Volkswagen Wants To Be More Premium And Sell More Hybrids

Contrary to previous reports, Volkswagen wants to sell conventional hybrid electric vehicles (HEVs) in the United States, not plug-in hybrids (PHEVs) as expected. Volkswagen already offers several PHEV models in Europe, so it made sense that the company would simply export them to the US. After speaking with the CEO of the Volkswagen Group of America during a roundtable at the 2025 New York International Auto Show, CarBuzz learned that this is no longer the plan.

Instead of selling PHEVs, which represent a smaller portion of the US market than even EVs like the ID.4, VW will focus on the larger market. For reference, PHEVs only represent around 1.9% of vehicle sales in the US, while hybrids make up 10.7%, and EVs represent 9.4%.

“We’re investing in hybrids. We believe, for this market and what the consumers here want, full hybrids are the right solution. Full hybrid, not plug-in.”

– Kjell Gruner, CEO of Volkswagen Group of America

Why PHEVs Are Out

Gruner gave several reasons why his company will not focus on PHEVs for the VW brand in the U.S.: “It adds a lot of weight and also a lot of material cost. Consumers don’t want to change their behavior. Some people also just don’t have the opportunity to charge at home,” he explained.

There are also global political considerations at play, including the future of federal tax credits for electrified vehicles and tariffs on foreign-built vehicles. Both present risks, making PHEVs a less viable option for the US market. “PHEVs have their advantages under certain conditions, especially regulatory environments. There are currently some ZEV credits associated with them, but let’s see what that regulatory environment looks like in the coming years,” Gruner said, likely hinting at the Trump Administration’s proposed plans to eliminate credits for electric vehicles.

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“We want to manufacture them in North America. It would be much faster, obviously, to import them from Europe. But that’s, that’s not the solution we’re going for. You need the tooling. You need the local battery, the local gearbox, etc. And that means it takes time. That’s why we don’t have [hybrids] today, because we need all this localization.”

Gruner specified, “We will have two vehicles with hybrids.” VW will choose these from their “volume models,” and although he didn’t provide any official confirmation, the latest Volkswagen Tiguan and next-generation Atlas are almost certainly the two vehicles he was referring to.

Back To Premium

Along with a pivot to hybrid, VW is also moving back towards a premium experience, like it had in the 2000s and early 2010s. The new Tiguan, for example, has American walnut wood trim and massaging seats on the top trim level.

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“Us as a brand – this little bit of extra fun, the nice things in the vehicle. That’s the German roots. The engineering, the haptics, and the material quality, that’s very much us as a brand,” Gruner described. “But at the same time, it needs to be accessible. This vehicle should be for people who are climbing the social ladder. A product that has those premium touches that feels better as a reward.”