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A few years ago, while most global automakers were drawing up elaborate electrification plans, Toyota stood out for its reticence to jump on the EV bandwagon, even managing to get a vindication of sorts recently as the EV market tanked while Toyota and its dealers took a hit by capturing a big piece of the total gross margin of new cars in the U.S. This hybrid-first strategy, however, comes at a huge environmental cost.
Toyota remains reluctant to embrace electric vehicles
In the quarter ended June 30, 2024, approximately 43% of Toyota’s total sales were from its electrified fleet, with battery electric vehicles (BEVs) accounting for just 4% of that group.
In fact, Toyota only introduced two all-electric models in the US so far, including the battery electric vehicle bZ4X. Instead, the Japanese giant continues to rely on its growing portfolio of hybrids and plug-in hybrid models to maintain sales momentum.
At a time when even Tesla is struggling with a persistent malaise related to demand, which is resulting in a free fall automatic gross margin (ex-regulatory credits) In the recently concluded quarter, Toyota’s hybrid-first strategy continues to act as an insulating force.
Hybrids have up to 4.9 times more lifetime emissions compared to battery electric vehicles
This brings us to the heart of the matter. According to a new to study According to the International Council on Clean Transportation (ICCT), lifecycle greenhouse gas (GHG) emissions for 2024 BEV sedans in the U.S. are 66% to 70% lower than their ICE counterparts. For 2024 BEV SUVs, these lifecycle emissions are even lower, at around 71% to 74%.
The report notes:
“GHG emissions from 2024 model year PHEVs (both sedans and SUVs) are approximately 2x higher over their lifetime compared to BEVs powered by the average grid mix.”
In a critical view, the ICCT study states:
“Notably, compared to BEVs powered by 100% renewable electricity, this difference increases to 4.9 times more GHG emissions for HEV SUVs and 6.7 times more for conventional ICE SUVs.”
This means that hybrid SUVs produce ~5x the lifecycle GHG emissions of a comparable BEV SUV powered by renewable energy. Overall, hybrid vehicles are about ~2x more polluting to the environment than their BEV counterparts.
While Toyota’s hybrid-first strategy makes economic sense at the moment, this study shows that its environmental footprint is far worse than a full electrification strategy.