General Motors Co. (NYSE: GM) has a $4-plus-a-gallon problem: Americans are increasingly turning to hybrids to cut fuel bills, but the top-selling U.S. automaker has almost none to sell them. Hybrids accounted for 19% of U.S. retail vehicle sales in August, up from around 16% before the Iran war sent gasoline prices sharply higher, Reuters reported.
Why $4 Gas Favors Hybrids
The national average for regular gasoline reached $4.37 Wednesday, up about 30 cents in a month and $1.18 from a year ago, according to AAA.
Hybrids cut fuel consumption without requiring drivers to plug in or change how they refuel. That middle ground has become more attractive as gasoline costs rise: hybrids sold off dealer lots more than twice as fast as non-hybrid gasoline vehicles in the second quarter, according to automotive research firm J.D. Power.
Florida dealer Bill Wallace told Reuters that most customers lately have been asking about hybrids. His Hyundai, Kia and Mazda dealerships can meet that demand. His Chevrolet and Cadillac stores largely can't.
GM Skipped the Middle
CEO Mary Barra called hybrids an "interim solution" in 2019 as GM favored investing directly in EVs. The company later shifted course on plug-in hybrids as EV sales failed to take off as quickly as expected.
Higher gasoline prices might be expected to benefit fully electric automakers such as Tesla Inc. (NASDAQ: TSLA). But U.S. buyers have so far responded much more strongly by turning to hybrids.
Hybrid sales jumped 37% in the first two months after the Iran conflict began, Reuters reported in May, compared with an 11% increase for fully electric vehicles.
That leaves GM in an awkward position. It invested heavily for a shift toward fully electric vehicles, while buyers seeking immediate relief from high gasoline prices have increasingly chosen the hybrid middle ground GM largely skipped.
GM's only hybrid is the Corvette E-Ray, while Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. (NYSE: HMC) offer hybrids in high-volume segments including the RAV4 and CR-V.
GM's U.S. market share fell to 16.8% in the first half from 17.6% a year earlier, while Toyota and Honda gained share.
GM Can't Fix the Gap Quickly
Barra said in late 2024 that GM would bring plug-in hybrids to North America by 2027.
Supplier sources and forecasting firms now project GM won't have a hybrid on sale in the U.S. until near the end of the decade, Reuters reported. A GM spokesperson declined to comment to Reuters on that projection.
Polymarket traders currently put about a 31% chance on WTI crude touching $110 before September ends and 11% odds on $120, with roughly $5.2 million traded across the market.
If triple-digit oil keeps gasoline prices elevated, GM may spend longer watching rivals sell into a hybrid market it chose to largely skip.