Flagship green car Toyota Prius approaching redesign and diminishing influence in market

Toyota Prius family salesThe Toyota Prius has been a flagship for Toyota Motor Co. for about 15 years – and the automaker is counting on the redesigned 2016 model to restore its image as the leading green car on the market. Spy shots show that its body style is changing and will be more in-line with the revamped 2016 Chevrolet Volt; and the mileage will be getting better – sources say the standard Prius hatchback (sometimes called the “Liftback”) will go from a 50 mpg rating to 54 mpg on the window sticker. Toyota faces steep challenges in getting Prius sales back toward upward trending with gasoline prices being where they are; and stiff competition coming from small, fuel-efficient cars and competing alternative technologies.

If you study the chart above with the entire Prius model lineup, you’ll see sales dropping for all the variations – with the big one being the Prius Plug-in Hybrid dropping about 70% from a year ago and the mothership model down about 15%. Nationwide, Prius sales fell 12% last year to 207,372 units sold. The Prius had been the No. 1 new vehicle model sold in California during 2012 and 2013, but that model was beaten last year by the Honda Accord.


Toyota seems to have lost its commitment to assembling and delivering its Prius Plug-in Hybrid to its dealer network. Pricing is higher than the Prius and Prius C, even with the $2,500 federal tax credit and state incentives on the plug-in version, which makes it more challenging to sell; but a few years ago, the Prius Plug-in Hybrid was doing very well in new vehicle sales, sometimes selling more than the Chevrolet Volt. Less than 500 units (464) were sold in June; for comparison, in March 2015, 473 units were sold and in June 2014, 1,571 units were sold in the U.S. Toyota decided to cease production of the Plug-In Hybrid in June; the company said it was working hard at developing the next generation of the Prius Plug-in Hybrid and will be sharing details on the launch date. The recent decision to extend the launch of the Prius Liftback, C, and V, could push off the next generation Plug-in Hybrid as far as the second half of 2016 as a 2017 model.


It’s very typical to see fleet applications of the standard Prius model these days in taxis and in company cars. Toyota hasn’t released data on its fleet sales, but it does offer fleet incentives – for 2016 models, there will be a $500 incentive for the hybrid lineup (Prius, Prius C, and Prius V) versus a $1,000 incentive for the popular Toyota Camry sedan. The Prius Liftback comes in five levels with Two through Five being priced at a bit over $25,000 to just over $30,100. The level One is priced $1,000 less than the Two trim level and is reserved for fleet customers.


For Toyota Motor Sales, Toyota’s US division, seeing a lot of Prius taxis being used in markets like New York and Los Angeles isn’t very appealing. “I hate to see Toyotas in taxi fleets but (it) does create an image for us,” said CEO Jim Lentz in 2013. Taxi operators and drivers like the fuel efficiency and ample passenger room in the backseat and trunk area. The Prius is a very good car to drive on crowded city streets, being small and nimble with enough torque to cut through traffic openings.


A Toyota dealer in Texas thinks the Prius makes a lot of sense for Uber drivers to save money on their passenger trips. Toyota of Plano is offering hefty discounts and targeted online advertising to Uber drivers – and now is selling about 200 cars per year to these drivers, or 6% if its 3,200 cars sold per year.


The dealership likes it very much as a rolling advertisement for the Prius – as drivers pick up passengers and tell them how much they love their Prius. The dealership doesn’t mind offering great rebate incentives to Uber drivers. “If I lose $1,000 to sell a car and [an Uber driver] sends me three customers,” general manager Rusty Gentry said, “I still come out ahead.”


The future of hybrids has been called into question with moderate gas prices and fuel efficient cars and crossovers becoming more popular. Nissan has killed the hybrid version of its Pathfinder crossover as consumers look increasingly to other Nissan products. Hybrid sales numbers have been declining as a share of nationwide new vehicle sales, especially after gasoline prices started dropping in the summer of 2014. Toyota continues to try out a broad spectrum of technologies and vehicle categories to secure its spot as the No. 1 automaker in global sales – and as an innovator embracing new technologies. Lately, the Toyota Mirai fuel cell vehicle has become Toyota’s favorite alternative technology vehicle to show off.

