Why hybrids are ‘having their moment’ as EVs and gas-powered vehicles lose market share

For much of the 2020s, automakers poured billions into fully electric vehicles while federal and state governments rolled out tax incentives aimed at accelerating EV adoption.

But with federal EV tax credits gone, gas prices rising and car prices still high, many buyers are turning to hybrids instead.

"Hybrids are having their moment," says Stephanie Valdez Streaty, director of insights at Cox Automotive.

The most recent data from Cox shows hybrids emerging as the fastest-growing segment of the U.S. auto market, while both traditional gas-powered vehicles and EVs ceded market share in late 2025.

Hybrids accounted for nearly 20% of new vehicle sales by late 2025, nearly triple their share from three years earlier. At the same time, EV market share fell sharply to 5.9%, down from a peak of 10.3% in 2025, according to Cox data. 

Experts say hybrids are resonating with buyers because they offer better fuel economy than gas-powered cars without many of the charging concerns or lifestyle changes that can come with fully electric vehicles.

Hybrid vehicles typically cost more than comparable gas-powered cars, but substantially less than many fully electric vehicles, according to Kelley Blue Book. At the same time, hybrids typically achieve 25% to 40% better fuel economy than comparable gas-powered models, according to JD Power.

"A hybrid is a great way to save on gas without committing to an EV infrastructure that might not be ready to meet every need," says Sean Tucker, senior editor at Kelley Blue Book.

Unlike fully electric vehicles, standard hybrids do not need to be plugged in to charge. Instead, they use a gasoline engine alongside a small battery that recharges automatically while driving. For many drivers, hybrids rely more heavily on electric power during lower-speed city driving, helping improve fuel economy in traffic.

In other words, hybrids offer fuel savings "with no change to a car buyer's lifestyle or driving habits," says David Thomas, automotive industry analyst at dealership software company CDK.

For many drivers, that's a big deal, Valdez Streaty says, with fuel savings mattering more at a time when car prices are sharply up. "If you can lower any of that operational part of it, whether it's maintenance or less on gas, I think that's a really strong value proposition," she says.

Despite years of tax incentives, widespread EV adoption in the U.S. has yet to take hold, with consumers continuing to cite concerns about affordability, charging access, battery costs and long-distance travel, according to a 2025 survey by the American Automobile Association.

Valdez Streaty says buyers in some parts of the country remain more skeptical about the practicality of owning an EV than others.

"I'd argue that EVs are more practical than most Americans think," says Tucker. But "the math is quite different in an East Coast suburb and in the more sparsely populated West." 

The growing popularity of hybrids doesn't necessarily signal that Americans are turning against EVs altogether. Instead, some consumers may simply be becoming more selective as car ownership costs remain high, says Kevin Roberts, director of economic and market intelligence at CarGurus.

"Buyers aren't necessarily anti-EV," he says. "They're just managing risk."

While the price gap between EVs and gas-powered vehicles has narrowed in recent years, EVs still tend to cost more on average. The average transaction price gap between EVs and gas-powered vehicles was roughly $6,200 in early 2026, according to Cox Automotive.

That may help explain why new EV market share nearly halved to 5.3% in the first full quarter after federal tax credits worth up to $7,500 expired on Sept. 30, 2025, according to Cox data.

At the same time, a growing supply of off-lease EVs has helped push used EV prices lower, making electric vehicles more accessible to some buyers in the resale market. Used EV sales jumped 27.7% in March from a year earlier, according to Cox, and 44% of used EVs sold that month were priced below $25,000.

Even so, hybrids have also retained their value better than EVs in recent years, Roberts says.

For many buyers, a hybrid "works the way people expect cars to work, but with significantly better fuel economy," says Jennifer Myers, chief marketing officer at Kunes Auto & RV Group.

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