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Podcast

The U.S. Has a Tesla Problem

Inside episode 12 of Shift Key.

Electric cars.
Heatmap Illustration/Getty Images

It isn’t just bad vibes: Electric vehicle sales are slumping in the United States. Fewer than 300,000 EVs were sold nationwide during the first three months of 2024 — although it could be more than 350,000, depending on how you count and whose data you trust. That’s a slight decline from last quarter at a time when EV sales need to be accelerating.

What caused the slump, and what can be done about it? And could hybrids or plug-in hybrids help solve the problem? In this week’s episode, Rob and Jesse chat with Corey Cantor, an EV analyst at BloombergNEF. They talk about Tesla’s spiraling problems, whether Detroit can pull its EV strategy together, and whether plug-in hybrids can co-exist with a climate strategy. Shift Key is hosted by Robinson Meyer, executive editor of Heatmap, and Jesse Jenkins, a Princeton professor of energy systems engineering.

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Here is an excerpt from our conversation:

Robinson Meyer: The PHEV story is really interesting here, and the hybrid story is interesting here, because three years ago, four years ago, Toyota was talking about how hybrids and plug-in hybrids were going to be the bridge for consumers. And what we have seen is that plug-in hybrid and hybrid sales have increased.

Now, what’s funny is that Toyota has actually not really been selling those plug-in hybrids. It’s like a Stellantis story, right? It’s Jeep. Ford sells a very expensive plug-in hybrid. Toyota actually doesn’t sell plug-in hybrids. In fact, if Toyota made more plug-in hybrids, if they made more Prius Primes, this amazing-looking recent car for them — it’s a plug-in hybrid — then they would sell them. But they don’t make enough. So Toyota has kind of won this discursive cycle, but not actually made the plug-in hybrids that they were advocating for, you know, two or three years ago.

Jesse Jenkins: Yeah. I mean, if you look at the numbers, about half of all the plug-in hybrids sold are Stellantis vehicles, right? Across the Jeep, Chrysler, Dodge, and Alfa Romeo brands, they don’t sell hybrids. They only sell plug-in hybrids. And they also don’t sell any, BEVs yet, either. They’re coming, later than the end of this year, probably, their first U.S. battery electric vehicle.

So, you know, Stellantis’ only offerings right now are a set of plug-in hybrids, and they’ve been selling them very effectively, partly because I think the tax credits from the Inflation Reduction Act make them very competitively priced relative to the conventional Jeep or, Chrysler Pacifica minivan, or whatever else you’re looking at in the market. Why not get the plug-in hybrid, even if you don’t plug it in?

But if you look at it, so they’ve sold about 46,000 plug-in hybrids in the first quarter of the year. Toyota, who talks about it more than anybody, only sold 11,600. So they sold like a quarter as many as Stellantis did —

Meyer: Which is so crazy because also, the Toyota plug-in hybrids are great. They’re awesome cars. They should be making more of them!

Jenkins: Yes, they should be selling 50,000 of them a quarter.

Meyer: Yeah, exactly. But they treat them — it’s so funny. The Toyota plug-in hybrids are central to the Toyota argument, and then they treat them like compliance cars. They don't make enough, even though they’re like, this is what consumers want.

And it’s funny: They were right. That is seemingly what consumers want. And it does seem like the availability of BEVs has like defanged plug-in hybrids and hybrids for consumers in a way that maybe we didn’t expect. Toyota’s not making them. It’s like they won the discourse cycle, but they’re not actually selling vehicles.

Jenkins: Yeah. I mean, Toyota Group and Honda are really the undisputed kings or queens of hybrid electric vehicles. They sell far more than anybody else. But on the plug-in side, Stellantis is the No. 1 by far. They’re like half of the market, just themselves.

Corey Cantor: I was just going to say, to Rob’s point on just how much better the Toyota plug-in hybrids are, they’re getting 40-mile electric range between the Prius Prime and the RAV4 Prime — which by the way: RAV4, Model Y, you could have a RAV4 Prime-Model Y-off every quarter if Toyota was selling enough of those.

For those Stellantis PHEVs, the other one that’s big is the Chrysler Pacifica minivan, which, I know how much you guys love your minivans, here. Those are in the low 20-mileage. So what you’ve seen policymakers in California advocate for is really going towards a 50-mile minimum to begin to count PHEVs in what's called Advanced Clean Cars II. Which, in the kind of conventional popular media is often referred to as California’s ban of gas cars, which actually isn’t a ban of gas cars because even in 2035, you could sell 20% PHEVs if they meet a 50-mile electric range minimum.

My hope, from a climate standpoint, is if PHEVs are going to be a part of the story — and again, data-wise, they’re just not in the U.S. In some European countries ... or BYD, for example, you see 50-50 split between BEV and PHEV. Here, it’s remained 80-20.

Just better PHEVs — just automakers delivering better PHEVs with 40[-mile] all-electric range, or 50[-mile]. I do think Hyundai and Kia might move in that direction, where they’re delivering those better PHEVs over time. But not to just take the, kind of, spin on them, and just say, wow, because Toyota or whatever automaker says PHEVs are great, that consumers should buy them. The PHEVs now just aren’t as good as they should be, and they can be better, and automakers can still make a profit off of it.

It’s one of those big myths, where it’s like, you see so many people say, “Have you considered a PHEV?” And it’s like, which PHEV? Because it’s really just the Jeep Wrangler and the Pacifica.

This episode of Shift Key is sponsored by…

KORE Power provides the commercial, industrial, and utility markets with functional solutions that advance the clean energy transition worldwide. KORE Power's technology and manufacturing capabilities provide direct access to next generation battery cells, energy storage systems that scale to grid+, EV power & infrastructure, and intuitive asset management to unlock energy strategies across a myriad of applications. Explore more at korepower.com.

Watershed’s climate data engine helps companies measure and reduce their emissions, turning the data they already have into an audit-ready carbon footprint backed by the latest climate science. Get the sustainability data you need in weeks, not months. Learn more at watershed.com.

Music for Shift Key is by Adam Kromelow.

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