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Electric vehicles are the future. But what if you can’t buy one now?
As unpredictable as world events have been recently, very few people would’ve put money on the humble Toyota Prius getting a stunning makeover for 2023. Somehow, that’s exactly what happened. Now the all-new, fifth-generation Prius hybrid boasts sleek, almost sports-car-like looks to go with its impressive 57 miles per gallon.
The Prius will need every advantage it can muster. Its sales have been down for years, and hybrid cars also feel almost anachronistic compared to the new crop of high-range, high-performance electric vehicles hitting the market. Why go hybrid when you’re about to have more options than ever when it comes to breaking up with gasoline entirely?
Even the Biden Administration’s Inflation Reduction Act seems to be reinforcing this idea. While the act modernized how EV and plug-in hybrid tax credits work, regular hybrids without plugs have been left out in the cold. In other words, if you want an American-made EV like a Ford F-150 Lightning, you now qualify for a $7,500 tax break; but if you want a hybrid F-150 or Maverick pickup truck, you’re out of luck because those don’t have plugs.
Furthermore, the hybrid — long the standard-bearer for eco-friendly driving — seems to have a target on its back. “Hybrid cars are still incredibly popular, but are they good for the environment?,” NPR wondered in February, probably much to the chagrin of listeners, many of whom have enjoyed “All Things Considered" while commuting in their own hybrids.
This is all deeply unfortunate, especially given how quickly we need to reduce emissions to avoid the worst outcomes of climate change. Whether there's a plug or not is also the wrong way to think about hybrids.
There’s still a strong case to be made for hybrids today. But let’s be clear about what that case isn’t: an argument for extending the internal combustion era or to slow-walk EV adoption. Rather, hybrids can and should be seen as an essential tool for reducing vehicle emissions right now, and as cars that still have tremendous advantages EVs don’t have yet.
The auto industry’s move toward zero-emission vehicles is now basically inevitable. But there’s still a long way to go. In the interim, cars that pair electricity and gasoline can play a vital role in making the air cleaner and serving as a gateway drug for widespread EV adoption.
For a long time, the primary appeal of a hybrid car was that it would help you save money on gas. But they do much more than that. The science is clear: Hybrid vehicles generate fewer tailpipe emissions than their all-gasoline counterparts, and obviously none when running only on electricity. In fact, 2021 data from the U.S. Department of Energy indicates hybrids produce about half the carbon dioxide on average that fully internal-combustion cars do. The numbers are even better for plug-in hybrids.
Of course, battery EVs fare the best; the only emissions they’re tied to are related to vehicle and battery production and charging. If your goal with your next car purchase is to cut down on CO2, this is a superb way to do so.
As for plug-in hybrids, those have gotten a bad rap in recent years with various studies (especially out of Europe) claiming they pollute much more than automakers advertise. Certainly, that wouldn’t be the car industry’s first rodeo when it comes to greasing emissions — remember Dieselgate?
One thing that hasn’t made headlines is the fact that in Europe, many corporations took advantage of government subsidies to buy PHEVs for their corporate fleets, but company car owners often didn’t charge them. The result is a heavier car, thanks to its additional batteries, that isn’t being used as intended.
The moral of this story: If you drive a PHEV, make sure to plug it in so that it can be driven in all-electric mode properly. The average PHEV gets between 20 and 40 miles of electric range, and given that most Americans drive around 40 miles a day on average, you may be surprised how much gasoline you don’t end up using.
You have more options than ever before when it comes to EVs, and things will get even better in the years to come. Just about every automaker is planning an aggressive EV rollout across multiple categories — trucks, vans, even convertibles — and multiple price points. Electric range is getting better, and thanks to the IRA, EVs built in North America will come with enticing tax credits. Starting next year, those credits will even be applied at the point of sale at the dealership, so you won’t even need to wait on a tax return to reap the benefits.
But there’s still a lot of daylight between where the EV market is now and where it will go next. America’s public charging network is woefully inadequate and many providers offer an infamously subpar experience. Few good charging solutions exist for city dwellers and those who live in apartments. (In fact, I’ve been seeing more and more EVs here in New York charged by 100-foot extension cords running out of windows, which is suboptimal for countless reasons.) Whether you’re into road trips or not, long distances remain a challenge for many EVs too, thanks to these network issues.
Tesla still has objectively the best charging network and it’s opening up to other EVs, but that’s a ways off. So is the network expansion that will be driven by the IRA’s incentives.
