Toyota, the Japanese company that currently sells just one all-electric vehicle in the United States–the bZ4X crossover–is known in hardline electric car enthusiast groups as being a laggard in transitioning to a fully electric portfolio.
The Japanese automaker even went on record through the voice of its main science man Gill Pratt last year, who said that EV-only extremists are wrong and that in the long run, a diversified powertrain approach will win–both for the environment and for the customers.
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Toyota's bet on hybrids and plug-in hybrids might pay off
Toyota has long touted that its diversified powertrain approach is the best solution both for the environment and its customers. And while the EV market experiences a slowdown in growth, Toyota's strategy might pay off, at least when it comes to sales.
His reasoning was that most people usually don’t need the massive batteries that are fitted to long-range EVs. As such, resources are wasted on batteries that aren’t used at their full potential. The solution, in Toyota’s eyes? Spread the same materials that would go into a big battery across multiple, smaller batteries that are part of hybrid or plug-in hybrid setups.
Toyota has since changed its stance on EVs and is planning a full lineup of next-gen vehicles that could offer upwards of 621 miles of range on a full charge by the end of this decade. But even with a renewed appetite for all-electric cars, Toyota isn’t giving up on its diversified powertrain approach, which might actually give it the upper hand in terms of sales as the growth in the EV-only segment slows, at least in the short term.
The reason for this multipronged strategy, as the Nippon manufacturer calls it, boils down to the customer. In short, people don’t want EVs any more than they want plug-in hybrids, hydrogen-powered cars, and even gasoline-only vehicles.
That’s what Toyota North America’s head of sales, Jack Hollis, said during the Automotive News Retail Forum: NADA last week. “Our strategy is based on what dealers are telling us the customer wants,” Hollis said. “Our dealers are not telling us that the customer wants EVs more than other things. They’re telling us they want EVs as a choice. They want plug-in hybrids as a choice. They want hydrogen as a choice. In fact, they would like to have gas engines as [as a choice] but also have cleaner-burning fuels,” Toyota’s executive vice president of sales added.
Furthermore, through the voice of Jack Hollis, Toyota is concerned that regulation which will require a major shift toward all-electric vehicles by the end of the decade might not work out as lawmakers intended because if customers won’t be more willing to choose a battery-powered car instead of a combustion one.
“Regulations are way out in front of where the customer is at,” Hollis said. “That never works well for any industry. The customers have to lead, the regulations have to be able to protect them. Not the other way around.”
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But aren’t these regulations meant exactly for the customers, in the sense that they’ll be able to breathe cleaner air when they step outside? And shouldn’t manufacturers and dealers step up their game when it comes to educating their customers about the benefits of getting an all-electric car as opposed to opting for the default, gas-powered solution?
These are all valid questions but for the consumer who doesn’t have $40,000 to spend on a new EV, they get relegated to the bottom of the priorities list. And not everybody wants a Tesla, for various reasons, even if the Model 3 and Model Y are among the most affordable EVs in the United States now.
So it makes sense that shoppers who want a new car but can’t afford an EV would go for a cheaper hybrid or plug-in hybrid. The Tesla Model 3 starts at $38,990 without the destination charge. The Toyota Corolla hybrid? $23,500. The bigger Prius goes from $27,950.
And it’s this price gap that might help Toyota keep its crown as the best-selling car manufacturer in the world as the EV market experiences a slowdown in growth. The same Jack Hollis said that the percentage of hybrid and plug-in hybrid vehicles sold by Toyota and Lexus in the U.S. would continue to rise above the record-high 29% it recorded last year.
