Hybrid vehicles have become the fastest growing segment of the
automotive market in 2024.
They are outpacing fully electric cars by a wide margin,
with the growth rate of hybrids up over 50% year
over year, while full electric cars are growing at a
mere 5% annually.
This surge has allowed legacy automakers, particularly Toyota, to claw
back some of the market share that they lost to
Tesla in 2020 and 2021.
This could potentially become a big problem.
Elon doesn't like hybrid cars, and he's previously dismissed them
as a phase that the world needs to move on
from.
But clearly, the world is not ready to do that.
So has Tesla made a mistake by not addressing the
hybrid market?
Well, the simple answer to why Tesla doesn't make hybrid
cars is because hybrids suck.
Objectively, by combining internal combustion and electric propulsion into one
package, you end up with the worst of both worlds.
And there's no reasonable argument against this.
Here is an example to get us started.
You know what a futon is, right?
It's a couch that folds flat to be used as
a bed.
In theory, a great idea, 2 pieces of furniture in
one easy package.
But in reality, futons suck at being couches, and they
also suck at being a bed.
The hybrid is the futon of the Automotive World.
Inside our hybrid vehicle, you'll find an internal combustion motor,
transmission, exhaust system, fuel tank, and everything else you would
associate with a conventional automobile.
Then in addition, you get an electric motor and a
lithium ion battery pack.
Some hybrids include a charging plug, some don't, but it
really doesn't matter.
Now the first red flag should be that instead of
subtracting components to achieve greater efficiency, we have added them.
This is probably one of the most obvious reasons Elon
is triggered by hybrids.
The best part is no part hybrid cars spit in
the face of everything that Musk has built his empire
on.
Beyond that, I think we can agree that fossil fuel
extraction and consumption is bad for the environment, while at
the same time acknowledging that mining nickel and cobalt to
make batteries is also bad for the environment.
Most EV owners accept that there's a trade off involved
with achieving a quote UN quote 0 emissions vehicle, but
there's a certain audacity to hybrid enthusiasts who choose to
support both sides while somehow retaining a smug virtue about
their environmentalism.
Our second red flag comes when people try to talk
about efficiency.
Here is the deal.
When the car is burning fossil fuel, it's carrying around
the battery pack and electric motor, which are heavy, and
that means the engine has to burn more fuel to
move around than it would have without being a hybrid.
Now, mercifully, the battery and motor in a hybrid car
is typically much smaller than their fully electric counterparts, but
that becomes a big problem when we switch over to
electric mode.
And now that relatively small battery is dragging around a
combustion engine, gearbox, and tank full of fuel that we
are supposedly trying to avoid burning, yet are definitely going
to need because the battery can't possibly hold out over
any long distance because it's been sandbagged by the hybrid
system.
Now beyond that, it's just not healthy for a combustion
engine to be used in a hybrid scenario where it's
constantly being switched on and off as needed over the
course of the drive.
The same can be said of those triggers that shut
down the engine in a normal car when you stop
at a red light and then turn it back on
when you release the brake.
If you have that in your car, go find the
button to switch it off.
The only purpose that serves is to put more money
in the pockets of dealerships and service centers.
At the same time, it's also not good for a
lithium ion battery pack to be constantly charged and discharged
and run dead like the way that the undersized battery
of a hybrid car is used.
The electric propulsion side is underpowered for the job of
moving a car, especially one carrying the dead weight of
a combustion engine.
And when you make lithium batteries work too hard, bad
things happen.
Beyond that, you'll never get the thrilling instant acceleration of
an electric car from a hybrid system.
The electric motor just does not get enough energy.
In the best hybrids, the two motors can work together
to provide extra power, but you're still tied to a
combustion engine that needs to Rev up and shift gears
to accelerate.
So this presents a new problem that we need to
contemplate.
If hybrid cars suck, then why do people want them
so bad?
The simple answer is that they've been tricked.
But life isn't actually that simple.
There are objectively good qualities to the hybrid vehicle that
do appeal to the average consumer.
That is something we need to acknowledge.
For all of the amazing creative potential of the human
mind, we tend to be a people who are very
resistant to change.
We thrive on familiarity and security.
This psychological trait is something that the hybrid plays to.
It's the same, but different.
You can still go to the gas station like you
always have, just less often.
