• Nissan and Honda are reportedly in talks to merge.
• Nissan's lack of hybrids has affected the success of popular models like the Rogue.
• Honda has seen big sales increases for popular models with hybrid offerings.

A potential tie-up between Nissan and Honda could solve one big problem for Nissan: a lack of hybrids.

That's what dealers who spoke with Business Insider said this week amid reports that the Japanese automakers are in talks to create a new global auto goliath. Nissan is one of few car manufacturers in the US without a hybrid or plug-in hybrid offering, despite taking an early lead in EV sales with the Leaf in 2010.

Green car shoppers have turned away from EVs in favor of hybrid models this year, leaving Nissan with unpopular and unprofitable battery-powered offerings in the Leaf and Ariya SUV.

Nissan dealers have dealt with slumping sales all year, particularly for the brand's top seller, the Rogue. Once a segment leader, sales of the Rogue fell 10% through the first nine months of the year compared to the same period last year, according to company data.

And dealers say they're losing customers to Honda and Toyota, which have hybrid versions of their CR-V and RAV4 SUVs.

One dealer with both Nissan and Honda stores says it's "painfully obvious" that Nissan is losing customers to brands with more hybrids. The dealer didn't want to be identified, but Business Insider confirmed his identity.

He said it has become common for a Nissan shopper to migrate to the Honda store after they realize there aren't any hybrids.

Following disappointing sales results in the first quarter, Nissan CEO Makoto Uchida acknowledged the hybrid blind spot, saying during an earnings press conference that until last year, Nissan wasn't able to predict the rapid rise in demand for hybrids. The company has said it is shifting efforts toward hybrid offerings, but dealers and automotive industry experts say that change could take years.

Meanwhile, Honda is riding the hybrid wave this year as customers gravitate toward the hybrid versions of the CR-V SUV and Civic sedan. Just this month, Honda said it has plans to double its global hybrid sales to 1.3 million vehicles by 2030, as it aims to create a "bridge" to EV adoption.

Dealer skepticism over another auto merger

While details of a potential tie-up between Nissan and Honda remain scant, some dealers are wary of yet another global auto merger. In separate statements, the companies didn't comment specifically on the reports, pointing instead to a March announcement in which they said they were exploring "various possibilities for future collaboration."

Adam Lee, a dealer in Maine with several major brands, including Nissan, Honda, and Chrylser, said he's grown cynical about promised "synergies" after experiencing several different mergers as a Chrysler dealer.

"Show me a merger where the synergies actually existed, and I'll show you something that doesn't exist," Lee said. "I'm trying to give them the benefit of the doubt, but I tend to be cynical about anything like this."

Chyrsler-owner Stellantis is in the middle of a tough transition right now, as the CEO who led the merger of Fiat Chrysler and PSA stepped down suddenly at the start of the month. Before that, Chrysler lived through a messy marriage with Germany's Daimler in the late 1990s and early 2000s.

Lee said Nissan could probably use some help with hybrids and other plug-in models but argued: "You don't necessarily need to merge to do that."

• EV customer bases are changing, so auto executives are investing in more hybrid-focused models.
• Hybrid EVs can be more practical and affordable than charge-only EVs.
• This article is part of "Getting Ready for Electric," a series of guides and practical advice for buying your next EV.

Though the electric-vehicle market is having its toughest year yet, battery-powered cars are here to stay.

As EV sales slowed this year, major automakers had to reconsider their lofty goals and adjust to shifting customer bases.

Automotive executives moved forward with several EV launches this year, with some companies adding more hybrid models — cars that industry experts say could become a bridge for future EV owners.

Companies are turning to hybrid models to appeal to a more practical and frugal shopper, as wealthy early EV adopters who fueled years of growth have recently fled the market.

It's clear that the expansion the EV segment enjoyed over the past few years is no longer a guarantee of future growth. But executives insist they're committed to an all-electric future, even at a slower clip and with an updated strategy.

In the coming years, you can expect a greater menu of green vehicles on dealer lots — at various price points and with more seamless charging options.

Why more consumers are considering hybrid EVs

Hybrids — once thought to be a relic of the pre-Tesla EV market — are quickly gaining in popularity as EV demand slows.

Green-car shoppers are increasingly drawn to hybrid cars, which come in plug-in and non-plug-in varieties. These cars offer a stepping stone to full EV adoption, with the safety net of a gas-powered engine to ease range anxiety.

While these vehicles solve a pervasive concern among new EV shoppers, a lack of supply has also driven up the price of these cars, creating an affordability barrier for some shoppers.

Still, companies that stayed in the hybrid market over the past several years are now reaping the benefits of a renewed interest in these cars.

Toyota, which was once criticized for its slow adoption of EV technology, is now enjoying big increases in hybrid sales. That's elevating the brand's cache among green-car shoppers in general, with Toyota often at the top of brand considerations for EV shoppers now.

Ford is also taking this approach. The company has said that Ford's hybrid cars are converting more car buyers than any other segment. More than half of all Ford Maverick pickup truck hybrid buyers are new to the brand.

A strategic shift after EV growing pains

The nascent EV market experienced a demand shift this year: The new generation of shoppers are more frugal and practical than their early-adopter counterparts.

But the market is still growing. J.D. Power said that battery-powered cars accounted for 10.2% of retail sales in the US in September, up by 0.8 percentage points from the same month a year ago.

This growth rate is much slower than the rates of the past four years. EV market share soared from about 2% of retail sales in the 2010s to nearly 8% by the end of 2023, Kelley Blue Book said.

The important distinction here is that demand hasn't dried up — it's just changing.

Companies are scrambling to adjust, pulling back production on big, expensive EVs and prioritizing more affordable models. Ford, for example, recently said it would pause production of its F-150 Lightning pickup truck for the rest of the year.

Ford also announced plans in August to replace two electric three-row SUVs with hybrid models. GM promised this year to bring hybrids to the North American market, reversing its full-EV strategy in the region, though the company provided few details about its Stateside hybrid plan.

As companies shuffle the deck, EV launches are expected to slow. S&P Global Mobility expects that about half of the 143 EV launches it's tracking between 2024 and 2026 could be delayed or canceled.

This upheaval is likely to continue after President-elect Donald Trump takes office in January. Trump has been tough on EVs, promising to gut Biden-era legislation designed to support the EV transition.

But it's unclear how much a new administration could undo the Inflation Reduction Act, which includes electric-vehicle tax credits, without Congress's help.

These EV tax credits, which can effectively lower the purchase price of a new car by up to $7,500, have been a specific target of Trump's. As affordability becomes a top barrier to EV adoption, the dissolution of these incentives could lower demand even further.

Tesla CEO Elon Musk has become a close ally of Trump's, which initially gave industry executives and experts hope that the president-elect could soften his EV approach.

However, Musk's stances have largely aligned with Trump's so far, including opposing government subsidies for electric vehicles.