General Motors and Hyundai Team Up. What’s Driving the Partnership.

The companies announced details of the first five vehicles the pair will collaborate on. The cars are expected to hit roads by 2028. (GEOFF ROBINS/AFP via Getty Images)

General Motors is pivoting back toward hybrids as demand growth for all-electric cars slows.

On Thursday, GM and Hyundai announced plans for the first five vehicles the companies will co-develop. There will be an all-electric commercial van for North America. There will also be four vehicles for Central and South America, including a compact SUV, a car, a pickup truck, and a midsize pickup truck.

Those four vehicles will use either internal combustion or hybrid powertrains. GM is relatively unique among traditional car makers. It doesn’t sell hybrids in North America, focusing its efforts on all-electric cars.

(It does offer the Corvette E-ray, which has an electric motor for acceleration. That car retails for north of $100,000.)

Investing more in hybrid powertrains is one sign that the company is adapting to market trends. Americans bought about 311,000 all-electric cars in the second quarter, down about 6% year over year. Selling all-electric vehicles is about to get much harder. At the end of September, buyers lose the purchase tax credit worth up to $7,500.

In the second quarter, GM sold more than 46,000 all-electric cars in the U.S., up more than 100% year over year, making it the number-two seller behind Tesla, which sold about 144,000 EVs in the U.S.

In 2024, all-electric sales were strong in Asia, excluding China, Latin America, and Africa, up some 60%. But that’s off a small base. All-electric cars accounted for about 4% of total new-car sales in those regions. EVs account for roughly 7% to 8% of new-car sales in the U.S. and closer to 15% in Europe. Plug-in hybrids and mild hybrids, which don’t plug in, account for about 35% of the new European car sales.

One reason for lower EV sales is price. Hybrid vehicles still tend to be cheaper than their all-electric counterparts. South America tends to be a lower-priced market. Entry-level cars start at about $13,000. Few cars in the U.S. start below $20,000.

The four vehicles announced aren’t intended for North America. GM, however, is likely to introduce a hybrid version of its Chevy Equinox in 2027. GM didn’t comment on its hybrid plans.

The partnership with Hyundai shows that auto makers can adapt to trends. It also shows the importance of scale and collaboration. GM and Hyundai expect the co-developed vehicles to sell more than 800,000 units annually. That’s the scale required to make traditional vehicles profitable. What’s more, common platforms and sharing R&D will help keep costs in check.

GM stock rose 0.9% to $52.95; the S&P 500 and Dow Jones Industrial Average dropped 0.1% and 0.5%, respectively. Hyundai shares gained 1% in overseas trading.

A bigger bump from the Hyundai deal shouldn’t be expected. The vehicles in question won’t hit roads until 2028.

Write to Al Root at allen.root@dowjones.com