We consider the prospects for quantum simulation of condensed matter models exhibiting strong electronphonon coupling using a hybrid platform of trapped laser-cooled ions interacting with an ultracold atomic gas. This system naturally possesses a phonon structure, in contrast to the standard optical lattice scenarios usually employed with ultracold atoms in which the lattice is generated by laser light and thus it remains static. We derive the effective Hamiltonian describing the general system and discuss the arising energy scales, relating the results to commonly employed extended Hubbard-Holstein models. Although for a typical experimentally realistic system the coupling to phonons turns out to be small, we provide the means to enhance its role and reach interesting regimes with competing orders. Extended Lang-Firsov transformation reveals the emergence of phonon-induced long-range interactions between the atoms, which can give rise to both localized and extended bipolaron states with low effective mass, indicating the possibility of fermion pairing.