Toyota Shifts Focus to Hybrid-Only Models Amid Slowing EV Demand

Toyota, historically slower than other legacy automakers in developing electric vehicles (EVs), is now betting big on hybrid-only models as demand for EVs begins to cool. Nearly three decades after launching the pioneering Prius, Toyota is looking to convert most, if not all, of its Toyota and Lexus lineup to hybrid-only models, according to two Toyota executives who spoke to Reuters.

Toyota’s focus on hybrids rather than fully electric vehicles is part of the company’s broader strategy to challenge the prevailing industry view that the future of all cars is electric. Toyota Chairman Akio Toyoda has stated that he believes EVs will ultimately account for only about 30% of the global market. Instead, the automaker is pursuing a “multi-pathway” strategy that includes hybrids, hydrogen fuel-cell vehicles, green fuels, and potentially other emerging technologies.

David Christ, head of sales and marketing for Toyota in North America, explained that the company plans to evaluate, model by model, whether a shift to hybrid-only makes sense, with some decisions potentially being made as soon as the next redesign.

The upcoming overhaul of the RAV4 for the 2026 model year may mark the start of this shift. The RAV4, already America’s best-selling SUV with hybrid variants making up about half of its sales, could see its gasoline-only version phased out in the North American market.

Toyota has already moved in this direction with other models, such as the 2025 Camry, which is now offered only as a hybrid, and the Land Cruiser and Sienna minivan, which are also hybrid-only. Many future hybrid models are expected to come as plug-in hybrids with larger batteries.

This strategy is designed to strengthen Toyota’s dominant position in the hybrid market, which is experiencing renewed interest as EV demand slows due to high prices and charging infrastructure challenges. Hybrids, which don’t require charging and can seamlessly switch between gasoline and electric power, offer a familiar and practical alternative for many consumers.

By focusing on hybrids, Toyota also gains an advantage in meeting increasingly stringent U.S. carbon-emission regulations. The company’s booming hybrid sales could help it avoid billions of dollars in fines and give it more time to develop EVs and other zero-emission vehicles.

While Toyota has not set a specific deadline for an all-hybrid lineup, the company aims to have 30% of its global fleet converted to EVs by 2030, with a focus on fully electric versions of its top-selling models.

The hybrid push is supported by decades of investment in making the technology more cost-effective and efficient. Today’s hybrids often add less than $2,000 to a car’s price and can offer more power than their gasoline-only counterparts. As a result, hybrids have moved from a niche market to capturing 11.3% of U.S. sales, with Toyota’s hybrid sales surging to 37% of its total sales as of June.

Looking ahead, Toyota plans to leverage its new battery plant in North Carolina to expand its plug-in hybrid offerings, taking advantage of U.S. emissions rules that favor these vehicles. This strategy allows Toyota to buy time and flexibility as it continues to develop next-generation technologies, including EVs.