Hybrids make gains in US auto market amid high gasoline prices

New York: The growth of electric vehicles in the United States has encountered a hurdle, but hybrid automobiles are gaining market share due to soaring fuel costs resulting from the conflict in Iran. The increasing popularity of hybrids – capable of operating on gasoline or electric power – has contributed to a rise in US sales for Japanese and South Korean automakers in 2026, prompting fresh investments from both established and new entrants in that market segment.

Honda, a longtime competitor to the US hybrid market leader Toyota, recently announced a $3 billion investment to construct a new hybrid plant in Ohio and expand production capacity at facilities in two other states. Nissan, which will launch its first major hybrid offering for the US market this fall, acknowledged that its lack of presence in the category was hurting sales, as many customers are interested in at least testing a hybrid before committing to an internal combustion engine (ICE) vehicle.

General Motors, which had previously focused on electric vehicles and shunned hybrids in the 2020s, plans to introduce hybrids across multiple vehicle segments, according to CEO Mary Barra, who hinted at further details as the launch nears. Hybrid electric vehicle sales have surged more than 20% since mid-2025, accounting for 16.3% of the market at the end of the second quarter, according to Cox Automotive, a leading auto services and technology provider.

This represents a record high and a significant increase from 13% a year earlier. The growth stands in contrast to declines in the share of conventional internal combustion engine (ICE) and electric vehicle (EV) sales, with EVs suffering from the elimination of US tax credits under legislation signed by former President Donald Trump.

Gasoline prices have remained above $4 per gallon for much of 2026 due to the Middle East conflict, currently averaging $3.87 per gallon, according to the American Automobile Association. Nissan's US strategy in this category will start with the Rogue, a hybrid variant of the compact SUV that has been the company's top-selling ICE product in the United States.

Nissan has been developing hybrid vehicles for other markets for several years, with the latest model tailored to US driving conditions. The company's new Rogue is optimized for US driving conditions, benefiting from its use on highways rather than concentrating on stop-and-go city traffic, according to Ponz Pandikuthira, a senior vice president at Nissan Americas.

Nissan's unique e-POWER system, which exclusively drives wheels via the electric motor while the gasoline engine acts as a generator, provides a smoother, quieter driving experience compared to other hybrid models. The success of this approach is evident in the popularity of compact SUVs like the Toyota RAV-4 and Honda CR-V, which account for about 30% of US hybrid sales, according to Stephanie Valdez Streaty, director of industry insights at Cox.

Valdez Streaty attributes the hybrid market's growth not only to higher gasoline prices but also to the expanding range of vehicle options resulting from new entrants like South Korean brands Kia and Hyundai, and expects further hybrid adoption in popular vehicle classes like pickup trucks and full-sized SUVs.