Toyota redesigns America's top-selling RAV4 SUV to exclusively be a hybrid

CNBC

21-05-2025

PLANO, Texas — The top-selling SUV in the United States will exclusively be offered as a hybrid model as part of a redesign of the RAV4 lineup, Toyota Motor announced Tuesday night.
The world's largest automaker said the 2026 Toyota RAV4 only will be offered as a hybrid or plug-in hybrid, eliminating a traditional gas engine in the vehicle for the first time. It will still have a 2.5-liter four-cylinder engine, but with hybrid technologies such as batteries and electric motors.
Despite a slower-than-expected adoption of all-electric vehicles, automakers have looked to hybrid models — which combine electric vehicle technologies with traditional internal combustion engines — to increase performance and help them meet fuel economy regulations.
Toyota, which started offering hybrids with the Toyota Prius in late 1990s, has been a global leader and advocate for hybrid adoption, despite an industry push in recent years for automakers to exclusively offer all-electric vehicles.
Toyota's electrified vehicle sales in the U.S. — including hybrids, plug-in hybrids and all-electric vehicles — accounted for 43.1% of the company's 2.3 million units sold domestically in 2024.
RAV4 sales increased 9.3% last year to nearly 475,200 units sold, including a 29.3% increase in RAV4 hybrids and 19.3% gain in plug-in hybrid electric vehicles. Roughly half of RAV4 sales last year were hybrids.
Sales of all-electric vehicles and hybrid models reached a record 20% of new car and truck sales in the U.S. last year, to 3.2 million electrified vehicles, according to auto data firm Motor Intelligence. That encompasses 1.9 million hybrid vehicles, including plug-in models, and 1.3 million all-electric models.
David Christ, head of the Toyota brand in North America, said the company decided to exclusively offer the RAV4 as a hybrid because of its already established popularity and growing customer demand.
"The hybrid is faster turning; it has more sales orders on it, and the consumers and dealers are asking for it," he told CNBC Tuesday during an event at the automaker's North American headquarters. "It was pretty clear that the consumer is voting for the hybrid."
Christ said the automaker expects to continue growing its hybrid offerings, including additional plug-in hybrid electric vehicle offerings.
Seven of Toyota's current vehicles are exclusively hybrid models, including the Camry and Prius cars, Sienna minivan and Sequoia SUV. RAV4 will be the eighth.
RAV4 hybrids accounted for 44% of sales last year, Toyota reported, while plug-in models — which offer all-electric ranges with a traditional engine that needs to be plugged in — were 6.5%.
The redesigned RAV4 is set to go on sale at U.S. Toyota dealerships in later this year. The all-hybrid RAV4 lineup is part of a next-generation redesign of the vehicle that included interior and exterior design changes, as well as upgrades to the vehicle's performance and technologies.
The company declined to disclose pricing until closer to the vehicle's launch. The current RAV4 starts at $30,645. The hybrid variant starts at about $33,700. Pricing includes mandatory delivery fees.
The RAV4 has steadily increased sales since its U.S. introduction for the 1996 model year. Last year's sales of the vehicle increased 9.3% year-over-year to a new record — making it the best-selling non-pickup nameplate in the U.S. last year.
The RAV4 faces new challenges this year with President Donald Trump's ongoing tariffs of 25% on vehicles imported into the U.S., as well as many auto parts.
Toyota produces the RAV4 at a plant in Kentucky, but a majority of its U.S. sales come from vehicles built at a plant in Ontario, Canada. It currently exclusively imports plug-in hybrid models for U.S. consumers from Japan.
Roughly half of Toyota's U.S. sales are imported from outside of the U.S., including 84.3% of RAV4 models, as well as its popular Tacoma midsize pickup truck from Mexico.
Mark Templin, chief operating officer of Toyota Motor North America, said the company plans to produce more RAV4 models at its Kentucky plant, but declined to offer specific plans for potential changes in production to mitigate tariffs.
"It'll work its way out. I think we'll build more RAV4s in Kentucky, which will help. But that's such a big volume car. … It was the No. 1 selling vehicle in the entire market, even beating out the F-150," he told CNBC. "Now we're bringing out one that's even better than that car. So, I think that we're going to need multiple plants to build that."
Cox Automotive reports the RAV4 finished third in sales last year behind the Ford F-Series and Chevrolet Silverado truck models, which include several variants. However, other third-party data firms have said the RAV4 topped sales of the Detroit pickups last year when breaking out the models, such as the Ford F-150 from the larger group.
Toyota's days' supply — an adjusted number based on the rate of sales — has been among the lowest in the automotive industry, especially for the RAV4.
Cox Automotive reports Toyota's recent days' supply is at 29 days and the RAV4 is among the fastest-selling vehicles in the automotive industry. The industry average is 66 days, according to Cox.
Templin said the automaker has been conducting scenario planning for different tariff and production outcomes, but the situation remains fluid amid Trump's trade negotiations with other countries.
"The worst thing for an industry is uncertainty," Templin said. "Consistency is the best thing we could all ask for."