Then there's the fact the best EVs are comparatively hard to buy. Many of the really in-demand new EVs — the Mustang Mach-E, the Hyundai Ioniq 5, and the Kia EV6 — are tough to find and still impacted by supply chain issues. If you want a car with great range, a beautiful interior, and excellent range, get in line. Now, to be fair, supply remains super weird across the whole automotive industry, but the most desirable electric cars still seem to have among the longest lines.
EVs remain expensive as well, even by modern standards; by late last year, the average EV was priced around $65,000, around $20,000 more than a typical new vehicle's price tag. That too should change as batteries get cheaper and more options come to market, but for now, going electric could mean sticker shock, too — especially if your EV does not qualify for the new tax breaks.
In other words, it should get much easier to be an EV owner in the next few years. Until then, if these barriers to entry are too onerous, consider a hybrid instead.
There’s also the unfortunate matter of how “green” our electricity really is. Recently, Polestar and Rivian — two companies with every incentive to get you to buy their EVs — jointly commissioned a study that urged a dramatic increase in renewable energy powering both the automotive supply chain and electricity sources in order for these vehicles to be maximally effective at deterring climate change.
EVs alone will not be enough to reduce the harmful effects of the transportation sector. While it’s hard to say “be patient” when we directly experience climate change, we must realize that making changes that should’ve happened decades ago will be a process.
Until then, there’s great value in doing whatever can be done to reduce CO2 emissions, and driving hybrids — to say nothing of walking, biking, and taking public transit — can be crucial to that too.
Are hybrid cars essentially a stopgap to full EV adoption? At this point, it feels like the definitive answer is yes. Car companies like General Motors, Ford, Volvo, and Volkswagen all say they plan to phase out internal combustion entirely by the middle of the next decade, and even if they try to renege on their promises, governments from Brussels to California are banning the sale of new gasoline cars around the same time.
Between regulations and market forces — especially China’s aggressive EV push — the writing is on the wall for gasoline cars. Reducing emissions will be the single most crucial guiding force for the auto industry over the next few decades. In the meantime, and for that very reason, more and more hybrid options are coming to market.
Sure, the Prius’ sales figures don’t look great, but the venerable Toyota Tacoma truck is heavily expected to offer a hybrid option soon. The Toyota Sienna minivan is now only offered as a hybrid, as is the quirky new Toyota Crown sedan. Honda brought back the Accord Hybrid for 2023 and the all-new CR-V Hybrid looks promising as well. Mazda is finally dipping its toes into that market with the new CX-90 plug-in hybrid. Even the beloved Mazda Miata, the gold standard for affordable sports cars, is heavily rumored to have some kind of electrification when an all-new one arrives in the next few years. And as of this year, every new Volvo you can buy is a hybrid if it’s not a full EV.
The point is, while EVs are getting the splashy headlines, car companies aren’t yet done with hybrids. Not by a long shot. In fact, electrification is likely to become even more common as we start to approach the end of the internal combustion era, particularly as battery costs start to go down.
Think of it this way: If the Chevy Corvette can go hybrid, so can you.
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Investing in red states doesn’t make defying Trump any safer.
In the end, it was what the letters didn’t say.
For months — since well before the 2024 election — when asked about the future health and safety of the clean energy tax credits in the Inflation Reduction Act, advocates and industry folks would point to the 20 or so House Republicans (sometimes more, sometimes fewer) who would sign on to public statements urging their colleagues to preserve at least some of the law. Better not to pull out the rug from business investment, they argued. Especially not investment in their districts.
These letters were “reassuring to a lot of folks in clean energy and climate communities,” Chris Moyer, the founder of Echo Communications and a former staffer for longtime Senate Majority Leader Harry Reid, told me.
“I never felt reassured,” Moyer added.
Plenty of people did, though. The home solar company Sunrun, for instance, told investors in a presentation earlier this monththat a “growing number of Republicans in Congress — including 39 overall House members and four Senators — publicly support maintaining energy tax credits through various letters over the past few months.” The company added that “we expect a range of draft proposals to be issued, possibly including draconian scenarios, but we expect any extreme proposals will be moderated as they progress.”
Instead, the draft language got progressively worse for the residential solar industry, with the version that passed the House Thursday morning knocking billions of dollars off the sector, as tax credits were further squeezed to help make room for other priorities that truly posed an existential threat to the bill’s passage.
