More and more models, and even brands, are approaching a tipping point where they are approaching an equal number of hybrids/EVs and conventional gasoline vehicles, and in some cases, selling more hybrids than non-hybrids. The biggest domino to fall is Toyota, and not surprisingly, but it is not the only automaker seeing a product mix shift.
One of the reasons hybrid vehicles are soaring in popularity is that, as we’ve previously covered in The Morning Dump, they cost about the same to manufacture as internal combustion engines and can maintain about the same profit margins. Batteries are expensive to manufacture and critical to the profitability of a vehicle, which is why it’s such a big deal when the UAW unionizes the Ultium plant in Tennessee.
Curiously, despite the importance of batteries to EVs, chemistry and production have not been a big focus for Tesla, which has worked with outside suppliers for battery development. Is this silly? Will this ultimately make BYD a bigger, more profitable company? Someone point that out.
As hybrid vehicles become more prevalent, so too are “Software Defined Vehicles” (SDVs) and there’s an interesting interview with Stellantis’ Head of SDV. He talks a lot about the higher level stack and the need to move away from Tier 1 suppliers, but also about the idea of upgrading existing vehicle hardware in the same way you upgrade software. This is a unique idea and worth talking about.
Toyota’s electric vehicles account for 48% of its vehicles, while the CR-V’s hybrids account for 51%.

If I shout “the year of the hybrid” any louder, I’ll smash it with a hammer, but I’m not a fan of subtlety or humility. Yesterday, I used this space to say that Kia and Hyundai are doing well thanks to hybrid sales. Today, data from Honda and Toyota show roughly the same results.
Let’s start with Toyota. The company’s overall sales volume in August was approximately 198,389 units, up 1.9% year-over-year including Lexus (a slight decrease of 1.3% without Lexus). This decrease was likely due in part to the discontinuation of the Toyota Grand Highlander/Lexus TX, which negatively impacted sales.
According to Automotive News, here’s what’s interesting to me:
Toyota said sales of electric vehicles rose 49% to 94,509 units in August, accounting for nearly half (48%) of its U.S. deliveries for the month, almost all of which were gasoline-electric hybrids.
Toyota does sell the bZ4X electric crossover, but the numbers are pretty nominal compared to the total number of hybrid RAV4s it sells. The fact that the Sienna and Camry are hybrid-only is significant and helps to boost these numbers even more. As the Tacoma Hybrid and other hybrids come onto the market more, I think Toyota will soon be selling mostly “electric” vehicles.
The story is much the same at Honda, with the new Honda CR-V selling 38,527 units, its highest number of sales so far this year, and hybrids making up more than half (51%) of this month’s total sales (yes, I’m doing my part). Overall, Honda is lagging behind Toyota, with just 28% penetration of electrified models, but it’s only a matter of time before the Civic Hybrid and Accord Hybrid are released. The big question I have is how long it will be before Honda releases a hybrid Odyssey.
The Maverick is another model with a positive hybrid to non-hybrid ratio, so we look forward to Ford’s sales report later today.
UAW unionizes Ultium battery plant

