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Can Toyota retain dominance in US hybrid and electric car market?

Although the US hybrid and electric car market has grown strongly in recent years leading player Toyota Motor Corporation (Toyota) is facing pressure the dominance of under the challenge of other manufacturers, such as Ford Motor Company (Ford).

Sales volumes of electric and hybrid cars have been fluctuating in the US over the past few years, with the market being hit hard by the economic downturn from 2008 onwards. However, sales picked up in 2012, as the country’s economy stabilized and governmental legislation shifted in further favor of high-efficiency vehicles. Notably, plug-in vehicles are gaining traction, and are growing at a much faster rate than standard hybrid vehicles following environmental legislation, tax incentives and changing consumer attitudes.

In spite incumbent manufacturer’s heavy focus on the hybrid segment, in which it remains the clear market leader, Toyota has found itself playing catch-up in the high growth plug-in vehicle sector. Notably, Nissan’s Leaf and Tesla’s Model S battery electric vehicles (BEVs) saw especially impressive sales volumes in 2013 and Ford, which maintains a balanced approach regarding its plug-in and traditional hybrid offering, has grown its market share substantially in both segments.

With sales volume growth of plug-in vehicles expected to outpace that of traditional hybrid models in the coming years, Toyota faces a dilemma. Although it may be able to continue to enjoy its dominance of the hybrid segment for the foreseeable future, it is at risk of not capitalizing on plug-in popularity amongst consumers to the same extent that its rivals are poised to.

It is therefore essential for Toyota to not relinquish control of the direction of the market: it has already positioned itself as a trailblazer, and its Prius brand of hybrid vehicles has effectively become synonymous with the market as a whole. In order to keep this role, the manufacturer needs to continue to innovate its alternative fuel offering, staying ahead of the chasing pack.

In essence, instead of running a race in the plug-in segment – a race in which it is currently a member of the chasing pack – it needs to look to start a new race in which it can enjoy another head start. This should, therefore, form a central aspect of the manufacturers’ ongoing alternative fuel vehicle strategy if it is hoping to retain the same degree of dominance over the market that it has enjoyed over the past decade. Toyota’s development of fuel cell vehicles will, therefore, be critical to its future success in the sector.

Want to read more on the US hybrid and electric car market? See our case study: Hybrid and Electric Cars in the US: Two differing strategies.

You can also find out more on Tesla in this case study: Tesla: The Californian start-up that made head way on the automotive giants.

Posted in Automotive.

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