Tesla should pivot to hybrids
Demand for EVs is falling, and hybrid cars can still make a dent in carbon emissions. Releasing a plug-in hybrid would be a galaxy-brain move on Tesla's part.
Tesla should pivot away from electric vehicles and start making hybrids.
No, I’m not suggesting the company stop making electric vehicles altogether. They are the company’s bread and butter, after all. But with demand for electric vehicles waning, making hybrids would be an easy way for Tesla to attract new customers while staying true to one of its overarching goals of producing cars that are better for the environment. And it can do this while maintaining its cutting edge by “reinventing” the hybrid.
Government put the cart before the horse on EVs
Environmentalists think EVs can play a major role in combatting climate change. To that end, the Biden administration earlier this year announced a rule designed to phase out new vehicles with internal combustion engines in favor of EVs and hybrids, with the majority of new vehicles belonging in the latter categories by 2032.
That lofty goal isn’t working out too well. Demand for EVs, including Teslas, has slowed considerably. As the New York Times puts it:
Nearly 269,000 electric vehicles were sold in the United States in the first three months of this year, according to Kelley Blue Book. That was a 2.6 percent increase from the same period last year, but a 7.3 decrease from the final quarter of 2023. And amid the quarter-to-quarter slowdown in the industry, Tesla’s market share has fallen from 62 percent at the start of 2023 to 51 percent now.
Tesla subsequently announced a 10 percent cut to its workforce, and fired its entire Supercharger team. That’s not good news, considering that we don’t have anywhere near the infrastructure required to charge all the electric cars the Biden administration wants on the road. As a recent column in The Hill noted, “Secretary of Transportation Pete Buttigieg has claimed the U.S. will need 500,000 such [EV charging] stations by 2030. To build the remaining 499,992 stations, we will need to build almost 90,000 of them annually — that’s almost 250 daily or more than 10 per hour — for the next five-and-a-half years.” Considering that the so-called Inflation Reduction Act allocated $7.5 billion to building charging station along U.S. highways but, in the two years since the act was signed, only built eight such stations, it’s not looking like we can count on adequate charging infrastructure to be in place by 2032.
In short, electric vehicles aren’t happening. Not on a widespread level, at least.
Toyota got it right by emphasizing hybrids
Toyota long ago saw that hybrids were the way forward, at least for the foreseeable future. Although the Japanese carmaker has dipped its toes into electric vehicle production via the bZ4X, a model it produced with Subaru, the company has doubled down on producing hybrid vehicles.
People used to ridicule the automaker for that decision, but Toyota is having the last laugh. As a Business Insider article recently noted, “The Japanese automaker actually tops the list of brands most considered by EV shoppers in a recent survey — beating out Ford and Elon Musk’s Tesla. It would appear Toyota’s more hybrid-heavy approach to electric cars is alluring for the new breed of electric-car shopper, more frugal and practical than the early adopters that came before them.”
The article notes that Toyota’s stance on EVs has come straight from the top of the company:
Toyota’s chairman, Akio Toyoda, has long been a skeptic of the industry’s all-in attitude on battery-powered vehicles, preaching instead the importance of Toyota’s “multipathway approach,” in which the automaker is researching and developing a variety of alternatives to the internal-combustion engine.
Toyoda has pushed back on proclamations that EVs will one day become the dominant powertrain. Most recently, he predicted in January that “no matter how much progress BEVs make,” these cars would still eventually account for only 30% of global market share at most.
Tesla CEO Elon Musk famously dismissed the prospect of his company producing anything but all-electric vehicles, saying things like, “We need to be able to move away from fossil fuels and toward sustainable energy,” and “Electric vehicles have a lot of advantages over gasoline cars.”
But as the economy has faltered, and as other car companies have entered the EV fray resulting in a supply glut, Tesla has been forced to slash prices on its vehicles. Musk may be right that EVs are the future, but that future is a long way off and Musk — and Biden — must consider what technology can work as a transition between internal combustion engines and electric engines. The answer is obvious: Hybrids.
Following in Chevy’s footsteps to blaze a new trail
Enter the hybrid. Tesla needn’t make a ho-hum hybrid, its own equivalent of a Prius. I would propose that Tesla base its hybrid offering on a discontinued but criminally underappreciated hybrid model: The Chevy Volt.
The Volt, originally released in 2010, was billed as an electric vehicle, but many considered it a plug-in hybrid because it contained a backup gas tank that could hold a bit less than 10 gallons of fuel. Charging infrastructure was even less developed back then than it is now, so this was a brilliant move. The car was electric for all intents and purposes, but if you found yourself running low on juice without a charger in sight, rather than being stranded, you could fuel up at a gas station and be able to get home or to a charging station.
That’s the direction Tesla should go: Make the best plug-in hybrid the car industry has ever seen. A superpowered hybrid that’s more expensive than a Prius, but more affordable than any of Tesla’s current offerings. A car with a range and versatility no electric vehicle can match. It’s the kind of unexpected move that would get people really talking about Tesla again. And it would show the world that Elon Musk is not without humility and, more importantly, that he’s flexible — able to pivot the company toward whatever vehicles make the most sense in the current market.
It wouldn’t even be a complete retreat from the company’s stated goals, however. A hybrid vehicle with only a small, backup gas tank is far more an electric-powered car than a gas-powered one, while still alleviating many of the concerns people have about electric vehicles.
Course correcting on the Cybertruck
While they’re at it, when Tesla inevitably releases its follow-up to the ill-received Cybertruck, it should make that a plug-in hybrid, too, and tone down its eccentric design.
Some sharp, futuristic edges here and there are fine and would give an updated model a sleek, unique look — but being unique to the exclusion of all else is not necessarily a good thing, as the first model has demonstrated. Toning down the eccentricity while making a hybrid model would again demonstrate Tesla’s ability to show humility and pivot to market demands.
Hybrids: A practical way forward
If environmentalists are serious about reducing carbon emissions, they must recognize that the infrastructure is not in place to switch the country’s entire vehicle fleet to electric cars — and it won’t be for a long time.
Transitioning to hybrid vehicles, however, is far more feasible and could make a real dent in emissions almost immediately. And Tesla could pave the way.