One of the most contentious aspects of the United Auto Workers strike against GM has been the possibility of unionizing the company’s new battery plant, which is not wholly owned by GM but is part of a joint venture with South Korea’s LG.
The ultimate conclusion to the Altium conundrum was that if a majority of the workers at the plant voted to join the UAW, the Altium plant could enter into a comprehensive agreement with GM.
That happened, as the UAW scored its second victory in the Republican-leaning South, including for union members at the Altium plant in Spring Hill, Tennessee, the Detroit Free Press reported.
“UAW members at Altium and VW are proving that new jobs in the South will be union jobs,” Tim Smith, director of UAW Region 8, which includes Tennessee, said in a statement provided to the Detroit Free Press. “In battery and EV factories coming up from Georgia to Kentucky to Texas, workers know they deserve the same great wages and benefits that our members have won for themselves, and we’re going to make sure our members have the support they need to win their union and get their fair share.”
Coincidence or a sign of things to come?
Is Tesla’s lack of battery infrastructure a blessing or a curse?
While we’re on the subject of battery manufacturing… automaker Tesla has been adept at using traditional cylindrical battery cells made by other companies in its vehicles (18650 in the case of the Model S) since the beginning, and the company continues to leverage battery production from a variety of sources, including Panasonic and BYD.
The company has experimented with making its own 4680 cells but says it has run into some issues.
In May, Musk gave the team developing the battery, known as the “4680,” a cylindrical device that is 46 millimeters in diameter and 80 millimeters tall, until the end of the year to cut costs and scale up one of its key innovations, according to three people familiar with the matter.
Musk has also told people in recent months that he wants to see a solution to a nagging technical issue that could cause the battery to break down during use, one of the people said.
Is this a big deal? Tesla has done a pretty good job partnering with companies to get batteries. Twitter analyst and investor Glenn Luk posted a great thread this morning about why this is the case, and it’s worth a read.
Luk looked at the financial statements of all the big EV companies operating in China and found that the majority of the profits go to battery makers like BYD, Tesla, and CATL. His conclusion: BYD will likely see higher net profits in the future because it can make money from batteries in a way that Tesla currently can’t.
BYD derives value from both the technology, design and distribution of the cars, as well as the batteries.
The roughly 24.5% gross margin should be mentally split in two: roughly 19.8% gross margin from the car and 4.7% gross margin from the batteries. pic.twitter.com/S6A1UqeR2E
— Glenn (@GlennLuk) September 4, 2024
This is a somewhat random person on Twitter/X, so take the analysis with a pinch of salt, but it’s an interesting question and one that could be tested to some extent if BYD surpasses Tesla in profits later this year.
The French were apparently testing upgradeable hardware.

A favorite adage that biographer and historian Robert Caro inherited from a newspaper editor was, “Turn every page.” I often fail to meet this standard, but it’s true that sometimes the best information is buried deep within a lengthy document.
Automotive News has a lengthy interview with Yves Bonnefont, Chief Software Officer at Stellantis, about vehicle software, but there’s a bit about hardware towards the end of the interview that caught my interest and made me glad I read the whole thing.
Do you foresee a situation where you could perform hardware upgrades in the field?
The idea of upgrading vehicle components such as headlamps is an ongoing topic of discussion in the industry, but one of the main challenges is finding an economically feasible solution.Previously, when I was leading DS, there was an attempt to upgrade the headlamps by introducing new LED modules, which were carefully designed to ensure physical compatibility with the previous headlamp design, allowing customers to upgrade if they wanted.
However, the price of the headlamp upgrade was not attractive to customers, and demand was low. The cost of the upgrade outweighed the significant improvement to the vehicle’s appearance.
Um, what? First, an interesting question. Over-the-air updates for cars are becoming more commonplace, and the idea of a technician coming to your home or business to do basic upgrades has been around for a while, but you’ve never heard of a technician coming to your home to provide a hardware upgrade. Typically, you have to drive to the dealer to get an upgrade as defined in a technical service bulletin or similar.
In particular, French sub-brand DS (part of Citroen) seems to be experimenting with offering modern LED headlights that can be fitted to existing cars. Huh? That’s kind of interesting, and makes sense. If your particular model doesn’t come with improved headlights, you’ll have to make do with them, or worse, some sort of lame aftermarket retrofit. OEM-approved headlights seem marketable, but apparently they’re too expensive.
What I’m listening to while writing TMD
My wife and I were talking about Joe Cocker’s wonderful “With a Little Help from My Friends” and we both thought for some reason that Cocker died young. It turns out he lived to be 70 years old – that’s 900 in 60’s rock star years. That’s great for him.
The big question
Are there any parts on your current car that you’d like an OEM upgrade for? Headlights? Seats? That’s a really weird idea to me.
Top photo: depositphotos.com