Honda Bets $3 Billion on Hybrids as US EV Auto Growth Stalls
Hybrids reached a record 16.3 percent share of the US auto market at the end of the second quarter, according to Cox Automotive. Honda, Nissan and General Motors are all expanding hybrid plans as gasoline prices stay high and the US eliminates electric vehicle tax credits.
US EV auto growth has hit a speed bump, and hybrids are taking the lead. Hybrid vehicles held a record 16.3 percent of the US auto market at the end of the second quarter of 2026, according to Cox Automotive, an auto services and technology provider.
Fuel prices are driving the shift. Gasoline has stayed above $4 a gallon for much of 2026 because of the Iran war, and the American Automobile Association says it now averages $3.87 per gallon.
Hybrids, which can run on gasoline or an electric charge, have boosted 2026 US sales for Japanese and South Korean carmakers. That is prompting new investment from established and newer players alike.
Carmakers move on hybrids
Honda announced this week it will spend $3 billion on a new hybrid plant in Ohio and add capacity at plants in two other states. The company has long competed with Toyota, the US hybrid market leader.
Nissan launches its first significant US hybrid this fall. Ponz Pandikuthira, a senior vice president at Nissan Americas, said the missing product had hurt sales. "We were losing that traffic," he said.
Many shoppers want to explore and test drive a hybrid even if they end up buying a gasoline-engine car, he added.
General Motors, which avoided hybrids earlier in the decade while it invested heavily in electric vehicles, is now changing course. CEO Mary Barra told analysts last month that GM plans hybrids "in multiple segments, the key segments that we participate." She gave no launch details.
Market share and the Rogue
Hybrid volumes have risen by more than a fifth since the middle of 2025, Cox said. The 16.3 percent share compares with 13 percent a year earlier.
Over the same period, the shares of gasoline-engine vehicles and EVs both fell. EVs have also lost US tax credits under legislation signed by President Donald Trump.
Nissan will begin with a hybrid Rogue, the compact SUV that is its top-selling gasoline model in the United States. The system uses an electric powertrain to drive the wheels, with the gasoline engine acting only as a power source. Nissan markets it as "e-POWER."
Compact SUVs make up about 30 percent of US hybrid sales, led by the Toyota RAV-4 and Honda CR-V, said Stephanie Valdez Streaty, director of industry insights at Cox. She credits the growth to higher gasoline prices and to more choice, including models from Kia and Hyundai.
She said hybrid pickup trucks and full-sized SUVs could also sell well. "It definitely has room to grow," she said of hybrids' market share.
Chinese brands are largely absent from this market. Steep US tariffs, trade restrictions and new regulations have created major barriers for Chinese electric cars, even as BYD expands rapidly across Europe and Latin America.
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