Tesla's Biggest Sales Threat Could Be Toyota

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Going electric doesn't necessarily mean fully electric.

After struggling for the past few years, Tesla has finally gotten its act together. Tesla Model 3 sedans are being produced to meet demand, a new factory has just got online in Shanghai, China, and a second factory will soon be built near Berlin, Germany. There's also this all-important fact: Tesla is now worth more than GM and Ford combined. Not bad at all for an automaker founded in 2003.

In fact, some auto industry and financial analysts believe Tesla poses an existential threat to mainstream automakers. Whether this is true or not remains to be seen, but there is another automaker that's also currently on an electrified vehicle sales hot streak. That company is Toyota. Forbes recently did some number crunching and the results speak for themselves.

2019-2020 Toyota RAV4 Hybrid Front Angle View Toyota
2019-2020 Toyota RAV4 Hybrid Side View Toyota
2019-2020 Toyota RAV4 Hybrid Rear Angle View Toyota
2019-2020 Toyota RAV4 Hybrid Dashboard Toyota

Last year, sales of Toyota's hybrid vehicles increased by 28.7 percent in the US, while Lexus hybrid sales rose by 43.1 percent. Toyota sold a grand total of 274,550 hybrids in the US in 2019. To compare, Tesla sold about 200,000 vehicles in the US last year.

Remember, Toyota offers non-hybrid versions of its most powerful cars, such as the RAV4 crossover. Customers, however, are opting for the Toyota RAV4 Hybrid in droves. A total of 92,500 RAV4 Hybrids left dealership lots in 2019, a 92.3 percent growth from 2018's total.

All the more impressive is that the RAV4 Hybrid isn't eligible for the $7,500 federal tax credit. To be fair, that tax credit expired for Tesla vehicles on December 31, 2019. As of the first day of this year, it is now zero. Only the Toyota Prius Prime, a plug-in hybrid, is eligible for the federal EV tax credit, though due to its small battery and limited range that credit is for only $4,500.

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2017-2020 Toyota Prius Prime Front Angle View Toyota
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Forbes further estimates that about 95 percent of Toyota's "electrified" US vehicle sales represent regular, non-plug-in hybrids. Impressive, and all the more so because this achievement was done without any government interference/incentives. Another brilliant move on Toyota's part has to do with marketing. You see, Toyota promotes its hybrids as "electrified" vehicles, not pure-electric vehicles. Words matter.

None of this means Toyota has zero intention of launching pure electric vehicles one day (it does). But for the time being, Toyota's strategy in selling "electrified" vehicles, aka hybrids, continues to be masterful.

2020 Toyota Corolla Hybrid Three Quarter Front Right Side View In Motion Toyota
2020 Toyota Corolla Hybrid Left Side View Toyota
2020 Toyota Corolla Hybrid Rear Bumper Toyota
2020 Toyota Corolla Hybrid Dashboard Toyota

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