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Automakers pivot to hybrids amid EV demand uncertainty

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Lucid Group ( LCID ) shares cost of lost tax credit with customers

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Rivian focuses on R2 SUV amid waning leased vehicle

interest

By Nora Eckert, Abhirup Roy and David Shepardson

DETROIT, Oct 29 (Reuters) - One month after a $7,500

federal U.S. tax credit for electric vehicles and plug-in

hybrids was scrapped, automakers are rethinking their product

pipelines and focusing on cheaper models to keep car buyers

interested, company executives said on Wednesday at a Reuters

conference in Detroit.

Volkswagen's U.S. chief said the company is pivoting

to hybrids, which run on both gasoline and batteries, as it

waits to see the natural level of consumer demand for EVs.

Volkswagen historically has had few hybrid options in its

lineup.

"We thought we were going to leapfrog the hybrids, but we

can't," said Kjell Gruner, president and CEO of Volkswagen Group

of America. "We're all in" on hybrids, he said.

Instead of plug-in hybrids, VW will focus on full hybrids,

which he said have lower costs and higher consumer demand.

LUCID PLANS AFFORDABLE EV

Marc Winterhoff, the interim chief of EV startup Lucid Group ( LCID )

, said the company has absorbed half the cost of the

lost credit and passed half to the customer on its electric Air

sedan. It is focused on bringing an affordable model to market

by the end of next year.

Winterhoff said he is already seeing demand for

battery-powered models recover as company sales incentives kick

in.

"There's clearly a dip, but we're already seeing after two,

three weeks that it's coming back up again," he said.

U.S. EV sales have fallen far short of carmakers' forecasts

from a few years ago, as many shoppers remain leery of charging

hassles and high prices. Many traditional automakers are pulling

back on their EV plans, although some hope future lower-priced

models will entice mass-market buyers.

RIVIAN OFFERING DEALS

Rivian finance chief Claire McDonough said the

automaker expects waning interest for its leased vehicles, and

is providing deals for shoppers looking to purchase. Only leased

vehicles from Rivian and Lucid qualified for the tax credits

before September 30.

McDonough said Rivian is focused on the R2 SUV, which it

plans to launch in the first half of next year at a price around

$45,000.

"A lot of players in the traditional automotive space have

leaned a little bit more away from EVs right now. And as we look

at the opportunity that that creates, we're continuing to

innovate," she added.

Traditional automotive competitors including General Motors ( GM )

, Ford and Stellantis ( STLA ) have rolled back

their EV plans in the United States in recent months, a trend

that has intensified with U.S. President Donald Trump's

unraveling of federal subsidies and emissions regulations.

Volkswagen's Gruner said it is too soon to say how EV demand

will settle without the federal support.

"We need to see what the true demand is and it's going to be

very different also in different states," Gruner said. "It's

going to be certainly on a different volume level in the

future."