Several automakers are developing new plug-in hybrid vehicles (PHEVs) as demand for battery-electric vehicles (BEVs) softens. But, according to the J.D. Power 2025 Initial Quality Study, reliability issues are rearing their heads with PHEVs that may make consumers take pause before signing up.
In the 2025 IQS, plug‑in hybrids have 237 problems per 100 vehicles (PP100) – more than BEVs, which average 212 PP100.
J.D. Power explains that the issue with PHEVs is the complexity of marrying electric propulsion and internal-combustion-engine systems – including charging interfaces and software layers – which doubles the opportunity for faults.
As of late 2024, 41 PHEV models were available in the U.S. – slightly more than hybrid models (39) but far fewer than the number of BEVs (60) on the market, according to J.D. Power.
Looking ahead to 2026, automakers including Toyota (next-generation RAV4 PHEV) and Nissan (new Rogue PHEV) are adding plug-in hybrids, and General Motors has at least three PHEVs expected in 2027.
According to Statista, U.S. PHEV unit sales are expected to reach 288,000 in 2025, growing to 358,000 by 2029, which actually is not that robust a growth rate given the number of PHEVs supposedly set to arrive in market in the coming years.
That forecast is likely to tumble as a result of the Trump Admin. cancellation of the federal tax credits for PHEVs. Even this year, with the credits, PHEVs aren’t flying off the lots with an average of 7,024 sales per model, though some of the plug-in hybrid systems are in small-volume models like the Bentley Flying Spur and Mercedes-Benz GLC 350e.
Automaker Cost Challenges
PHEVs are costlier to produce due to dual powertrain architectures; each has an electric motor with a battery pack and an ICE. That translates to higher sticker prices, which could slow sales growth, especially if the U.S. faces broader inflation as has been suggested by JP Morgan Chase and other analysts as a result of Trump Admin. tariffs on imported goods, which are taxes on U.S. companies and consumers.
Toyota’s RAV4 PHEV, for example, costs about $12,000-$15,000 more than the RAV4 Hybrid. The Jeep Wrangler 4xe PHEV, which was on sale last year, costs between $50,690-$52,690, about $20,000 more than the Wrangler base model with strictly an ICE.
An analysis by WardsAuto shows that with the $12,000 premium for the RAV4 PHEV it would take a buyer 25 years to break even on fuel savings.
S&P Global Mobility analysts warn that unless automakers have already invested heavily in PHEV model lines, the “large incremental cost” may not justify future expansions of their PHEV offerings.
The S&P report further says that the next wave of buyers of BEVs and PHEVs “appear to be more price sensitive… (and that) segments like hybrids and plug-ins saw sales growth because incentives and (BEV charging) infrastructure aren’t fully in place.”
Sales Trends FH1 2025 vs. FH1 2024
PHEVs as a whole were down from last year’s pace in the first half of this year. According to Omdia, U.S. automakers sold 151,000 units through June, compared with 162,000 in the same period a year ago. The Jeep Wrangler 4xe was the best-selling PHEV in the U.S. in 2024, per parent company Stellantis, with 55,554 units sold.
The maximum federal tax credit for PHEVs that meet the federal requirements for sourcing and manufacturing is $7,500, but only the Chrysler Pacifica qualifies. Some others have qualified for a half-credit, such as Ford Escape, Jeep Grand Cherokee and Wrangler 4xe. But those supports, as well as a credit of up to $4,000 for used PHEVs, are being eliminated by the current federal budget bill come Sept. 30.
PHEVs today occupy a tricky middle ground. While serving as a transitional technology, their complexity and cost – combined with their current quality challenges – pose a tough value proposition for both automakers and buyers.
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