SOUTHFIELD, MICHIGAN - 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 pre-eminent 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.”
Monthly sales released earlier this month provided further evidence of Prius’s slide.
Sales dropped 24 percent in the month, bringing the model’s year-to-date decline to 39 percent. The automaker attributed the steep drop-off to a manufacturing changeover for an updated version that began in January.
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, Cameron Diaz and others, 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,” Bob Carter, Toyota Motor Corp.’s executive vice president for U.S. sales, said in an interview. “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 so-called 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 percent of the U.S. market, up from 2.7 percent last year, according to LMC Automotive. Fully electric vehicles will grow to 4.5 percent from 1.2 percent in 2018. IHS Markit predicts hybrids will command 22 percent of U.S. sales by 2025, while wholly battery-powered vehicles will be 7 percent.
“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 $4.00 per gallon, no longer works so well. With U.S. pump prices averaging just $2.82 a gallon (about ¥81 per liter), 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 has not reversed its slide. The automaker says it will take time, following the manufacturing changeover that started this year.
“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’s greatest accomplishment — making hybrid technology mainstream — is now its greatest encumbrance. Toyota is finding customers are more interested in the propulsion systems 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 (about ¥3.07 million), 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.”
But since Ford is getting out of the sedan business in the U.S., it has to figure out how to persuade those Fusion hybrid buyers to choose one of its SUVs or trucks the next time they make a purchase.
Toyota is already seeing that migration to its hybrid SUVs as buyers turn away from the Prius. But De La Garza insists Toyota will not give up on its flagging hybrid flagship.
“We’re committed to Prius,” De La Garza said. “It has been the entry point to the Toyota brand for thousands and thousands of customers. Without Prius over the last 19 years, where would Toyota be?”