As demand for electric vehicles slows, car buyers are shifting focus to hybrids, Dunne Insights CEO Michael Dunne tells Yahoo Finance.

Dunne argues we've reached "the end of the honeymoon" for pure electric cars like Tesla (TSLA). After an initial surge, consumers now want “a better alternative” due to the high costs and unreliable charging infrastructure for EVs. With consumers desiring something more “practical,” Dunne sees “a surge in demand” for hybrids. Additionally, global EV demand is declining as "range anxiety" persists, Dunne notes.

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Editor's note: This article was written by Angel Smith

Video Transcript

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RACHELLE AKUFFO: US car buyers are increasingly looking to hybrids as sales of electric vehicles pull back. Hybrids now make up more than 9% of new light vehicle registrations, that's according to the S&P Global Mobility report. Now, Ford CEO Jim Farley is saying that hybrids will play an increasingly important role in the transition for consumers to go fully electric. On the other hand, Toyota's CEO is predicting that pure EVs will peak at 30%, leaving a large space for hybrid cars.

Let's bring in our next guest Michael Dunne, Dunne Insight CEO to discuss more. Thank you for joining us, Michael. So what do you think is going to be the key three factors that will drive hybrid conversion and adoption?

MICHAEL DUNNE: What we're seeing right now is the end of the honeymoon for pure electric vehicles. You know, for the last couple of years, there's been sensational interest in buying electrics like Teslas, or your Mach-Es from Ford, or your Hyundai Ioniq 5. But what's happened is that consumers have realized, hey, the charging infrastructure is not great on these things, they're expensive, and maybe there's a better alternative.

So we're moving into more of a realistic practical consumer. The first movers, the leaders who would go for those electrics are now moving to mass market. And those consumers are saying, give me something much more practical that I don't have to worry about range or charging. And their solution is to move exactly as you said into hybrids. We're seeing a surge in demand for hybrids while demand for pure electric vehicles is slowing.

AKIKO FUJITA: Michael, it feels weird to talk about hybrids having a moment because they have been around for a while. And you look at a company like Toyota, who for years have said this very issue, that EVs are going to be slow in terms of adoption, hybrids will be a longer bridge than you expect. How long does that transition look like for you? I mean, does it make sense for a company like GM, for example, to suddenly pivot to hybrids when you consider where the overall EV transition is going?

MICHAEL DUNNE: Absolutely. It's a longer run than most people expect it. So we're talking about a 10-year transition before electrics. And Toyotas case, as you said, just 30% of the market. Others are more optimistic.

But what's happening around the world is that people are realizing range anxiety is real, charging infrastructure is not that great, especially here in North America, prices of electrics remain high. So why don't I just buy a hybrid or a plug-in hybrid? I get something more affordable, I don't have to stress about range, and I can get in-- there's a lot of options out there from Toyota, from Ford, from even Chinese companies like BYD.

There's definitely competition now in the minds of consumers. Hey, I don't necessarily have to jump to pure electric. I can do very well with a hybrid.