Carmakers' answer to US EV lull: hybrids, cheaper models

By Nora Eckert, Abhirup Roy and David Shepardson

DETROIT (Reuters) -One month after a $7,500 federal U.S. tax credit for electric vehicles and plug-in hybrids was scrapped, automakers are rethinking their product pipelines and focusing on cheaper models to keep car buyers interested, company executives said on Wednesday at a Reuters conference in Detroit. 

Volkswagen's U.S. chief said the company is pivoting to hybrids, which run on both gasoline and batteries, as it waits to see the natural level of consumer demand for EVs. Volkswagen historically has had few hybrid options in its lineup. 

“We thought we were going to leapfrog the hybrids, but we can't,” said Kjell Gruner, president and CEO of Volkswagen Group of America.  “We’re all in” on hybrids, he said. 

Instead of plug-in hybrids, VW will focus on full hybrids, which he said have lower costs and higher consumer demand. 

LUCID PLANS AFFORDABLE EV

Marc Winterhoff, the interim chief of EV startup Lucid Group, said the company has absorbed half the cost of the lost credit and passed half to the customer on its electric Air sedan. It is focused on bringing an affordable model to market by the end of next year. 

Winterhoff said he is already seeing demand for battery-powered models recover as company sales incentives kick in. 

“There's clearly a dip, but we're already seeing after two, three weeks that it's coming back up again,” he said. 

U.S. EV sales have fallen far short of carmakers’ forecasts from a few years ago, as many shoppers remain leery of charging hassles and high prices. Many traditional automakers are pulling back on their EV plans, although some hope future lower-priced models will entice mass-market buyers. 

RIVIAN OFFERING DEALS

Rivian finance chief Claire McDonough said the automaker expects waning interest for its leased vehicles, and is providing deals for shoppers looking to purchase. Only leased vehicles from Rivian and Lucid qualified for the tax credits before September 30.

McDonough said Rivian is focused on the R2 SUV, which it plans to launch in the first half of next year at a price around $45,000.

“A lot of players in the traditional automotive space have leaned a little bit more away from EVs right now. And as we look at the opportunity that that creates, we're continuing to innovate,” she added.

Traditional automotive competitors including General Motors, Ford and Stellantis have rolled back their EV plans in the United States in recent months, a trend that has intensified with U.S. President Donald Trump’s unraveling of federal subsidies and emissions regulations. 

Volkswagen’s Gruner said it is too soon to say how EV demand will settle without the federal support.

“We need to see what the true demand is and it's going to be very different also in different states,” Gruner said. “It's going to be certainly on a different volume level in the future.” 

(Reporting by Nora Eckert and Abhirup Roy in Detroit; Editing by Mike Colias and Rod Nickel)