Car companies are living on borrowed time.
After years of talk, the real impact of the government’s New Vehicle Efficiency Standards will begin to be felt in 2026, and almost every car brand will need to react to avoid costly fines and other penalties.
The truth is we’re already seen the beginning of this process as plug-in hybrids (PHEVs) become more popular, but expect to see a rapid acceleration of this sector of the market in the next 12-24 months.
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That’s because plug-in hybrids represent a cost-effective way — for both the manufacturers and customers — to get into lower emission vehicles, especially in the wake of slowing electric vehicle (EV) sales.
And don’t take my word for it, not even Toyota, with its armada of hybrids is safe from the impending changes. Toyota Australia’s leader, Sean Hanley, told media recently that the company’s “multi-pathway solution” will include PHEVs, an option it has avoided until this point.
“Well, we've always said multi-pathway solution, Steve,” Hanley said. “There's no doubt plug-in hybrids will play a role in Toyota's portfolio in the next [few] years — has to. Hybrid electric vehicles will play a role in Toyota's portfolio. Battery electric vehicles will play a role in Toyota's portfolio.”
The good news for Toyota Australia is there are already two well-known plug-in hybrid models available globally that it will be able to tap into — the Prius and RAV4.
It would be fitting for Toyota Australia to revive the Prius as a technology leader, given the role the original Prius played in laying the foundations for Toyota’s current success with hybrids across its range before being cut formt eh local line-up several years ago. The Prius — namely its PHEV variant — could turn out to be the car Toyota has need all along.
It's much better looking than the previous generation and its PHEV tech makes it extremely fuel efficient and would allow Toyota to offset its sales of big thirsty utes and 4WDs.
The RAV4 PHEV might be a more popular solution though, with the SUV already one of the country’s best selling models adding an even more fuel-efficient powertrain would only expand its appeal.
Hanley, for his part, is staying tight-lipped on what PHEVs Toyota will introduce, but expect them by next year at the latest.
“Hybrids and plug-in hybrids will be what you'll be talking about in January of ‘26, I'll tell you now,” he said.
When asked if that meant we’d see Toyota’s first PHEV in 2025, Hanley teased: “You'll have to wait and see. I can tell you, plug-in hybrids are on the agenda.”
It’s not just Toyota going down the PHEV path either. We’ve already seen Ford pivot from its plans to introduce the all-electric version of the Puma small SUV and instead focus on PHEV variants of its Transit vans, as well as the upcoming Ranger PHEV.
BYD is another brand pushing PHEVs with the Shark 6 and Sealion 6, while Mitsubishi was a trailblazer with its Outlander PHEV back in 2014 and there are more coming across the market from a variety of brands.
PHEV sales rose more than 100 per cent in 2024, albeit from a low base, but expect it and conventional hybrids to continue to grow rapidly in the coming years as the impact of the New Vehicle Efficiency Standard is felt.
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