No Prices or Production Targets Set
Toyota has not released the prices for either the Lexus RX 400h or the Highlander Hybrid, nor is the company saying publicly what its production targets are.
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| While Toyota believes the demand for the Highlander and RX 400h hybrids will be strong, they haven't yet released production targets. (Photo: Toyota Canada) |
"We think the demand (for the Highlander Hybrid) will be strong," noted Michaels.
Yet, the prices for hybrid vehicles are substantially more expensive than conventionally equipped vehicles--about USD $4,000-$6,000, according to analyst David Cole, president, Center for Automotive Research of Ann Arbor, Mich.
"There are two issues that hybrids face as you look at trying to get higher volume production and achieve economies of scale," Cole said. "First, there is duality in the system--you still have an internal combustion engine, but then you have the electric drivetrain too. There are more parts in hybrid vehicles; more sophisticated parts in terms of the electronics and the hardware."
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| If Prius sales are any indication, Toyota shouldn't have any problems finding a market for its new hybrid SUVs. (Photo: Trevor Hofmann, Canadian Auto Press) |
Unless fuel prices increase substantially in North America, as a result of oil shortages or taxation, the buyer may not get the benefit in fuel savings that outweighs the additional cost per vehicle, he said. While a company can always charge a bit more for the uniqueness of a product and "early adopters," people who are willing to buy the latest technology at high costs just when it comes out, will want to purchase hybrids, you can't base your business entirely on selling to these people.
"Ultimately, you can't sustain the business unless it's cost effective to do it," Cole said.
Only time will tell if Toyota's bold venture into HEVs will pay off over the long term, but if its Prius sales are any indication success should be in hand.