year in the fourth quarter of 2023. Battery electric vehicle registrations rose 39 per cent, while overall registrations increased 24 per cent.
“A decline in full electric vehicles, and an increase in interest in hybrids and plug-ins,” Akyurek said. “That’s what we hear anecdotally. I talk to a lot of people in the industry. I present to a lot of dealerships and OEMs (original equipment manufacturers), and the feedback is very aligned.”
Zero-emission vehicles, which include battery electric, hybrid, and fuel cell powertrains, accounted for 12 per cent of new light vehicle sales in Q4 of last year, according to StatCan. Ottawa wants 100 per cent of new light-duty sales to be zero-emission vehicles by 2035 in order to achieve its goal of net-zero by 2050.
On Thursday, Honda announced plans to invest $15 billion in a new EV and battery production plant in Ontario. Support from the federal and Ontario governments could total around $5 billion, deepening financial commitments to build a thriving Canadian battery industry.
While hybrids may buy time for electricity grids to expand and more charging stations to come online, critics say relying on vehicles that burn fossil fuel is not ambitious enough to meaningfully address the pace of climate change.
“Putting more gasoline-powered cars on roads, and saying that’s good for the climate, is just misleading,” Aaron Regunberg, senior policy counsel at consumer group Public Citizen, told the Wall Street Journal in February.
Meanwhile, AutoTrader found that most Canadian consumers are betting against the federal government when it comes to phasing out sales of new internal combustion cars and trucks.
Three-quarters (75 per cent) of respondents to its survey say they're skeptical Canada will meet its target. Of those who believe it's unlikely, 70 per cent say the charging infrastructure will be inadequate to support the mandate, while 60 per cent believe a change in political power could revoke or amend the timeline.
AutoTrader’s data were collected via an online survey conducted nationwide in French and English. The survey was deployed from Feb. 9 to March 11, 2024.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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