Hybrid-first policy to aid Toyota during Trump’s 2nd term: Report

Hybrid vehicles offer the advantages of fuel savings and reduced "range anxiety" compared to pure EVs, and they are more profitable for automakers.

Despite ongoing challenges, Toyota will likely be a gainer in Donald Trump's second term as US President due to the world’s largest carmaker’s hybrid-first vehicle policy rather than an EV-first approach, The Wall Street Journal reported.

Lower sales and rising costs have hit margins at the Japanese automaker, which reported a 20 percent year-over-year drop in operating profit for the quarter ended September, facing challenges in all of its largest markets. A scandal at home about faking vehicle safety certifications that led to production suspensions on some models, and product recalls at its largest market, the US, has weighed further. These factors led to Toyota selling around 4 percent fewer cars last quarter than a year earlier.

China also continues to be a headache for Toyota, similar to the fate of many foreign carmakers in the country as domestic rivals speed ahead. Toyota’s car sales volume there dropped nearly 10 percent year-over-year in the quarter.

Despite all these setbacks, Toyota's hybrid vehicle strategy is proving successful, the report said. The company has expanded its hybrid offerings beyond the Prius, including popular models like the RAV4 and Camry. As a result, hybrids now account for 44 percent of Toyota's global vehicle sales, up from 24 percent four years ago. This success has been especially pronounced in the US, where interest in hybrids has surged as demand for full electric vehicles (EVs) has cooled.

The article suggests that Toyota's cautious approach to fully electric vehicles, focusing on hybrids instead, is a smart bet. Hybrid vehicles offer the advantages of fuel savings and reduced "range anxiety" compared to pure EVs, and they are more profitable for automakers.

According to the report, this strategy positions Toyota well, especially if there is less emphasis on promoting EVs in a potential second Trump presidency, where tariffs on Japanese imports could pose challenges, but Toyota’s US-based production could mitigate some of the risk.