Toyota has taken a slower path to electrification than its competitors, choosing instead to prioritize hybrid and hydrogen-fueled vehicles. Although this tendency won the ire of many in the industry, a recent explosion of demand within the hybrid segment has led many, including automakers who once planned to abandon the internal combustion engine (ICE) within the decade, to reconsider Toyota’s approach and whether it may provide a more sustainable path toward addressing carbon emissions.
On this special episode of Inside Automotive, host Jim Fitzpatrick is joined by Jack Hollis, executive vice president of sales at Toyota North America and president of Toyota Motor Sales. Hollis has played an integral role within the automaker since 1992, helping steer the brand through the many headwinds experienced by the automotive industry over the last 32 years. Now, he shares his perspective on hybrids and electrification to give dealers a detailed, realistic view of the car market’s true future.
Key Takeaway
1. The outpouring of interest in hybrid vehicles has been immense. Demand has outpaced production to such an extreme that no model within Toyota’s hybrid catalog presently has more than four days of supply. Toyota’s luxury subsidiary, Lexus, is only slightly ahead, with Hollis estimating a 12-day supply across its hybrid lineup. For comparison, the U.S. car industry’s average days’ supply at the start of February was 80, according to Cox Automotive.
2. Compared to automakers who plan to become electric vehicle-only manufacturers within the next decade, Toyota has taken a multi-platform approach to carbon reduction, one reliant on a multitude of low or zero-emission vehicles, including hybrids, rather than a single powertrain. From Hollis’ perspective, the car industry should use a customer-first strategy, one that connects buyers with options that work best for them, rather than limiting choice to a single ICE alternative.
3. Toyota recently cut the hydrogen-powered Mirai’s price tag shortly after Shell announced plans to close its hydrogen fuel stations in California. Hollis admits that the complicated infrastructure required to support hydrogen vehicles poses challenges to scaling production. Despite this, Toyota still believes that hydrogen is a viable alternative to gasoline due to its efficiency, especially where heavy vehicles are concerned.
4. New vehicle prices have risen rapidly since the COVID-19 pandemic. Even in 2024, car buyers are still paying many thousands more than they were in 2019, despite the primary drivers of price increases, such as inventory shortages, improving. As it stands today, many consumers are effectively priced out of the market. Hollis attributes the industry’s ongoing affordability crisis to electric vehicle production, which remains more expensive than ICE manufacturing. Adopting a more moderate approach to carbon reduction that makes space for hybrids, he argues, would reduce pressure on the consumer.
5. Hollis explains the 1:6:90 rule, which submits that a single battery electric vehicle contains enough precious minerals to build six plug-in hybrids or 90 hybrids. According to the rule, hybrids are the far more efficient option in terms of material consumption.
6. Hollis feels that full-scale electrification of the automotive industry is an admirable long-term goal. Reaching that target, however, will take many years and extensive effort. “We will never get to 100% until all these factors come into play, and we just don’t see a timeline for that right now,” he comments.
7. Jack Hollis will be a featured speaker at the New York Automotive Forum hosted by J.D. Power and the National Automobile Dealers Association during the 2024 New York International Auto Show on March 26. Register for the event at the link here.
"For the North American consumer...my hope is we spend a lot of time listening to make it so we can put us on the path to really solve a lot of these issues." — Jack Hollis
