The Toyota Prius, once revered as the greenest car on the road, has fallen on hard times. Sales are on a six-year losing streak, and now the previously preeminent eco-mobile has fallen behind the Ford Fusion hybrid – a model its parent company plans to pull the plug on in a couple years.
“The Prius is the model that got us to where we are today; it led the charge to electrification, but now it's facing so much competition,” said Jeff Schuster, senior vice president of forecasting for researcher LMC Automotive. “The Fusion is having a little bit of a last hurrah to send it off on a higher note.”
The Prius ceding leadership of the U.S. hybrid market would have been unimaginable in the early part of the century, when Hollywood celebrities including Leonardo DiCaprio and Cameron Diaz embraced the little larva-shaped car, and squadrons of them ferried stars to the Oscars. More than 4.4 million have been sold worldwide since the model's introduction two decades ago.
But sales peaked in the U.S. in 2012, and its descent roughly follows the rise of Tesla Inc.'s sleek fully electric cars including the more mass-market Model 3 sedan. “It's a competitive business,” said Bob Carter, Toyota Motor Corp.'s executive vice president for U.S. sales. “There are some people who trade in their Prius for a Model 3 – I'm well aware of that. But it's still a very small part of the market.”
While Tesla may have usurped the Prius as the it-car among the glitterati, Toyota and Ford Motor Co. are finding new life for hybrid powertrains by installing them in models with broader appeal: sport utility vehicles and trucks.
The RAV4 small SUV is now among Toyota's top-selling hybrids. Ford is rolling out gas-electric versions of its Escape and Explorer sport utility vehicles this year and its top-selling F-150 pickup truck next year. Both companies are pitching these as “no compromise” vehicles. That's automaker-speak for: Don't worry about finding a place to charge your car and waiting while the battery is replenished.
Gas-electric technology remains cheaper than fully electric powertrains. This is especially the case with mild hybrids that give mostly gasoline-powered cars quick electric-power boosts.
“When Prius started, it needed to really change the conversation, but now hybrids are part of the landscape,” said Stephanie Brinley, principal auto analyst for researcher IHS Markit. “The need Prius had to stand out no longer exists. Hybrids are just part of Toyota's lineup, and most models offer them in an affordable way.”
Analysts expect hybrids to outpace electric cars in the U.S. through at least the middle of the next decade. By 2025, hybrids will represent 15% of the U.S. market, up from 2.7% last year, according to LMC Automotive. Fully electric vehicles will grow to 4.5% from 1.2% in 2018. IHS Markit predicts hybrids will command 22% of U.S. sales by 2025, while wholly battery-powered vehicles will be 7%.
“We see continued and even increasing demand for hybrids on our vehicles,” said Mark Grueber, Ford's consumer-marketing manager. “As we see the overall market moving from sedans to utilities and trucks, our focus is going to be on offering hybrids on those body styles.”
The pocketbook pitch that helped Toyota propel sales of the Prius in the early 2000s, as U.S. gas prices soared above $4, no longer works so well. With U.S. pump prices averaging just $2.82 a gallon, fuel economy ranks low on car buyers' list of priorities. So automakers are selling other attributes.
Toyota is hawking a new all-wheel-drive version of the Prius in the snowy Northeast, and is tuning its RAV4 hybrid with extra electric zip to make it more fun to drive. Ford boasts that its hybrid Explorer can tow a boat and that its hybrid F-150 can operate as a mobile generator, powering tools and tailgate parties.
So far, adding all-wheel drive to the Prius hasn't reversed its slide, with sales down 43% this year. The automaker attributes its decline to the manufacturing changeover for an updated version, which began in January.
“It's a very, very slow ramp up,” said Sam De La Garza, Toyota's senior manager of small-car marketing, who plans big promotions for the Prius in the fall. “We need an adequate number of inventory in order to really start to blast the airwaves.”
Perhaps the Prius' greatest accomplishment – making hybrid technology mainstream – is now its greatest encumbrance. Toyota is finding customers are more interested in this propulsion system on its standard models, such as the Corolla and Camry sedans and RAV4 and Highlander SUVs. Buying a hybrid just because it's a hybrid is no longer novel.
“A hybrid doesn't have to look like a science experiment anymore,” Schuster said. “And to an extent, the Prius still does.”
As the gas-electric market has matured, price has become a selling point. The new Escape hybrid starts at $28,255, just $700 above the Fusion hybrid.
And Ford is now offering lease deals on the Fusion that actually make it cheaper than the gasoline version: $223 a month, with $3,700 down, while the gas-powered equivalent is $314 a month with $3,500 down, according to LMC Automotive.
Passing the Prius has been “something to be proud of,” Ford's Grueber said. “Our customers don't have to get a vehicle that looks more funky or unique; they're going to get a beautiful sedan with great value.”
Prius owners, whom Jason Campos calls “Prius people,” are strikingly loyal to the Toyota model, and the dealership where he works hasn't seen a sales decline.
“Prius is one of those (cars) that has a reputation bar none and when somebody owns a Prius, it is likely they will buy another one when their Prius goes,” said Campos, a business manager at Evans Toyota. “Nationally, there may be a decline, but here in the Midwest, we've seen a steady flow of hybrid and Prius-specific purchases.”
The dealership has a Prius retention rate of 80%, Campos said. But regular and hybrid Toyota RAV4 models constitute about 30% to 35% of the dealership's 100 monthly sales.
Toyota of Warsaw has seen the same trend. The dealership averages 20 RAV4 hybrid sales a month, and the SUV is one of its biggest sellers, along with the Camry, said Caleb Niemi, marketing specialist.
“RAV4 hybrids get crazy good gas mileage and you can have the sporty look while still saving money on gas,” Niemi said. But “people are still wanting and buying (the Prius), just not at the same level as 2012 or 2014, when they were the top things to buy.”
– Alaina Stellwagen, The Journal Gazette