What Sunrun and others appear to have failed to notice — or at least publicly acknowledge — is that while these representatives wanted to see tax credits preserved, they never specified what they would do if their wishes were disregarded. Unlike the handful of Republicans who threatened to tank the bill over expanding the deduction for state and local taxes (each of whom signed one of the tax credit letters, at some point), or the Freedom Caucus, who tend to vote no on any major fiscal bill that doesn’t contain sizable spending cuts (so, until now, every budget bill), the tax credit Republicans never threatened to kill the bill entirely.
Ultimately, the only Republicans to outright oppose the bill did so because it didn’t cut the deficit enough. All of the House Republicans who signed letters or statements in support of clean energy tax credits voted yes on the legislation, with a single exception: New York’s Andrew Garbarino, who reportedly slept through the roll call. (He later said he would have voted for it had he been awake.)
“The coalition of interests effectively persuaded Republican members that tax credits were driving investment in their districts and states,” Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress, told me in a text message. “Where advocates fell short was in convincing them that preserving energy tax credits — especially for mature technologies Republicans often view skeptically — should take precedence over preventing Medicaid cuts or addressing parochial concerns like SALT.”
The Inflation Reduction Act itself was, after all, advanced on a party-line basis, as was Biden’s 2021 American Rescue Plan. Combined, those two bills received a single Democratic no vote and no Republican yes votes.
In the end, Moyer said, Republican House members in the current Congress were under immense political pressure to support what is likely to be the sole major piece of legislation advanced this year by President Trump — one that contained a number of provisions, especially on SALT, that they agreed with.
“There are major consequences for individual house members who vote against the president’s agenda,” Moyer said. “They made a calculation. They knew they were going to take heat either way. They would rather take heat from clean energy folks and people affected by the projects.”
It wasn’t supposed to be this way.
White House officials and outside analysts frequently touted job creation linked to IRA investments in Republican House districts and states as a tangible benefit of the law that would make it politically impossible to overturn, even as Congress and the White House turned over.
“President’s Biden’s policies are leading to more than 330,000 new clean energy jobs already created, more than half of which are in Republican-held districts,” White House communications director Ben LaBolt told reporters last year, previewing a speech President Biden would give on climate change.
Even after Biden had been defeated, White House climate advisor Ali Zaidi told Bloomberg that “we have grown the political consensus around the Inflation Reduction Act through its execution,” citing one of the House Republican letters in support of the clean energy tax credits.
One former Biden White House climate official told me that having projects in Republican districts was thought by the IRA’s crafters to make the bill more politically sustainable — but only so much.
“A [freaking] battery factory is not going to save democracy,” the official told me, referencing more ambitious claims that the tax credits could lead to more Democratic electoral victories. (The official asked to remain anonymous in order not to jeopardize their current professional prospects.) Instead, “it was supposed to make it slightly harder for Republicans to overturn the subsidies.”
Congresspeople worried about jobs weren’t supposed to be the only things that would preserve the bill, either, the official added. Clean energy and energy-dependent sectors, they thought, should be able to effectively advocate for themselves.
To the extent that business interests were able to win a hearing with House Republicans, they were older, more traditionally conservative industries such as nuclear, manufacturing, agriculture, and oil and gas.The biofuels industry (i.e. liquid Big Agriculture) won an extension of its tax credit, 45Z. The oil and gas industry’s favored measure, the 45Q tax credit for carbon sequestration, was minimally fettered. Nuclear power was the one sector whose treatment notably improved between the initial draft from the House’s tax-writing committee and the version voted on Thursday. Advanced nuclear facilities can still claim tax credits if they start construction by 2029, while other clean energy projects have to start construction within 60 days of the bill’s passage and be in service by the end of 2028.
“I think these outcomes are unsurprising. In places where folks consistently engaged, things were protected,” a Republican lobbyist told me, referring to manufacturing, biofuels, and nuclear power, requesting anonymity because they weren’t authorized to speak publicly. “But assuming a project in a district would guarantee a no vote on a large package was always a mistake.”
“The relative success of nuclear is a testament to the importance of having strong champions — predictable but notable show of political might,” a second Republican lobbyist told me, who was also not allowed to speak publicly about the bill.
But all hope isn’t lost yet. The Senate still has to pass something that the House will agree with. Some senators had made noises about how nuclear, hydropower, and geothermal were treated in the initial language.
