Hyundai has a hit on its hands with the Palisade three-row crossover SUV. Since it arrived for the 2020 model year, it’s been quiet, comfortable, and roomy, all while delivering a class-above luxury experience. For its second generation launched with the 2026 model year, it is larger and even more comfortable, but in the powertrain department Hyundai made it worse only to make it better.
While the base engine is a new 3.5-liter V6 that is down by just two horsepower and four pound-feet of torque versus the outgoing 3.8, a weight increase of 250-360 pounds makes the new Palisade considerably slower than the last model. With the V6, the 2026 Palisade’s 0-60 mph time is a leisurely 8.7 seconds in Edmunds.com testing. That’s about a second slower than the 2025 model.
But now Hyundai has a solution that makes the Palisade not only more powerful, but also more efficient. It’s the second-generation of the brand’s hybrid powertrain, and it’s clearly the powertrain to buy in the new Palisade
The hybrid system teams a turbocharged 2.5-liter four-cylinder engine with a pair of electric motors, a six-speed automatic transmission, and a small 1.65-kWh battery. The engine makes 258 horsepower and 260 pound-feet of torque on its own, and total system output is 329 horsepower and 339 lb-ft of torque.
This is the first hybrid for the Palisade. Both motors are located within the transmission. The first motor, P1, delivers 13 kW of energy (17 hp) to start the engine, act as a generator, and provide small amounts of drive assist and regenerative braking assist to capture energy for the battery. The second motor, P2, can be clutched in and out and offers 54 kW (72 hp) of energy to move the vehicle on electricity, add to the engine’s power, and provide regenerative braking.
During the media drive for the Palisade Hybrid in Austin, Texas, the hybrid system impresses most with its power, and less so with its real-world fuel economy.
The vehicle starts in a default EV mode and the motors can move the Palisade Hybrid on its own as long as the driver doesn’t need much power. That means the hybrid system is mostly aiding the engine and recovering energy rather than acting as the sole power source. Watching the energy flow graphic that can be displayed in both the 12.3-inch digital instrument cluster and the 12.3-inch infotainment touchscreen shows that the motors are constantly switching between adding power for acceleration, recovering energy when I let off the throttle, and providing power at very low speeds or when tapping into just a little power to keep the Palisade moving on the two-lane highways in Central Texas hill country.
For those moments when you plan to sit in the vehicle with the engine off, Hyundai offers a Stay mode. It keeps the HVAC, infotainment, and other convenience systems running using the power from the battery for up to 40 minutes.
The hybrid system’s transitions between power sources are transparent. The engine starts and shuts down smoothly, without sending a shock through the driveline, and it purrs along quietly in the background when it’s on. The powertrain also gives the Palisade the grunt it needs to move up to 5,016 pounds of SUV effectively. A stab of the throttle gets it out in front of traffic easily or provides the punch needed to pass the many flat-bed pickups that seem to roam these lands.
Fuel economy isn’t as impressive, at least not for my somewhat heavy foot. Over two stints of 70-80 miles each, I average 23.6 and 24.2 mpg, though much of the time is spent at 70 mph or above on these open Texas roads. My less aggressive drive partner averages 27.2 mpg during his 150 miles behind the wheel.
Both are below the 29 mpg city, 30 highway, 29 combined EPA ratings for the all-wheel-drive Calligraphy model we’re driving, though the higher speeds allowed by these roads mean we’re tapping into the turbo more often than drivers might on their daily commutes and certainly more than the EPA does during fuel economy testing. Front-wheel-drive versions of the Palisade Hybrid are even more efficient, with ratings as high as 34/35/34 mpg. It would take a light foot to achieve those numbers.
Even with my lead foot, the Palisade Hybrid does considerably better than a Palisade with the base 3.5-liter V6 would. A similarly equipped front-drive Calligraphy model with the base engine is rated at just 18/24/20 mpg.
An EPA calculation shows that the Hybrid is also the smarter buy monetarily. It costs about $2,200 more than a 3.5 model, and the gas savings should pay off in about a year and a half for a typical buyer.
The only reason not to buy the Hybrid is towing capacity. While it can still tow a decent 4,000 pounds, that’s down from 5,000 pounds for the 3.5 version due to the cooling constraints of the hybrid system. A select few buyers have trailers in the 4,000-5,000-pound range, so towing will be a dealbreaker for very few customers.
Otherwise, the Palisade Hybrid is mostly like the full gas version, though with about two hundred pounds of extra mass due to the battery and motors.
That’s of little concern for the vehicle’s dynamics, as the Palisade is tuned for comfort rather than handling. The suspension absorbs impacts well to keep the ride smooth. While handling is generally well controlled, there is notable body lean in corners, and the steering is slow but direct with decent heft. Hyundai’s e-Motion AWD and e-Handling systems enhance the ride quality and stabilize the handling by selectively applying torque from the motors to smooth out forward-and-back and side-to-side motions.
A Sport drive mode does little to perk up the Palisade’s reserved character. It adds only a little weight to the steering feel and makes the throttle pedal only slightly more aggressive.
Interior space takes a slight hit due to the hybrid battery, which is located under the floor on the passenger side of the second row. It cuts second-row legroom from 43 inches to a still generous 41.6 inches, which is really no penalty at all. The Palisade can seat eight or seven passengers with the available second-row captain’s chairs, and even the third-row will fit a pair of average-size male adults. Cargo space is unaffected, with 19.1 cubic feet behind the third row, 46.3 cubes behind the second row and a very useful 86.7 cubes behind the first row, just like versions with the 3.5-liter V6.
Every Palisade offers an interior that feels a step above the mainstream. The Calligraphy model I’m driving is especially high-end, with Nappa leather upholstery, heated and ventilated first- and second-row seats, power-folding second and third row seats, a rear camera mirror, a built-in dashcam, and a head-up display. Of course, not every Palisade is so well equipped, but the interior is smartly designed and well appointed, with the large screens standard and soft-touch or sturdy surfaces where the driver is likely to touch. If this interior were in an Acura, an Infiniti, or a Lincoln, it would fit right in.
The 2026 Palisade Hybrid starts at $45,760 for a front-wheel-drive SEL model, including a $1,600 destination fee. The SEL Premium runs $53,590, the Limited costs $49,120, and the Calligraphy sells for $58,380. All-wheel drive adds $2,000 at every level, so it is possible to push a Palisade Hybrid past $60,000, as evidenced by my tester’s $60,625 sticker price.
Like the Palisade itself, the hybrid system is a bargain. It pays for itself quickly, enhancing power and fuel economy along the way. It’s a smart part of a vehicle that will serve the family well with generous space, approachable technology, and premium comfort and luxury — all for mainstream prices.
[Images © 2025 Kirk Bell/TTAC.com]
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