Hybrids make gains in US auto market amid high gasoline prices

Electric vehicle growth has hit a speed bump in the US, but hybrid autos are gaining market share thanks to the jump in fuel prices due to the Iran war.

Rising popularity of hybrids — which can run on either gasoline or an electric charge — has been a source of US sales increases for Japanese and South Korean carmakers in 2026, prompting fresh investments from both established and new players in that segment of the market.

Honda, a longtime rival to US hybrid market leader Toyota, announced this week US$3 billion to build a new hybrid plant in Ohio and add capacity at plants in two other states.

Nissan, which is launching its first significant hybrid product for the US market this fall, realized its absence in the category was denting sales, said Ponz Pandikuthira, a senior vice president at Nissan Americas.

“We were losing that traffic,” Pandikuthira said, adding that many customers want to at least explore and test drive a hybrid even if they end up buying an internal-combustion engine (ICE) vehicle.

General Motors, which avoided the category earlier in the 2020s when it invested heavily in electric vehicles, plans hybrids “in multiple segments, the key segments that we participate,” CEO Mary Barra said last month on a conference call.

“We’ll talk more about them as we get closer to the launch,” Barra said in response to a question from a Wall Street analyst on an earnings call.

Hybrid electric vehicle volumes have risen by more than a fifth since the middle of 2025, resulting in market share of 16.3% at the end of the second quarter, according to Cox Automotive, an auto services and technology provider.

That’s a record and up from 13% a year earlier. The increase stood in contrast with declines in the share of ICE and EV vehicles, with the latter suffering from the elimination of US tax credits under legislation signed by US President Donald Trump.

Gasoline prices have been above US$4 a gallon for much of 2026 due to the Middle East war. Prices currently average US$3.87 per gallon, according to the American Automobile Association.

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Nissan’s US campaign in the category will begin with the Rogue, a hybrid version of the compact SUV that has been the Japanese automaker top-selling ICE product in the US.

Nissan has introduced two generations of hybrid vehicles in other markets, but began working a few years ago on a version better suited to US driving conditions.

“When we use the system in Japan and in Europe, they’re mostly in urban driving conditions, which just shines because you’re doing stop and go traffic,” Pandikuthira said.

The new Rogue being unveiled is “optimized for US driving conditions, so that’s why it’s a home run with climbing, with lots of use on the highway,” Pandikuthira said.

The vehicle’s other selling point is Nissan’s vehicle architecture in which the electric powertrain exclusively drives the wheels, meaning the gasoline-powered engine is only a source of neutrons but doesn’t actually propel the vehicle.

That system, which Nissan markets as “e-POWER,” is designed for a quieter, smoother ride than other hybrid models that drive on a gasoline-fueled engine.

In going with the Rogue, Nissan is picking the most popular vehicle segment for hybrids in the US market. Led by the Toyota RAV-4 and the Honda-CRV, compact SUVs account for about 30% of US hybrid sales, said Stephanie Valdez Streaty, director of industry insights at Cox.

Valdez Streaty attributes the growth in hybrids not only to higher gasoline prices, but also to greater vehicle choice on the market following product introductions from more recent hybrid entrants including South Korean brands Kia and Hyundai.

She predicted that additional hybrids in popular vehicle classes like pickup trucks or full-sized SUVs could sell well.

“It definitely has room to grow,” Valdez Streaty said of hybrid’s market share.

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