“Budget reconciliation is, first and foremost, a fiscal exercise,” Venkatakrishnan told me. “Energy tax credits offer a path of least resistance for hitting lawmakers’ fiscal targets. As the Senate takes up this bill, the case must be made that the marginal $100 billion to $200 billion in cuts seriously jeopardizes grid reliability and energy innovation.” Whether that will be enough to generate meaningful opposition in the Senate, however, is the $600 billion question.
A loophole created by the House Ways and Means text disappeared in the final bill.
Early this morning, the House of Representatives launched a full-frontal assault on the residential solar business model. The new language in the budget reconciliation bill to extend the Tax Cuts and Jobs Act passed Thursday included even tighter restrictions on the tech-neutral investment tax credits claimed by businesses like Sunrun when they lease solar systems to residential buyers.
While the earlier language from the Ways and Means committee eliminated the 25D tax credit for those who purchased home solar systems after the end of this year (it was originally supposed to run through 2034), the new language says that no credit “shall be allowed under this section for any investment during the taxable year” (emphasis mine) if the entity claiming the tax credit “rents or leases such property to a third party during such taxable year” and “the lessee would qualify for a credit under section 25D with respect to such property if the lessee owned such property.”
This is how you kill a business model in legislative text.
“Expect shares of solar companies to take a significant step back,” Jefferies analyst Julien Dumoulin-Smith wrote in a note to clients Thursday morning, calling the exclusion “scathing.” Investors are “losing the now false sense of security that we had 'seen the worst' of it with the initial House draft.”
Joseph Osha, an analyst for Guggenheim, agrees. “Considering the fact that ~70% of the residential solar industry is now supported by third-party (e.g. lease or PPA) financing arrangements, the new language is disastrous for the residential solar industry,” he wrote in a note to clients. “We believe the near-term implications are very negative for Sunrun, Enphase, and SolarEdge.”
Shares of Sunrun are down 37.5% in mid-day trading, wiping off almost $1 billion worth of value for its shareholders. The company did not respond to a request for comment. Shares of fellow residential solar inverter and systems Enphase are down 20%, while residential solar technology company SolarEdge’s shares are down 24.5%.
“Families will lose the freedom to control their energy costs,” Abigail Ross Hopper, chief executive of the Solar Energy Industries Association, said in a statement, in reference to the last-minute alteration to the investment tax credit.
When the House Ways and Means Committee released the initial language getting rid of 25D by the end of this year but keeping a limited version of the investment tax credit, analysts noted that Sunrun was an unexpected winner from the bill. It typically markets its solar products as leases or power purchase agreements, not outright sales of the system.
The reversal, Dumoulin-Smith wrote, “comes as a surprise especially considering how favorable the initial markup was” to the Sunrun business model.
“Our core solar service offerings are provided through our lease and power purchase agreements,” the company said in its 2024 annual report. “While customers have the option to purchase a solar energy system outright from us, most of our customers choose to buy solar as a service from us through our Customer Agreements without the significant upfront investment of purchasing a solar energy system.”
The new bill, Dumoulin-Smith writes is “‘leveling the playing field’ by targeting all future residential solar originations, whether leased or owned.” The bill is “negative to Sunrun with intentional targeting of the sector.
Last year, Sunrun generated over $700 million from transferring investment tax credits from its solar and storage projects. The company said that it had $117 million of “incentives revenue” in 2024, which includes the tax credits, out of around $1.4 billion in total revenue.
But the tax credits play a far larger role in the business than just how they’re recognized on the company’s earnings statements. The company raises investment funds to help finance the projects, where investors get payments from customers as well as monetized tax credits. Fund investors “can receive attractive after-tax returns from our investment funds due to their ability to utilize Commercial ITCs,” the company said in its report. Conversely, the financing “enables us to offer attractive pricing to our customers for the energy generated by the solar energy system on their homes.”
Morgan Stanley analyst Andrew Perocco wrote to clients that “this is a noteworthy change for the residential solar industry, and Sunrun in particular, which dominates the residential solar [third-party owned] market and has recognized ITC credits under 48E.”
Current conditions: A late-season nor’easter could bring minor flooding to the Boston area• It’s clear and sunny today in Erbil, Iraq, where the country’s first entirely off-grid, solar-powered village is now operating • Thursday will finally bring a break from severe storms in the U.S., which has seen 280 tornadoes more than the historical average this year.
