Electric vehicle hype is cooling off fast, and traditional automakers are scrambling to find solid ground. Ford just announced a staggering $19.5 billion write-down while killing off several electric models. Stellantis is declaring hybrids their top priority for America. And Toyota, long criticized for dragging its feet on full electrification, suddenly looks like the smartest kid in the room. For investors watching legacy automaker stocks, the message is clear: hybrids are back in play.
- Ford’s $19.5 billion charge includes canceling its next-generation electric truck and shifting hard toward hybrid and extended-range vehicles, marking a major industry turn away from expensive EV bets.
- Goldman Sachs analysts predict hybrid-focused automakers could see North American margins improve by 2 to 3 percentage points, potentially adding $15 to $22 billion in collective pre-tax earnings.
- Hybrid sales jumped 36% in Q2 2025, now representing 22% of all new light-duty vehicles sold in the United States as consumers seek fuel efficiency without charging infrastructure headaches.
A Brutal Reality Check for EV Dreams
Ford CEO Jim Farley didn’t mince words when explaining the company’s sharp retreat from electric vehicles. High-end EVs priced at $50,000 to $80,000 simply weren’t selling. Sales of the F-150 Lightning, which rolled off assembly lines in 2022 with comedian Jimmy Fallon writing a song about it, dropped 10% this year. Ford moved only 25,583 Lightnings through November 2025.
Numbers tell a brutal story here. Ford expects to lose roughly $5 billion on its EV business in 2025, matching losses from 2024. Executives have effectively killed the entire second-generation EV lineup and are now targeting hybrid and gas models for growth. Their goal is 50% electrified global volume by 2030, with hybrids carrying most of that weight.
Stellantis is singing the same tune. CEO Antonio Filosa told a Goldman Sachs conference that his company “truly believes hybrid is going to be one of the favorite powertrains in the U.S.” Traditional hybrids, not plug-ins, are getting the focus, and that game plan appears to be working. Stellantis market share crept up from 7% to 8% in Q3, reversing a painful slide that contributed to former CEO Carlos Tavares departing.
Toyota’s Vindication and the Camry Blueprint
Toyota stuck to hybrids when everyone else was chasing the EV dream, and that patience is paying dividends. Making the Toyota Camry exclusively hybrid starting with the 2025 model year looked bold at the time. No more gas-only option for America’s best-selling sedan over the past 22 years. Just hybrid powertrains across every trim level.
That bet landed perfectly. A redesigned Camry starts at $28,400, actually cheaper than the outgoing hybrid version, and delivers 51 combined MPG. Electrified vehicles now account for nearly 50% of Toyota’s U.S. sales, and operating margins near 10% stand well above competitors losing money on EV investments.
Goldman Sachs analysts see Toyota as the template for making money on electrification. Their research suggests automakers maximizing hybrid sales while minimizing unprofitable EV production could see margins expand by 2 to 3 percentage points. For companies that collectively earned about $52 billion in operating profits in 2024, that represents $15 to $22 billion in potential earnings gains.
What This Means for Automaker Valuations
Investment math here is straightforward. Toyota trades at roughly 8 to 9 times earnings with a 12% return on equity. Ford and GM have struggled with EV losses dragging down consolidated results. As those losses shrink and hybrid margins expand, multiple expansion becomes a real possibility.
Erste Group recently upgraded Toyota to a Buy rating, citing strong margins and hybrid demand. Analysts acknowledged short-term headwinds from tariffs and currency movements but see the medium-term picture brightening as hybrid sales keep growing.
U.S. EV sales actually fell about 40% in November 2025 following the expiration of the $7,500 consumer tax credit. Meanwhile, hybrid sales keep climbing. Regulatory winds have shifted too, with the Trump administration easing fuel economy targets from over 50 MPG by 2031 down to roughly 34.5 MPG.
Should You Buy Legacy Auto Stocks Now?
Hybrids offer real upside for investors, but risks remain. Chinese automakers like BYD are growing rapidly with aggressive pricing. Currency fluctuations can squeeze margins for exporters like Toyota. And consumer preferences could shift again if charging infrastructure gets dramatically better.
Still, for patient investors willing to hold through some volatility, legacy automakers with strong hybrid lineups look attractively priced relative to the earnings power that could materialize over the next few years. Wall Street spent years punishing these stocks for being slow to embrace EVs. Now that caution looks like wisdom, and valuations may need to catch up.
