Toyota bets big on hybrid-only models as EV demand slows

Austin (Reuters): Toyota may be one of the slowest legacy automakers to develop electric vehicles but it could be the first to jettison cars powered only by gasoline.

Almost three decades after launching the Prius, its pioneering gasoline-electric hybrid, Toyota is moving to convert most, and eventually maybe all, of its Toyota and Lexus line-up to hybrid-only models, two Toyota executives told Reuters.

Toyota's stubborn focus on hybrids over EVs is part of a broader challenge by the world's biggest automaker to the prevailing industry and regulatory orthodoxy that all cars will be electric in the near future.

Toyota Chairman Akio Toyoda said in January that he believed the global share of EVs would top out at just 30%. The Japanese automaker instead touts a "multi-pathway" strategy that includes EVs along with hybrids, hydrogen fuel-cell vehicles, green fuels and, potentially, other technologies yet to emerge.

"Going forward, we plan to evaluate, carline by carline, whether going all-hybrid makes sense," David Christ, head of sales and marketing for Toyota in North America, told Reuters.

Those evaluations will come with every model redesign, if not sooner.

That includes the pending overhaul of the RAV4 for the 2026 model year. The RAV4, America's best-selling SUV, already has hybrid variants that account for about half of sales.

Two people familiar with Toyota's product planning discussions said the automaker is highly likely to ditch the gasoline-only version for the North American market, but hasn't made a final call.

The automaker has already stopped offering a gasoline-only version of its Camry, America's best-selling sedan, for the 2025 model year while its rugged Land Cruiser and Sienna minivan, for example, also now come only as hybrids.

Many of the hybrid-only models will also likely come as a plug-in hybrid with a bigger battery, according to the two people, who declined to be named.

Toyota's effort to convert all or almost all of its North American line-up to hybrid-only vehicles has not previously been reported.

NEW EMISSIONS RULES

The automaker's hybrid strategy aims to solidify its already dominant position in a part of the market that has found a new lease on life as demand for EVs slows, partly due to their high prices and charging hassles.

Toyota's hybrids don't need charging and switch seamlessly between gasoline and electric power, or use both at once, depending on driving conditions. Its plug-in hybrids can be charged and typically travel about 40 miles (64 km) on battery power, like an EV, before their gasoline engines are required.

Stripping out two EVs and a fuel-cell car on sale in North America, there are currently 31 other Toyota and Lexus models. Eight are already hybrid-only and eight are available in gasoline versions only.

The hybrid strategy will also give Toyota unique advantages in complying with increasingly tough U.S. carbon-emissions restrictions, Toyota executives and industry experts said.

As the U.S. lowers pollution limits under regulations announced in March, Toyota's booming hybrid sales could help the automaker save billions of dollars in regulatory fines and costs while buying Toyota more time to develop EVs or other zero-emission vehicles.

The new emissions standards, opens new tab take effect from the 2027 model year and run through 2032.

Christ said Toyota hasn't set a deadline for producing an all-hybrid lineup, and that certain models, such as pickups and economy cars, may take longer because of consumer price sensitivity on entry-level versions.

In addition to hybrids, Toyota aims to convert about 30% of its global fleet to EVs by 2030 by focusing on a small number of fully electric versions of existing top-selling models, according to two sources familiar with Toyota's product planning.

Toyota has previously announced plans to invest $35 billion in new batteries and EV platforms by then.

In May, the automaker showcased a small prototype combustion engine it said could one day run on biofuels or low-carbon synthetic gasoline and could be paired with hybrid drivetrains.

But the main point of scaling down the engine size, according to one of the two sources familiar with Toyota's product planning, was to allow it to develop hybrids in a different way. Instead of starting with a gasoline car and adding a battery, it plans to start with its new EV platform and add the tiny engines to create a more efficient hybrid option.

According to one of the two sources, the first hybrid based on the new platform and engine will likely be a Corolla plug-in hybrid, which will likely hit the market in China in 2026 and the United States in 2027.