Long before the combustion engine, the hybrid car is facing obsolescence

Dying breed?
Dying breed?
Image: Reuters/Brendan McDermid
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Hybrid cars are becoming the VCR/DVD-combo players of the automotive world.

Just 2% of US auto sales last year were of cars with both electric motors and internal combustion engines, according to a report published this month by New York-based consulting firm AlixPartners. That’s down from a peak of 3.1% in 2013.

So what’s behind the drop in demand? Technology. Hydraulic fracturing (aka fracking), a drilling method that led to a boom in US oil- and natural-gas production, has driven down the cost of gasoline. Prices at the pump are currently just $2.40 a gallon, according to the US Energy Information Administration, a government statistics agency, a decline of nearly 35% since 2013. Cheap gas has also rekindled Americans’ love of trucks and SUVs.

Meanwhile hybrids, marketed in part as a way for price-conscious consumers to curtail gasoline costs, no longer have as compelling a value proposition.

At the same time, environmentally conscious consumers have more and cheaper options than ever for owning a fully electric car, thanks to improved battery technology that makes it possible to drive EVs over longer distances. (The fracking boom also drove down natural gas prices, which makes electricity cheaper too.)

This month, electric-car company Tesla finally rolled out its mass-market Model 3. Swedish carmaker Volvo last week said it wouldn’t launch any new cars without electric motors, and that it plans to launch fully-electric vehicles between 2019 and 2021, following rival automakers.

To be sure, fully-electric cars account for just 0.5% of US auto sales, according to automotive research firm Edmunds—but that is up from 0.1% five years ago. Consumers’ green-thinking isn’t the only factor either: The US government, as in other nations, provides tax credits to early buyers. (Though once those disappear, often so goes demand.)

Together, hybrids and electric cars are still a tiny part of the overall market—just 3% of US new-car sales—suggesting the internal-combustion death knell is a ways off yet. But it’s coming.

Correction: An earlier version of this story said Volvo would stop launching new vehicles with gasoline engines.