PHEVs, or plug-in hybrid vehicles, are having a moment. Overall, sales grew 60% in 2023 - a higher growth rate than either all electric or hybrid vehicles. The Biden Administration revised their emissions targets to give hybrids a starring role. GM recently announced that they will be developing new PHEV models as a bridge to their electric car goals. Hyundai reported that the “Tucson compact crossover, its top-selling nameplate, set February records for plug-in hybrid” with deliveries up 280 percent. That’s almost ten times as much growth as its mild hybrid cousin. 

But the PHEV segment is still a shockingly small part of the US auto market, “They accounted for just 1.8% of total vehicle sales: 251,000 units. By comparison, battery electric vehicles accounted for 7.4 percent of US sales with 1.03 million sold.” 

Clean Vehicle Cred

The often overlooked thing about PHEVs is that they are classified as clean vehicles and qualify for federal tax credits. If you’re looking to score a bargain with your tax refund this season, you may be able to knock an additional $4K off the purchase price of a used PHEV and sail into the electric lifestyle – even if you worry about range or don’t have a reliable home charger. 

But first, what exactly are PHEVs?

What kind of hybrid?

Many car shoppers and drivers don’t realize that there are two types of hybrid electric cars. In fact, when I started to work in the field, it took me a lot of research to understand the difference between the two types. 

Let me save you some time and break it down for you:

• Hybrid Electric Vehicles (HEVs) - This is the classic hybrid vehicle that’s been around since the first Toyota Prius and is sometimes called a mild hybrid. These cars have an electric battery that increases fuel efficiency, but can’t actually propel the car. Mild hybrids are not considered “clean vehicles'' because their batteries are too small to drive the car, and so they still emit tailpipe pollution. These vehicles cannot be plugged in. Instead, the small battery is recharged through regenerative braking and the internal combustion motor. HEV drivers still need to refill with gas, although less often than with a conventional combustion vehicle. 
• Plug-in Hybrids (PHEVs) - What a difference one letter can make! Plug-in hybrids have two separate power sources and two separate motors that can work together in hybrid mode or separately in EV mode. The electric motor and the battery are large enough to drive in electric only mode, which means 30- 50 miles of all-electric, zero-emissions range for many PHEVs. But, the battery is often small enough to recharge with a standard, 120V household plug. Then, when the battery runs out of charge, PHEVs seamlessly switch to a gas engine. Range anxiety? - we hardly knew ya. 

PHEVs can be a great introduction to electric vehicles. They address many of the concerns that new BEV drivers have about the leap to fully electric: 

• No range anxiety. If you run out of battery, you have a gas engine to fall back on. 
• No place to charge at home or on the go? You have a gas tank you can refill! This makes PHEVs great for apartment dwellers or people who live in charging deserts. 
• Unable to spring for the high price of a fully electric car but want those sweet, sweet fuel savings? PHEVs are priced between gas cars and BEVs, plus, nearly 40% of used PHEV listings are qualified for a $4,000 point-of-sale credit. 

A bargain way to go electric

Since many US drivers don’t go more than 40 or 50 miles in a day, PHEV drivers may not need to fill up at gas stations very often. We have many drivers in the Recurrent community who report filling up their tanks only a few times a year, and doing “90% of my driving on pure electric.”

Another plus? PHEVs are a gateway to all-electric cars. In one survey, 70% of PHEV drivers consider a fully electric vehicle as their next purchase. As a Chevrolet Volt driver told Recurrent, the car is “...the best of both worlds, electric and conventional fuel. It allows you to slowly enter the world of electric cars.”

Where can you find attractive and inexpensive used PHEVs? Check the used market, where 24.5% of listings are plug-in hybrids. Across the board, Chevrolet Volt and Toyota Prius Prime are the most available models. Nearly 50% of PHEV listings may be eligible for the used EV tax credit, saving you up to $4000 on eligible models, such as the BMW i3 REx, Ford Fusion Energi, or Chevrolet Volt. 

If you’re looking for more recent model years, there are plenty of used Porsche Taycans and Chrysler Pacificas. A slew of new plug-in hybrids from Hyundai, Kia, and Volvo will hit the used market in coming years. 

Cost Savings

The initial cost of a PHEV is certainly higher than the cost of a gas car or a traditional hybrid, but the savings pay off over the course of ownership. Consumer Reports finds that EVs and PHEVs have maintenance and repair costs that amount to half of those for a gas powered car:

• BEV (Battery-Electric Vehicle): $0.03/mile
• PHEV (Plug-in Hybrid Electric Vehicle): $0.03/mile
• ICE (Internal Combustion Engine): $0.06/mile

The cost of ownership savings helps offset the higher price tag of a PHEV. Federal tax credits or lease incentives will also help narrow the gap, although as of today, only six PHEVs are qualified for the tax credit:

Here is a price comparison between a few popular models:

• Hyundai Tucson: $27,500 (ICE) vs $38,725 (PHEV) -$10,225 difference
• Kia Niro: $26,940 (HEV) vs $34,390 (PHEV) vs $39,600 (BEV)
• Ford Escape: $29,495(ICE) vs $37,9601 (HEV) vs $40,500 (PHEV) - $11,005 difference between ICE and PHEV
• Volvo S60: $42,450 (ICE) vs $51,950 (PHEV) - $9,500 difference
• Mazda CX-90: $37,845 (ICE) vs. $49,945 (PHEV) - $12,100 difference

Why is it the year of the PHEV?

With less than 2% of the market, consumer demand for PHEVs may not be enough to make them take off. Rather, traditional auto manufacturers have their own reasons to love and promote plug-in hybrids:

• They qualify for federal tax credits and help meet emission standards
• EV-anxious drivers love them and having a good line of PHEVs can build a loyal customer base (think: Prius Prime and Chevy Volt)
• PHEVs use existing manufacturing facilities and supply chains, letting OEMs play to their strengths and use the plants they have already invested in. 
• Less battery material is required for a PHEV than a BEV, meaning that more cars can be made with fewer critical minerals. 

Another selling point: after the UAW strikes in 2023, many workers in the auto industry are worried about how the shift to electric cars might affect the labor force. Electric vehicles are simpler machines, and require fewer hands to build. A lot of the labor is shifted to battery mineral mining, processing, and electronics work. Eventually, auto workers can be retrained to work in these fields, but there will be a lag while US manufacturing plants are built and people can be retrained. By focusing on PHEVs, auto companies can preserve current automotive jobs and support the unions. 

Finally, PHEVs are a great way to compete with the Cybertruck-shaped elephant in the room: Tesla. Although Tesla still makes up the lions share of EVs on the road - both new and used - the company has zero presence in the hybrid market. Finally, traditional OEM have an electric arena they can compete in. 

PHEV Drawbacks

Nonetheless, there are a few drawbacks to PHEVs. According to Recurrent drivers, the biggest complaint is the limited all-electric range! 

Another issue is reliability, which Consumer Reports found to be worse than any other vehicle type, with “more than double the problems of conventional vehicles.” This is because they have both a conventional and an electric motor, which must work harmoniously. 

Finally - there are many studies that show PHEVs may not be as clean as they seem. The culprit: many drivers don’t really plug them in. Stay tuned for a deep dive on the dark side of PHEVs.