This fear is intensified by North America's apparent inability to
establish a reasonable charging network for electric cars.
This is the number one concern that people raise when
you try and talk about EVs.
I've experienced this in my own conversations with friends and
family.
Everyone is afraid that the battery will die and they
won't be able to recharge the car.
Now the thing about fear is that it's often irrational.
People in Canada are afraid of spiders and snakes even
though we have virtually 0 poisonous varieties in this country.
People are afraid of airplanes, even though they're proven to
be by far the safest form of transportation.
And the idea that people will just stop being afraid
if they are better informed, that's just not the way
fear works.
So even though most EV drivers in most situations will
never experience being left stranded by a dead battery, the
fact remains that North America does kind of suck at
electric car charging.
Here's a chart from Larry Goldberg.
He compares the number of EVs on the road versus
the number of public charging stations.
In China, there are over 13 million electric cars, which
are supported by about 500,000 Level 3 and 4 charging
plugs, which works out to around 28 EVs per charging
plug.
That is the gold standard.
In Europe, it's 106 electric cars per charger with 5.5
million EVs, and in North America we are up to
136 electric cars per charging station and we only have
3.2 million EVs.
Of course, there's a lot of nuance in the real
world that's not being captured in one simle chart, but
if we wanted to illustrate the key point, this is
it.
And we should also factor in that this assumes every
charging station in North America is functional, which we know
is not the case.
Downtime at public chargers that are not Tesla Superchargers is
a big problem, and even Tesla chargers go down.
Elon Musk acknowledged this when he laid off much of
the supercharging staff, saying that Tesla would continue to grow
the network, just at a slower pace for new locations
and put more focus on 100% uptime.
Now, there is no data to support this one, but
anecdotally there is a much bigger problem with charging station
downtime in North America than anywhere else in the world.
European chargers don't suffer from the same issue with reliability
for whatever reason, but that's a bigger topic anyway.
We also need to factor in money here, and I
don't necessarily mean the cost of vehicles.
Yes, fully electric cars are more expensive and that's a
barrier to entry for many people.
Hybrids do tend to be much closer in price to
their gasoline equivalents, No argument there.
We are talking about real money.
Big money.
You see, automakers know that going fully electric will destroy
the dealership model.
It will decimate the service industry associated with the automobile.
Most dealerships don't make money selling cars.
They make money doing oil changes and other routine maintenance
tasks that are so simple they can pay a high
school student minimum wage to do the work while charging
a colossal markup.
Of course you can change your own oil, but not
if you've got a new car with a warranty.
Now you're locked into dealer authorized service for years, and
traditional automakers are addicted to the dealership models because it
means that they don't actually have to worry about selling
cars.
It's the dealer's job to move the inventory.
It's like a sick codependency.
The automaker can get away with making poor quality product
because they know the dealer will buy it, and then
some coked up salesman is going to push it on
a poor sucker who doesn't know any better.
And the dealer is going to keep buying the inventory
regardless of how good the product is, because the more
cars they sell, the more service appointments they book, and
the worse the quality of the vehicle, the more maintenance
it's going to need.
It's a race to the bottom and they're taking us
along for the ride.
This is crystal clear and obvious to anyone who's not
already inside the traditional automotive cyclone of nonsense, which is
exactly the position that Elon Musk was in when the
company began to take off.
Whether Elon founded it or bought it doesn't really matter.
He stepped up and took charge, and one of the
big decisions he made was to eliminate the dealership from
Tesla's business model.
When you make a compelling product that offers unique features
and solves problems, then the car sells itself.
You don't need Slick Larry with the white powder on
his nostrils and the bad fitting suit to go out
and find you a sucker anyway.
The real reason is efficiency.
When you move from a gasoline car to a hybrid,
the only advantage is reducing the overall amount of gasoline
that gets burned, but the car itself still manages to
be even worse for the environment while retaining all of
the old problems associated with combustion engines.
But when you go fully electric, the advantages become epic.
You eliminate so many of the failings that have plagued
the Automotive World for the better part of the last
century.
The only price you pay is in money, a little
bigger monthly payment, and convenience.
You need to think a little more to navigate the
world, and that's life.
There's always a trade off, but it's one that Elon
Musk considered worthwhile.
And if we look at everything that Tesla has accomplished
in just ten years, it would be hard to say
that they're the ones making the wrong decision.