Hybrids: Toyota's Current Success

author: FutureCar Staff    

According to a recent report by The Wall Street Journal, Toyota's approach to electric vehicles (EVs) is proving to be successful, despite Elon Musk and Tesla's full commitment to EVs. While Tesla took a more aggressive approach to its EV rollout, Toyota's measured approach is now giving them the opportunity to say, "I told you so."

In the United States, hybrid cars have been overshadowed by traditional combustion engine vehicles and EVs. However, with the introduction of Tesla's Model Y, hybrids were pushed even further down the line. As a result, hybrid sales in the US declined last year, while EV sales increased by 65%, according to Kelly Blue Book.

However, the current economic climate, characterized by stubborn inflation and high-interest rates, is causing potential buyers to reconsider their shift away from gas guzzlers. The average cost of an EV is around $53,450, which is higher than the desired sub-$50,000 price range for many buyers. This has led to a re-focus on hybrids, as seen with Ford and General Motors, who initially planned major EV pushes but had to retreat due to waning demand.

Despite the recession watch in the US, hybrids are now gaining momentum over EVs. Tesla has already reduced prices on its Model Y and Model 3 multiple times this year to compete with Ford's price cuts on its F-150 Lightning electric truck. While Tesla's profitability declined by 44% in the third quarter, it seems that Musk is willing to sacrifice profit for the sake of sales growth.

On the other hand, Toyota Chairman Akio Toyoda recognized the potential for EVs but also diversified the company's investments across hybrids, EVs, and other technologies. As a result, Toyota's Q3 profit more than doubled compared to the previous year, driven by strong global demand for hybrids. Toyota experienced a 41% increase in sales of conventional hybrids and nearly a 90% increase in sales of plug-in hybrids.

In terms of the types of vehicles on the road, the majority are still gas-powered and often larger in size. Sedans accounted for only 21% of US cars on the road in 2022, while SUVs reached 55% and trucks grew to 20%, according to the Associated Press. Unfortunately, this trend has had negative environmental impacts. A report from the Global Fuel Economy Initiative suggests that if people weren't so obsessed with SUVs, the environmental impact of cars could have been reduced by 30% over the past decade. In the automotive industry, bigger hasn't necessarily been better for the planet.

FutureCar Staff