The smaller the car company, the more conservative the approach to electrification—that seems to be the theme, anyway. While some automakers have pushed forward with full-on EV efforts, other automakers have been testing the waters with much more subtle efforts to understand just how customers will respond to a changing market.
But that makes sense. EVs, with their batteries and software, require massive R&D investments where small players like Subaru and Mazda can’t keep up with the big dogs. But hybrids may be a safe place to play for now. And Subaru thinks that middle ground will be its next big opportunity.
Welcome back to Critical Materials, your daily roundup for all things electric and automotive tech. Today, we’re chatting about Subaru betting big on its new hybrids, Nissan reportedly killing off its subcompact EV crossover for the U.S. market, and Ford looking to do right with its buyers by paying for some EV investments. Let’s jump in.
30%: Subaru Says New Hybrids Are Its Ticket To Success
Subaru might not be the first brand that comes to mind when you think about hybrids. Rugged all-wheel-drive cars sporting those funny horizontally-opposed boxer motors, sure. But Subaru isn’t really a leader when it comes to any form of electrification. The Japanese automaker is looking to change that.
2025 is the year of change in Pleiades, and Subaru believes that its loyal customer base is going to love what it has in store: a hybrid version of its beloved Forester coming early this year, and a redesigned, hybrid-powered Outback following closely behind.
According to Automotive News, dealers are preparing for what could be a boost in sales across the U.S., and Jay Keras—the new chairman of the brand’s National Retailers Advisory Council—says the timing couldn’t be better.
For Subaru, this isn’t just about keeping up with the Joneses (although it will need to do just that in order to remain relevant as more brands move to hybrids and BEVs). It’s about giving customers options. Keras said that, ultimately, customers really aren’t sure what they want to buy until they drive the car. That’s why putting the customer in the driver’s seat of one for a test drive can convince customers that hybrids aren’t all hype and green marketing. He’s convinced that Subaru’s hybrids are “incredible.”
What really makes or breaks the deal is the price. Subaru knows its customers and how much they’re willing to pay. Subaru says that it intends to price its hybrids competitively, which is great news for customers looking to own a hybrid Subaru without breaking the bank. But he noted that Subaru is losing out in places where electrification is catching on fast.
“The CARB states, especially on the West Coast, have not had the jump in sales because of a lack of hybrids in the lineup,” Keras noted, pointing out Subaru’s potential sales explosion out West. “But with two new hybrids coming, the West Coast should be poised for a jump in sales.”
Perhaps cost is one of the reasons the brand is pushing forward with more hybrids before full electrification—or maybe it’s playing the field a bit more cautiously during a rather tempestuous political time. Subaru wants to electrify all of its models by the first half of 2030, which means going either full-on battery-electric (with the help of Toyota), or some degree of hybridization.
This is part of Subaru’s bigger push to expand its market. Keras believes that a more fuel-efficient lineup, specifically one beginning with hybrids, will work in its favor for states that follow California Air Resources Board standards.
Dealers are banking on Subaru’s new hybrids to continue on the sales success compounding over the last 30 months. Historically, the Forester and Outback have been two of Subaru’s top-selling models across its entire lineup, and hybrid options will only increase the scope of buyers who might be interested in the brand’s offerings.
It truly could be Subaru’s golden ticket, and if the brand rakes in enough sales, perhaps hybrids can prove to be a bridge to fund its electrification efforts after all.
60%: Nissan Kills Upcoming U.S.-Built Subcompact EV Crossover
Photo by: Nissan
Nissan, an automaker already in shambles while it tries to find its relevancy in a changing market, is rumored to have pulled the plug on plans to produce a subcompact electric crossover for the U.S. market according to a report by Automotive News.
The EV (codenamed PZ1L) was to be slotted as an electrified offering placed between the cute little Nissan Leaf and the utilitarian Nissan Rogue. Nissan even planned to build the pint-sized in one of its U.S. factories—likely at its facility in Canton, Mississippi which was to be transformed into a “Nissan Intelligent Factory” by 2028 with a steep $500 million cash infusion into the plant. However, the reported axing of this model means that Nissan will once again delay its deeper dive into the EV space.
Here’s the important bits that could explain Nissan’s motives. From Automotive News:
The PZ1L was one of three electric utility vehicles planned for Canton.
Nissan added the model to the production mix in May, but since then its financial fortunes have worsened amid tumbling sales and profitability.
Sam Fiorani, vice president of AutoForecast Solutions, said another compact electric crossover would add to the saturation of a segment already crowded with entrants from Hyundai, Kia and Volkswagen.
