CARMEL VALLEY, California — Toyota is from Mars, Detroit automakers are from Venus.
Toyota, America's best-selling brand in 2021, makes rugged trucks in Texas for American buyers. But it has always pursued a more retail-focused strategy than Motor City truckmakers who split their attention between retail and commercial fleet buyers.
As the federal government tries to force automakers to make EVs over the next decade, that truck strategy is diverging even further as the 2022 Toyota Tundra sidesteps fully electric trucks for retail buyer-preferred hybrid powertrains while General Motors Co. and Ford Motor Co. build battery-powered Silverado EV and F-150 Lightning pickups for their retail and commercial fleet customers.
The Toyota and the Detroit Three plans are case studies in how big automakers plan to keep both their customer and government constituencies happy. Where Toyota Motor Corp. sees volume sales — and resulting regulatory compliance — in its hybrid SUV and sedan offerings, GM and Ford see customer volume in their fleet truck sales.
"Our focus was towing — the vast majority of Tundra owners tow," said Toyota marketing manager Joe Moses at the Tundra i-Force MAX hybrid's media test in California. "So the priority was torque. We have a nice place with active recreation consumers. They're out towing things, riding motorcycles, on ATVs, going fishing. We found that's the place where we've been successful, and that's where we'll continue to play."
As with buyers of its best-selling RAV4 compact SUV and Camry sedan hybrids, Toyota found its retail customers didn't want fully electric trucks, which, despite their impressive low-end torque, have poor range — especially when towing. Real-world tests by TFLTrucks.com have found that EVs lose about 70% of range when towing.
With a 32.2-gallon fuel tank and EPA highway rating of 22 mpg, the Tundra has a range of just over 700 miles. By comparison, the F-150 Lightning's range tops out at 300 miles.
Toyota expects 25% of its pickup sales to be hybrid — similar to the percentage of electrified vehicle sales (gas-hybrid, plug-in and hydrogen fuel cell) in 2021 for the rest of its model lineup, led by the RAV4 and Camry. Toyota sold 583,697 vehicles in 2021 equipped with a battery of some kind.
Those sales, analysts say, also will help Toyota meet its mpg regulatory compliance goals as the EPA ratchets up fuel economy standards in coming years.
"Toyota is smart to do what they are doing," iSeeCars.com auto analyst Karl Brauer said. "Toyota is focused on making vehicles that will sell to today's customers, while watching how EV demand develops. Maybe they are wrong, but they haven't gotten much wrong in the last 50 years and they just sold more vehicles in the U.S. in 2021 than anyone else."
GM and Ford, by contrast, are making bold bets that consumers will make a quick shift to EVs. GM says that its lineup will be exclusively EV by 2035 and has abandoned hybrid vehicles to make big investments in all-electric skateboard chassis. Ford is investing heavily in EVs as well but is also bullish on gas-hybrids with its Escape Hybrid and Lincoln Corsair and Aviator plug-in models.
Like Toyota, say analysts, the Detroit automakers are playing to their strength: truck market dominance. Together, they hold more than 90% of the U.S. full-size pickup market.
While GM and Ford have struggled to sell hybrids on the same scale as their Japanese rival, they have a stranglehold on the U.S. commercial fleet pickup and delivery van markets. The Detroit manufacturers see big opportunities for EVs there.
At her recent address to the Consumer Electronics Show touting the General's zero-emission future, CEO Mary Barra highlighted demand from corporate customers for electric BrightDrop vans. Walmart has signed an agreement with the Detroit maker to buy 5,000 BrightDrop vans, while FedEx (BrightDrop's first customer) is already taking delivery of 500 vehicles with more expected to come.
"It's sexy to talk about retail electric vehicles, but there is actually so much opportunity in the fleet market," said Ed Kim, industry analyst with Auto Pacific. "Fleet vehicles can run fixed routes of 150 miles on a smaller, cheaper battery. Then they can charge overnight on cheaper utility rates. With Congress's proposed $12,500 in incentives, a Ford Lightning EV, for example, can make up its purchase premium over a gas-powered F-150 of about $10,000."
Ford is bullish on selling the Lightning to fleet consumers while GM sees its BrightDrop van demand translating to the pickup market. Indeed, the fleet-focused Work Truck version of the Silverado EV will beat the retail version to market in early 2023.
"That's the beauty of pickups," continued Kim. "They can sell a variety of flavors to fleet and high-end retail customers. Chevrolet is launching a work truck, but also a loaded, $105,000 Silverado EV."
The Detroit Three will continue to build diesel pickups for the heavy and light-duty markets given their superior towing capability and mpg numbers. But heavy-duty trucks will soon lose their federal exemption from mpg regulations — and will become tougher to make just as diesels have become expensive to engineer in the light-duty market.
"I wanted a diesel engine (for the Tundra). We're using a brand-new diesel engine overseas; it's fabulous," said Tundra chief engineer Mike Swears in California. "But diesels in North America are very difficult to certify now and demand for diesel is going down. The (emissions) after-treatment system is about $3,000 added to the cost of the engine. So in comes the hybrid."
Chevy, Ford and Ram light-duty diesels get 20% better fuel efficiency than Toyota's Tundra. But given the regulatory climate, Toyota's Moses says the hybrid's dexterity makes it attractive to truck owners just as hybrids have sold well to SUV and sedan owners.
"There are things about diesel that we wanted to make sure that we delivered in our" hybrid, said the marketing chief. "The torque and power is the most important thing. As we evaluated the different options, what we were able to do with this new hybrid system was deliver on more horsepower, more torque and more mpg off of the outgoing V-8 engine."
Whatever their electrification strategy, the American and Japanese pickups will cost you. Trucks have become the new luxury vehicles with stratospheric sticker prices. Top Lightning and Silverado EV trims will push $100K. With the Tundra Hybrid, Toyota is introducing a new Capstone model starting at 75 grand.
"We've continued to see the consumer transaction price in full-size pickups go up. Some of it is around the towing technology, a lot of it the advancement in tech," Moses said. "Consumers aren't just looking at a basic truck — (they) want a truck that can do everything, but with all the amenities, too."
And will Toyota develop an electric pickup?
"It goes back to the priority about towing," he said. "We'll continue to watch the market."
