AUSTIN, Texas, Aug 15 (Reuters) - Toyota ( TM ) may be one of

the slowest legacy automakers to develop electric vehicles but

it could be the first to jettison cars powered only by gasoline.

Almost three decades after launching the Prius, its

pioneering gasoline-electric hybrid, Toyota ( TM ) is moving to convert

most, and eventually maybe all, of its Toyota ( TM ) and Lexus line-up

to hybrid-only models, two Toyota ( TM ) executives told Reuters.

Toyota's ( TM ) stubborn focus on hybrids over EVs is part of a

broader challenge by the world's biggest automaker to the

prevailing industry and regulatory orthodoxy that all cars will

be electric in the near future.

Toyota ( TM ) Chairman Akio Toyoda said in January that he believed

the global share of EVs would top out at just 30%. The Japanese

automaker instead touts a "multi-pathway" strategy that includes

EVs along with hybrids, hydrogen fuel-cell vehicles, green fuels

and, potentially, other technologies yet to emerge.

"Going forward, we plan to evaluate, carline by carline,

whether going all-hybrid makes sense," David Christ, head of

sales and marketing for Toyota ( TM ) in North America, told Reuters.

Those evaluations will come with every model redesign, if

not sooner.

That includes the pending overhaul of the RAV4 for the 2026

model year. The RAV4, America's best-selling SUV, already has

hybrid variants that account for about half of sales.

Two people familiar with Toyota's ( TM ) product planning

discussions said the automaker is highly likely to ditch the

gasoline-only version for the North American market, but hasn't

made a final call.

The automaker has already stopped offering a gasoline-only

version of its Camry, America's best-selling sedan, for the 2025

model year while its rugged Land Cruiser and Sienna minivan, for

example, also now come only as hybrids.

Many of the hybrid-only models will also likely come as a

plug-in hybrid with a bigger battery, according to the two

people, who declined to be named.

Toyota's ( TM ) effort to convert all or almost all of its North

American line-up to hybrid-only vehicles has not previously been

reported.

NEW EMISSIONS RULES

The automaker's hybrid strategy aims to solidify its already

dominant position in a part of the market that has found a new

lease on life as demand for EVs slows, partly due to their high

prices and charging hassles.

Toyota's ( TM ) hybrids don't need charging and switch seamlessly

between gasoline and electric power, or use both at once,

depending on driving conditions. Its plug-in hybrids can be

charged and typically travel about 40 miles (64 km) on battery

power, like an EV, before their gasoline engines are required.

Stripping out two EVs and a fuel-cell car on sale in North

America, there are currently 31 other Toyota ( TM ) and Lexus models.

Eight are already hybrid-only and eight are available in

gasoline versions only.

The hybrid strategy will also give Toyota ( TM ) unique advantages

in complying with increasingly tough U.S. carbon-emissions

restrictions, Toyota ( TM ) executives and industry experts said.

As the U.S. lowers pollution limits under regulations

announced in March, Toyota's ( TM ) booming hybrid sales could help the

automaker save billions of dollars in regulatory fines and costs

while buying Toyota ( TM ) more time to develop EVs or other

zero-emission vehicles.

The new emissions standards take effect from the 2027 model

year and run through 2032.

Christ said Toyota ( TM ) hasn't set a deadline for producing an

all-hybrid lineup, and that certain models, such as pickups and

economy cars, may take longer because of consumer price

sensitivity on entry-level versions.

In addition to hybrids, Toyota ( TM ) aims to convert about 30% of

its global fleet to EVs by 2030 by focusing on a small number of

fully electric versions of existing top-selling models,

according to two sources familiar with Toyota's ( TM ) product

planning.

Toyota ( TM ) has previously announced plans to invest $35 billion

in new batteries and EV platforms by then.

In May, the automaker showcased a small prototype combustion

engines it said could one day run on biofuels or low-carbon

synthetic gasoline and could be paired with hybrid drivetrains.

But the main point of scaling down the engine size,

according to one of the two sources familiar with Toyota's ( TM )

product planning, was to allow it to develop hybrids in a

different way. Instead of starting with a gasoline car and

adding a battery, it plans to start with its new EV platform and

add the tiny engines to create a more efficient hybrid option.

According to one of the two sources, the first hybrid based

on the new platform and engine will likely be a Corolla plug-in

hybrid, which will likely hit the market in China in 2026 and

the United States in 2027.

TIPPING POINT

Toyota's ( TM ) hybrid boom owes to decades of investments in

bringing down the cost and boosting the efficiency and

performance of its gasoline-electric powertrains.

For most Toyota ( TM ) models, the decision to go hybrid-only is

becoming a no-brainer for the automaker and its customers

because the technology for a traditional hybrid now typically

adds less than $2,000 to a car's retail price.

In addition, while early hybrids were slow, today's models

often offer more power than their gasoline-only variants.

Those advances eliminate the two biggest consumer concerns

that for years made hybrids largely an automotive niche,

accounting for less than 3% of all U.S. sales as recently as

2019. Now they're at 11.3% and rising fast, according to auto

services specialist Cox Automotive.

Toyota ( TM ) has seen far more dramatic growth because of its

dominance of the hybrid sector, bringing the automaker to the

tipping point that has pushed executives to now consider an

all-hybrid lineup. Hybrids accounted for just 9% of Toyota ( TM ) sales

in 2018 but 37% as of June.

The hybrid sales surge has been a key factor driving its

profit and stock price to all-time highs this year.

Christ said Toyota ( TM ) expects hybrid sales to keep

accelerating. "Next year," he said, "we definitely will be well

over 50% of our total volume."

Toyota's ( TM ) U.S. hybrid sales through June 30 shot up 66% from

last year to 438,845 vehicles, the company said, compared with

EV sales of just 15,107.

Atlanta-based Cox Automotive estimates demand growth for EVs

will likely remain modest for the next few years.

"EV growth is going to continue, but it's not going to hit

the big pace we saw in the last few years," Cox senior analyst

Stephanie Valdez Streaty said.

"Regular gas-electric hybrids and plug-ins will continue to

eat into EV sales in the meantime because they are easier and

more familiar alternatives and there's no range anxiety."

HYBRIDS BUY TIME

Toyota's ( TM ) plan to offer more plug-in hybrids aims to take

advantage of U.S. emissions rules that give them outsized credit

for reducing pollution. That's now possible because Toyota ( TM ) is

opening a North Carolina battery plant that, by 2030, will have

14 production lines capable of producing 30 gigawatt-hours (GWh)

of batteries annually.

Plug-ins have so far sold in far lower volumes than

traditional hybrids because of their substantial extra cost.

Toyota's ( TM ) current plug-in hybrid models tend to cost $5,000 or

$6,000 more than comparable gasoline models.

Mass-market hybrid sales will give Toyota ( TM ) invaluable time to

develop EVs and other next-generation technologies, said

Katsuhiko Hirose, one of Toyota's ( TM ) managers who led its global

powertrain planning from 2001 through his retirement in 2019.

Hirose, now a visiting professor at Japan's Kyushu

University and an energy consultant, estimated U.S. regulations

would essentially require Toyota ( TM ) to go nearly all-hybrid by

around 2030 - with an increasing share of plug-in hybrids - to

avoid regulatory fines or other costs.

"(Hybrids) will buy them more time and give Toyota ( TM )

flexibility over how fast and how many EVs they'd have to roll

out," Hirose said. "They wouldn't feel pinned against the wall

to produce EVs."