Last year, U.S. sales of 10 compact electric crossovers topped 200,000 vehicles, with only three selling more than 20,000.
“It’s tough to make money on volumes that low,” Fiorani said. “Too many EVs are chasing too few buyers at the moment, and Nissan’s resources would be better spent on adding hybrids to its lineup.”
That being said, the model isn’t exactly dead, dead. The compact crossover will live on at Nissan’s Sunderland plant in England, meaning that it will likely go on sale in other markets, just not in the U.S. But is this a move made out of strategy to better align to U.S. sales, or is the PZ1L’s fate a tale of politics and partnerships?
Nissan is currently navigating murky waters as talks of a merger with Honda come to a rapid boil. The two automakers are looking to one another in order to offset their weaknesses. For Honda, this means a partner to help build out large vehicle platforms and share development costs, and for Nissan, a bit of stability in its otherwise turbulent post-Ghosn timeline.
Keep in mind that Nissan could also be axing the model in the U.S. because it’s unable to secure a solid supply chain that meets the ever-changing requirements for U.S. tariffs and EV incentives.
Historically, Nissan has been rather conservative with its move to electrification. Rather than continue to be the pioneer that it was with the Leaf, the automaker has entered the era of wait and see instead, which has put some of its more risky projects in limbo as it faces financial jeopardy. If Nissan doesn’t feel like it could sell the PZ1L for a profit (in low volume or otherwise) because of the potential for skyrocketing imported material costs, perhaps putting the kibosh on the model would be the smarter move.
90%: Ford Looks To Smooth Things Over With Its Dealers By Reimbursing EV Investments
Ford is once again retooling its strategy for selling EVs in the U.S. Its latest round of changes includes flip-flopping on some key requirements that it previously imposed on dealerships, and this time, it comes with a bit of a financial olive branch for those dealers that may have previously felt scorned.
If you recall, Ford previously pushed around the idea of requiring tiers for Ford dealers interested in selling EVs. For those who wanted the most allocations, Ford would require a hefty six (or seven) figure investment into DC Fast Chargers. Eventually, Ford canceled its so-called Model e dealership program and lowered the bar so that all Ford dealers could order its EVs. This would prove to be a good move, as Ford’s EV sales quickly skyrocketed.
Fast forward to 2025, where Ford has not just dropped its requirement for DC Fast Chargers, but is not reimbursing dealerships who spent the money up to $240,000 over the next few years—contingent on the number of chargers it installed, or the number of EVs it sells.
Here’s how Ford is looking to do right by its dealers, according to Automotive News:
One option, according to a bulletin sent to retailers and obtained by Automotive News, would give dealers $10,000 per Level 3 charger installed plus $2,000 per EV retailed through 2026, up to a maximum of $80,000 for each charger. For dealers who asked for more time to sell EVs, Ford added the option of taking $1,750 per vehicle retailed through 2027, with the same $80,000 maximum per charger.
Both options would pay out up to $240,000 because Ford had required dealers to install as many as three Level 3 chargers.
A third option would give dealers immediate payments of $40,000 per Level 3 charger installed, up to $120,000. This option would not include any money back for each EV sold but might be better for smaller, rural dealerships that don’t anticipate selling many EVs in the next few years and want the money faster.
Now, sure, we can’t ignore the obvious here. Ford’s move is an attempt to repair strained relationships with its dealerships. That’s crystal clear. However, the strategy shift underscores a louder roar across the industry. It speaks to how Ford—like many of the automakers that sunk billions into electrification over the past few years—overestimated just how quickly EVs would take hold in the U.S.
Since Ford first rolled out (and subsequently scrapped) its Model e dealership program, the Blue Oval has delayed $12 billion in EV-related spending, shelved and postponed product launches, plus, moved its focus from big battery-powered behemoths to more affordable cars for the average American.
The financial strain is evident, and when Ford reveals its year-end finances for 2024, the automaker is expected to report a loss of $5 billion.
100%: Will Scaling Out Hybrids Hurt Or Help Automakers?
Photo by: Thor Industries
Some automakers decide to go all-out into EVs—I’d argue that many even went faster than the market could handle the change. They’ve since backtracked and are now focusing on meeting in the middle between ICE and EV with plug-in hybrids. Some believe that this is the right approach, and others call it a “road to hell” in terms of progress and competition.
I want to know your thoughts on this. Is the move to back down from full-on electrification to hybrids the way to go, or is it a fool’s errand in the long run? Let me know in the comments.