State of the Union: Where do federal fuel economy and greenhouse gas emissions targets actually stand?

Federal fuel economy standardsFederal fuel economy and greenhouse gas emissions standards for new vehicles sold have had a huge impact on light duty passenger and medium-to-heavy duty vehicles being built and sold in the US. Consumer Federation of America (CFA) is hopeful that the 54.5 mpg by 2025 target for passenger vehicles can be met, though some automakers are lagging way behind their peers. A new study by CFA calls out a few of the automakers for dragging down the numbers. The dramatic drop in petroleum fuel prices over the past year is also having its impact on new vehicle sales numbers with truck and SUV sales climbing. Where does all of it stand in terms of hitting these ambitious federal corporate average fuel economy (CAFE) standards?

Analysis by the CFA states that from 2014 to 2015, the percent of vehicles with a US Environmental Protection Agency (EPA) fuel economy rating of at least 23 mpg increased from 50.5% to 52%; the percent of vehicles with fuel economy at or below 16 mpg declined from 8.5% to 6.1%. CFA says that some automakers are performing very well on improving fuel economy (Volvo, Honda, and Mercedes-Benz), while other automakers are doing poorly (Kia, Subaru, and General Motors) based on making progress in increasing the number of models they’re making and selling that comply with the year’s CAFE standard.

In reviewing 2015 models, CFA found that the biggest jump was in the 27-30 mpg category, which improved from 14.8% to 16.5% in 2015. The Ford F-150, which had a 2014 fuel economy range of 13-19 mpg, jumped to a range of 17-22 mpg in 2015 through switching to a lighter aluminum body. “There is no doubt that since the announcement of higher CAFE standards, many car companies have improved their selection of vehicles with greater fuel efficiency, proving that 54.5 mpg by 2025 is achievable. The fact that the number of cars getting over 23 mpg has risen by almost 40 percent in the last ten years is strong evidence that reaching the goal of 54.5 mpg by 2025 is indeed attainable,” said Jack Gillis, author of The Car Book and automotive expert for CFA.

Automakers are focusing more on increasing sales of light duty truck and SUVS lately. CFA found that the percentage of CAFE-compliant light trucks and SUVS declined significantly in 2015, bringing the percentage of CAFE-compliant from 66% to 44%. The University of Michigan’s Transportation Research Institute that the actual fuel economy of new vehicles sold in the US in April 2015 was 25.2 mpg, versus 25.4 mpg in March 2015 and 25.3 mpg in April 2014. The high point was reached in August 2015 at 25.8 mpg. Gasoline and diesel prices had begun their spike by that point and took their toll, with truck and SUV sales increasing along with their used vehicle values.

Margo Oge, former director of EPA’s Office of Transportation and Air Quality and author of “Driving the Future: Combating Change with Cleaner, Smarter Cars,” along with Mary Nichols, chairwoman of the California Air Resources Board, earlier this month wrote a guest column for The Detroit News calling on the federal government and automakers to avoid weakening the federal standards.

“The recent dip in gas prices has led some to suggest that automakers should shift back to supplying more of the large and less fuel efficient cars and trucks that were popular with consumers a decade ago…… This is exactly the wrong time to take our foot off the accelerator of advancing technology. It is time to embrace the transformation of the automobile and harness the environmental and economic benefits of the industry’s shift towards safer, greener, and ‘connected’ vehicles,” they wrote.

Sergio Marchionne, the CEO at Fiat Chrysler, raised the issue in January when he said that while automakers could reach the 54.5 mpg target, he doesn’t think that year is a realistic timetable to accomplish it. “The question is whether 2025 is a realistic date for which to achieve it,” he said.

Other industry executives have joined in, citing cheap gas prices, mediocre support of alternatively fueled vehicles and the technology limitations as obstacles that make a fleet average of 54.5 mpg unattainable. On the commercial vehicle side, truck makers are anxiously awaiting phase two of federal standards for heavy-duty vehicle fuel economy and emissions. The proposal is expected to be published in June, three months later than its initial target.

