(Credit: Toyota)
Toyota is leaning into plug-in hybrids (PHEVs) and aims to grow US sales of this category from last year's 2.4% to 20% by 2030.
PHEVs sit between a traditional hybrid and a full EV. They can drive a certain number of miles on pure electricity, typically between 20 and 50, and also have a gas tank for longer trips. The small but mighty battery recharges with an external cord.
"We are going to grow our PHEV volume through the lineup over the next few years,” David Christ, head of the Toyota brand in North America, tells CNBC. "We love the PHEV powertrain."
PHEVs are the least popular form of EV, with sales far below hybrids and full EVs. One main reason is their price. Building a car with two powertrains, a battery, and a gas engine isn't cheap. It could also mean more complex maintenance.
(Credit: US Energy Information Administration)For example, the gas-powered 2025 Kia Sportage starts at $28,690, and the hybrid version is just $100 more at $28,790. However, the plug-in hybrid is over $10,000 more than that at $39,890. Toyota offers a PHEV version of the Prius ($28,350), called the Prius Prime ($33,375). It earned a PCMag Editors' Choice award for its top-tier, 44-mile battery range and relatively affordable starting price of $33,375. The Jeep Wrangler 4xe ($50,695) is another popular PHEV.
But the car industry has not scratched the surface of these vehicles' potential. If they could go, say, 150 miles on pure electricity before switching to gas, they might be a serious competitor to full EVs. Christ tells CNBC the company is "working to...perpetually increase the amount of miles you can drive on EV-only range." It remains to be seen how lofty its ambitions are here.
Toyota has been slower to adopt EVs than other automakers, instead embracing its signature hybrid-forward strategy. It expects hybrids, including PHEVs, to be more than 50% of US sales in 2025. That's up from 46% in 2024 and 30% in 2023, a steady and significant increase. However, the brand is making moves toward strengthening its EV-only lineup. Its first model, the bZ4X, is getting a range boost for 2026 (and a name change to just bZ). Toyota also debuted a brand-new model, the 2026 C-HR compact SUV.
"We've got ICE [internal combustion engine]. We've got hybrid. We got plug-in hybrid. We got EV," Christ says. "So, our chances of being successful in scoring runs is just a lot better than if you’re really overly committed to any one of those power trains."
EV sales grew 11.4% in Q1 2025 in the US, according to Cox Automotive. Toyota's EV sales increased nearly 200% compared to Q1 2024, and that was before it made much-needed improvements to the bZ4X and introduced the C-HR. Next year could be big for its EV business. However, the auto industry overall is struggling to navigate the sharp policy differences between former President Biden and President Trump.
The Department of Transportation is no longer releasing planned funds for a nationwide charging network. One in five CEOs at automotive companies has stepped down in the past year, the Financial Times reports, as the companies struggle to navigate tariffs. Toyota might be in "throw everything at the wall and see what sticks" mode, and perhaps targeting a wealthier customer with the shift to PHEVs.