Episode #1411: California hybrids reclaim the lead over EVs, Tesla reportedly weighs separating its China business ahead of a potential SpaceX merger, and record trade-in equity gives dealers and buyers more room to make a deal.

California buyers are putting hybrids back in front. In the first half of 2026, hybrid registrations overtook EVs for the first time in four years, giving franchised dealers a lift as Toyota, Honda and others expand their gasoline-electric lineups.

• Standard hybrids captured 22.1% of California registrations, compared with 15.9% for EVs and 2.3% for plug-in hybrids.

• The shift favors franchised retailers because direct-sales brands such as Tesla and Rivian do not offer hybrids.

• Toyota led California with 19% market share, followed by Honda at 10.9% and Tesla at 9%. The Model Y remained the top individual model, with the hybrid Camry second.

• Dealers say smaller price gaps are making hybrids easier to sell, while EV demand remains solid where incentives and inventory are strong.

• “It’s not like EVs are going away in California. It’s just that with hybrids, there are so many more options,” said analyst Brian Moody.
  
  

Tesla may be preparing to separate its China business as Elon Musk weighs a potential merger with SpaceX. The move could reduce geopolitical and regulatory risks, but it would also carve out a major operation that helped make Tesla a profitable global EV leader.

• Tesla has reportedly structured its U.S. and China operations so they can be separated through a sale, spinoff or other restructuring.

• A split could create a firewall between Tesla’s Chinese factories and SpaceX, a major U.S. defense contractor handling classified and national-security work.

• China represented about 18% of Tesla’s sales in the first half of 2026 and operates major Shanghai vehicle and battery plants.

• Beijing could scrutinize any merger over vehicle data, supply chains and the potential transfer of dual-use technology or materials.

• Musk denied the report on X, calling it “fake news,” and Tesla did not provide an official response.
  
  

In what Edmunds analyst Ivan Drury calls ‘crazy, borderline unbelievable,’ two-thirds of trade-in customers are arriving with positive equity averaging a record $13,330—giving dealers a powerful tool to lower payments and win inventory.”

• Average positive equity has grown by nearly $4,000 since early 2021 and extends well beyond luxury or late-model vehicles.

• Examples include nearly $17,900 on a 2018 Ford F-150, about $10,500 on a 2019 Honda CR-V and $8,800 on a 2017 Toyota Camry.

• With average APRs near 6% and monthly payments up sharply, trade equity can become the customer’s built-in down payment.

• Dealers are retaining about 87% of trade-ins, but strong demand may require more aggressive appraisals to improve closing rates.

• “They might already have that down payment right there in their driveway,” Drury said.