Plug-in electric vehicles have played a “behind the scenes” role in automakers reaching fuel economy targets, as they’ve achieved credits in the federal program for selling more zero-emissions vehicles. President Barack Obama has relaxed his ambitious target of seeing one million plug-in electric vehicles on US roads by 2015. In March, the president scaled back that goal originally laid out in 2009; federal fleet purchase goals were scaled back in March, too, according to a Bloomberg article. Obama cut government purchase goals about two months ago, but said the government will continue to work to improve fuel economy into the future. “Presently, commercially available electric and hybrid vehicles do not align with the most purchased vehicle segments for federal fleets” which are trucks, GSA said in a statement. “They also come with a higher acquisition cost compared to conventional vehicles.”

This Week’s Top 10: Gasoline prices are coming down and what it means, CALSTART announces keynote speakers for its annual conference and awards event

by Jon LeSage, editor and publisher, Green Auto Market 

Here’s my take on the 10 most significant and interesting occurrences during the past week…….

Exxon gas station1. Automotive News ran a lead article yesterday on how gasoline prices are softening and what it means, with a telling headline: “Falling gasoline prices make alternative-fuel vehicles a tougher sell.” The boom in US oil production, more fuel efficient new vehicles being offered to consumers, and a softening global demand for oil, seem to be reducing the price of oil and gasoline sold at retail stations. The US Energy Information Administration thinks that will continue into next year – from $3.45 this year down to $3.38 next year. Automakers are increasing incentives on alternative fuel vehicles to make up for reducing demand in hybrid and electric vehicle sales. Toyota boosted Prius incentives up to $2,300 per vehicle in September from $1,400 a year ago and Ford increased C-Max incentives up to $4,900 from $2,650 in September 2013. Consumer tastes have been shifting away from electrified vehicles toward SUVs and pickups, according to a Kelley Blue Book analyst. Green Auto Market has been concerned about the impact of softening fuel prices on green vehicle sales since coverage of the issue last month. Wearing my consultant/analyst hat, I would say that strengthening sales of alternative fuel vehicles will require clear messages from automakers, dealers, government agencies, infrastructure suppliers, and other stakeholders:
♦Fuel efficiency is still a big driver for car shoppers, says Mike Maroone, COO of AutoNation. Consumers remain vigilant about the risk of another oil spike, even as they gravitate toward trucks, he said. Consumers and fleets are prioritizing fuel efficiency in their purchase decisions. Alternative fuel vehicles have an edge over internal combustion engines on fuel costs during their ownership lifecycles. (I like getting 48 mpg in my Prius, no matter how much gasoline prices may drop.)
♦Federal and state incentives, and those offered by automakers and dealers, will be continuing for a while on electric vehicles, natural gas vehicles, hydrogen fuel cell vehicles, and propane autogas vehicles.
♦The infrastructure is getting better all the time in charging stations and alternative fuel pumps.
♦As mentioned in the article on working with environmental groups (running in its long version this month in Green Auto Market – Extended Edition), there are three strong arguments for supporting alternative fuel vehicles: emissions reductions, reducing dependence on oil, and economic growth with job creation. If you add in the pragmatic lifecycle fuel cost savings, that means there are four good reasons to purchase these vehicles
2. CALSTART has announced two keynote speakers for its Annual Meeting and Blue Sky Awards luncheon. Christopher Grundler, director of the Office of Transportation and Air Quality for the US Environmental Protection Agency, and Dr. Cheryl Martin, acting director of the Advanced Research Projects Agency-Energy (ARPA-E) at US Dept. of Energy, will be speaking at the event on Tuesday, December 9, 2014, in Los Angeles. The CALSTART annual meeting will feature leading public policy officials, investors, and industry leaders with the sole focus of developing new plans and initiatives supporting clean transportation technologies. Leaders in the field will be honored; for over a decade, the Blue Sky Award has been presented annually to companies and individuals who have made outstanding contributions to the development of clean, sustainable transportation, and technologies. You can view the preliminary agenda here; and for more information, to review the agenda and register, you can email Susan Romeo at sromeo@calstart.org.