1. House GOP passes reconciliation bill after late-night tweaks to clean energy tax credits
The House passed the sweeping “big, beautiful” tax bill early Thursday morning in a 215-214 vote, mostly along party lines. Republican Representatives Thomas Massie of Kentucky and Warren Davidson of Ohio voted no, while House Freedom Caucus Chair Andy Harris of Maryland voted “present;” two additional Republicans didn’t vote.
The bill will effectively kill the Inflation Reduction Act, as my colleague Emily Pontecorvo has written — although the Wednesday night manager’s amendment included some tweaks to how, exactly, as well as a few concessions to moderates. Updates include:
The bill now heads to the Senate — where more negotiations will almost certainly follow — with Republicans aiming to have it on President Trump’s desk by July 4.
2. FEMA cancels 4-year strategic plan, axing focus on ‘climate resilience’
The combative new acting administrator of the Federal Emergency Management Agency, David Richardson, rescinded the organization’s four-year strategic plan on Wednesday, per Wired. Though the document, which was set to expire at the end of 2026, does not address specific procedures for given disasters, it does lay out goals and objectives for the agency, including “lead whole of community in climate resilience” and “install equality as a foundation of emergency management.” In axing the strategic plan, Richardson told staff that the document “contains goals and objectives that bear no connection to FEMA accomplishing its mission.”
A FEMA employee who spoke with Wired stressed that while rescinding the plan does not have immediate operational impacts, it can still have “big downstream effects.” Another characterized the move by the administration as symbolic: “There are very real changes that have been made that touch on [equity and climate change] that are more important than the document itself.”
3. Energy Department redirects Puerto Rican rooftop solar investment to upkeep of fossil fuel plants
The U.S. federal government is redirecting a $365 million investment in rooftop solar power in Puerto Rico to instead maintain the island’s fossil fuel-powered grid, the Department of Energy announced Wednesday. The award, which dates to the Biden administration, was intended to provide stable power to Puerto Ricans, who have become accustomed to blackouts due to damaged and outdated infrastructure. The Puerto Rico Electric Power Authority declared bankruptcy in 2017, and a barrage of major hurricanes — most notably 2017’s Hurricane Maria — have destabilized the island’s grid, Reuters reports.
In Energy Secretary Chris Wright’s statement, he said the funds will go toward “dispatching baseload generation units, supporting vegetation control to protect transmission lines, and upgrading aging infrastructure.” But Javier Rúa Jovet, a public policy director for Puerto Rico’s Solar and Energy Storage Association, added to The Associated Press that “There is nothing faster and better than solar batteries.”
4. EDF, Shell, and others to collaborate on hydrogen emission tracker
The Environmental Defense Fund announced Wednesday that it is launching an international research initiative to track hydrogen emissions from North American and European facilities, in partnership with Shell, TotalEnergies, Air Products, and Air Liquide, as well as other academic and technology partners. Hydrogen is an indirect greenhouse gas that, through chemical reactions, can affect the lifetime and abundances of planet-warming gases like methane and ozone. Despite being a “leak-prone gas,” hydrogen emissions have been poorly studied.
“As hydrogen becomes an increasingly important part of the energy system, developing a robust, data-driven understanding of its emissions is essential to supporting informed decisions and guiding future investments in the sector,” Steven Hamburg, the chief scientist and senior vice president of EDF, said in a statement. Notably, EDF took a similar approach to tracking methane over a decade ago and ultimately exposed that emissions were “a far greater threat” than official government estimates suggested.
5. The best-selling SUV in America will now be available only as a hybrid
Toyota
The bestselling SUV in America, the Toyota RAV4, will be available only as a hybrid beginning with the 2026 model, Car and Driver reports. The car will be available both as a conventional hybrid and as a plug-in that works with CCS-compatible DC fast chargers, meaning “owners can quickly fill up its battery during long road trips” to minimize their fossil fuel mileage, The Verge adds. The RAV4 will also beat the Prius for electric range, hitting up to 50 miles before its gas engine kicks in.
Toyota’s move might not come as a complete surprise given that the automaker already introduced a hybrid-only lineup for its Camry. But given the popularity of the RAV4, Car and Driver notes that “if you ever wondered whether or not hybrids have entered the mainstream yet, perhaps this could be a tipping point.”
Nathan Hurner/USFWS
The Fish Lake Valley tui chub, a small minnow threatened by farming and mining activity, could become the first species to be listed as endangered under the second Trump administration.