3. Tesla Motors may add franchised dealers into its retail chain to gain access to states like Texas and potentially Michigan that have banned Tesla selling directly to consumers. “We may need a hybrid system, with a combination of our own stores and some dealer franchises,” Tesla CEO Elon Musk acknowledged during an interview with John McElroy on Autoline Daily. Michigan’s governor is scheduled to make a decision today on whether he’ll be signing into law the state legislature’s decision last week to ban Tesla from selling or operating a gallery. There are no details yet on how this distribution network would be structured, but it might also assist Tesla in building its presence in states with bans or others like New Jersey and Nevada that are allowing Tesla to sell in the states with limited presence.
4. The US Environmental Protection Agency (EPA) will issue revised guidelines by the end of this year on mpg ratings. Christopher Grundler, director of the EPA’s Office of Transportation and Air Quality, says it has much to with the agency’s “coast-down” test that has been the source of mistakes impacting Hyundai, Kia, Ford, and Mercedes-Benz to revise their fuel economy ratings since 2012.  During testing, vehicles are sped up to 80 mpg then coast to a step for readings on aerodynamic drag, friction in the drivetrain, and other data points. That data has been going into dynameters for simulations of the vehicle’s performance on real roads. New guidelines will come out clarifying how the test should be conducted, and more accurate audits of automakers’ testing results, Grundler said.
5. China will crackdown on automakers that fail to meet fuel economy requirements on passenger vehicles set to rollout in the 2015 model year. China has standards similar, but stricter, to those being adopted in the US, Europe, and Japan – requiring corporate average fuel economy of 34 mpg in 2015 and 47 mpg in 2020. The rule takes effect on Nov. 1. The Chinese government says it will publicly name automakers, both foreign and Chinese, who fail to meet the 2015 target; and there will be a ban on new vehicles that don’t meet fuel economy targets that will be determined by a special weight-based formula.
6. Kia has been slacking on joining the electric vehicle competition, but it’s got a very cool car, according to the New York Times. The 2015 Kia Soul EV got a rave review for a few reasons, one being its 27 kilowatt-hour battery pack. The EPA gives it a range of 93 miles on a charge, better than other EVs and especially significant for its small car size. The reviewer was able to reach just about 100 miles each time without resorting to extreme eco-maneuvers.
7. Clean Energy Fuels introduced a patent-pending product designed to help fleet operators sequester natural gas vehicles (NGVs) in their existing maintenance facilities. NGV Easy Bay  is the “lowest cost separation and vapor containment system available” for NGV maintenance and storage facilities, the company says. It was developed by the company’s facilities modification team, which has been helping potential operators solve problems faced in converting not only their vehicles but their vehicle support installations for natural gas using its code-compliant fabric barrier system.
8. LG Chem predicts it will be the giant in electrified transportation batteries in 2017 – 25% of a $5 billion global market in lithium batteries for battery electric, plug-in hybrid, hybrid, and microhybrid vehicles. Prabhakar Patil, CEO of LG Chem Power Inc., the Korean company’s North American division, thinks that LG Chem will continue to grow despite Tesla Motors’ decision to go with Panasonic at its upcoming “gigafactory” in Reno. Nev. Patil thinks the EV market will grow and is in talks with several automaker about supplying them with batteries. He also thinks it’s pretty questionable that Tesla and Panasonic will be building 500,000 electric vehicles a year.
9. US Energy Secretary Ernest Moniz is impressed with a new biofuels plant in Kansas – he says it represents the future of ethanol production and next-generation biofuels, solar, and fossil technologies that reduce greenhouse gas emissions. The $500 million refinery in Hugoton, Kansas, is now one of three commercially sized facilities in that US that only use plant waste, such as stalks and leaves, for production. That would mean staying out of the “food vs. fuel” debate that plagues the corn ethanol used in E10 gasoline. Abengoa, a Spanish company, opened the plant in late September. The plant has been funded by an Energy Dept. grant and loan guarantee, and it has the capacity to produce 25 million gallons of ethanol per year.
10. General Motors has increased its number of landfill-free facilities up to 122 as 11 more manufacturing and non-manufacturing operations have made the list. These facilities in Asia, Europe, South America, and North America take waste from daily operations and recycle, reuse, or convert it to energy. Three of the 11 sites are in Michigan and one is in California; combined, the 11 added facilities help GM avoid more than 600,000 metric tons of CO2-equivalent emissions