What is the logic behind V6 vs hybrid pricing?
07-14-18, 04:55 AM
#1
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What is the logic behind V6 vs hybrid pricing?
Given essentially the same powertrains in ES, Avalon and Camry how come the hybrid option (relative to V6) goes from $3k premium (in ES) to $1k premium (in Avalon) and then all the way to being $2k cheaper in Camry? Shouldn't the price difference stay more or less the same?
Lexus ES350 (V6): $38,950
Lexus ES300h (hybrid): $41,820 <---- ~$3,000 more expensive
Toyota Avalon XLE (V6): $35,500
Toyota Avalon XLE (hybrid) : $36,500 <--- $1,000 more expensive
Toyota Camry XLE (V6) : $34,550
Toyota Camry XLE (hybrid) : $32,400 <--- ~$2,000 cheaper
Lexus ES350 (V6): $38,950
Lexus ES300h (hybrid): $41,820 <---- ~$3,000 more expensive
Toyota Avalon XLE (V6): $35,500
Toyota Avalon XLE (hybrid) : $36,500 <--- $1,000 more expensive
Toyota Camry XLE (V6) : $34,550
Toyota Camry XLE (hybrid) : $32,400 <--- ~$2,000 cheaper
07-14-18, 05:33 AM
#2
Lead Lap
For a number of years, Toyota and Lexus hybrids have been more expensive than their non-hybrid counterparts, but the price difference for the Toyota models has usually been quite a bit smaller than the price difference for the related Lexus models. For example, the price difference between the RAV4 hybrid and non-hybrid has only been around $600, but the price difference between the NX hybrid and the NX non-hybrid has been around $2400.
Recently, however, Toyota/Lexus announced that, for future models, hybrid prices were going to be reduced, and that the hybrid versions of those models would be priced comparably to or even lower than their non-hybrid counterparts.
Since the 2018 Camry is the start of a new generation, it looks like the pricing of its hybrid and non-hybrid versions is consistent with the pricing changes that Toyota/Lexus said that they would be making, and I would assume that the same thing will be true with the Generation 7 ES and new generations of other models.
Recently, however, Toyota/Lexus announced that, for future models, hybrid prices were going to be reduced, and that the hybrid versions of those models would be priced comparably to or even lower than their non-hybrid counterparts.
Since the 2018 Camry is the start of a new generation, it looks like the pricing of its hybrid and non-hybrid versions is consistent with the pricing changes that Toyota/Lexus said that they would be making, and I would assume that the same thing will be true with the Generation 7 ES and new generations of other models.
07-14-18, 08:13 AM
#3
Non-hybrid car purchases subsidize hybrid cars to make them cheaper because they are usually hard to sell to consumers. It's an incentive.
Much of this is the fact that automakers are forced to build hybrids in order to comply with dumb laws like C.A.F.E. Corporate Average Fuel Economy.
It costs Toyota way more than only $1,000 to build a hybrid car vs a non-hybrid. The battery pack alone from the dealer is priced at close to $5,000, much less the entire complex drivetrain that goes along with it (electric motor, special transmission, regenerative braking, etc) . Or even when they have to drop the price of a hybrid below a conventional engine.
Some hybrids do okay in sales and they can charge a slight premium, but consumers by in large don't want them but the automakers have to build them in order to satisfy the Feds. So the rest of us pay for them with our "regular" car purchases.
Much of this is the fact that automakers are forced to build hybrids in order to comply with dumb laws like C.A.F.E. Corporate Average Fuel Economy.
It costs Toyota way more than only $1,000 to build a hybrid car vs a non-hybrid. The battery pack alone from the dealer is priced at close to $5,000, much less the entire complex drivetrain that goes along with it (electric motor, special transmission, regenerative braking, etc) . Or even when they have to drop the price of a hybrid below a conventional engine.
Some hybrids do okay in sales and they can charge a slight premium, but consumers by in large don't want them but the automakers have to build them in order to satisfy the Feds. So the rest of us pay for them with our "regular" car purchases.
07-14-18, 03:19 PM
#4
For a number of years, Toyota and Lexus hybrids have been more expensive than their non-hybrid counterparts, but the price difference for the Toyota models has usually been quite a bit smaller than the price difference for the related Lexus models. For example, the price difference between the RAV4 hybrid and non-hybrid has only been around $600, but the price difference between the NX hybrid and the NX non-hybrid has been around $2400.
As for Avalon Hybrid, they don't even sell it it Canada which is disappointing as we have higher fuel prices than in the US, so you would figure there would be more of an incentive to have good fuel economy.
07-14-18, 04:22 PM
#5
Lead Lap
Part of the motivation for manufacturers wanting to make the pricing of hybrids, especially hybrid sedans, more attractive to buyers is based on the government fuel economy standards.
Whether or not a manufacturer is achieving the targets for fuel economy is based on the average mpg for all of the vehicles that they sell. Thus, if they can sell more high mpg hybrids, the better mpg for those hybrids can offset the lower mpg for the SUVs that they sell. And, with the popularity of those SUVs, the manufacturers see the SUV segment as their main profit generator. Thus, being able to offset the low mpg from the SUVs by selling a larger number of more fuel efficient hybrids becomes an important factor that allows them to still be able to meet the fuel economy targets for their entire fleets.
Whether or not a manufacturer is achieving the targets for fuel economy is based on the average mpg for all of the vehicles that they sell. Thus, if they can sell more high mpg hybrids, the better mpg for those hybrids can offset the lower mpg for the SUVs that they sell. And, with the popularity of those SUVs, the manufacturers see the SUV segment as their main profit generator. Thus, being able to offset the low mpg from the SUVs by selling a larger number of more fuel efficient hybrids becomes an important factor that allows them to still be able to meet the fuel economy targets for their entire fleets.
07-15-18, 05:58 AM
#6
Part of the motivation for manufacturers wanting to make the pricing of hybrids, especially hybrid sedans, more attractive to buyers is based on the government fuel economy standards.
Whether or not a manufacturer is achieving the targets for fuel economy is based on the average mpg for all of the vehicles that they sell. Thus, if they can sell more high mpg hybrids, the better mpg for those hybrids can offset the lower mpg for the SUVs that they sell. And, with the popularity of those SUVs, the manufacturers see the SUV segment as their main profit generator. Thus, being able to offset the low mpg from the SUVs by selling a larger number of more fuel efficient hybrids becomes an important factor that allows them to still be able to meet the fuel economy targets for their entire fleets.
Whether or not a manufacturer is achieving the targets for fuel economy is based on the average mpg for all of the vehicles that they sell. Thus, if they can sell more high mpg hybrids, the better mpg for those hybrids can offset the lower mpg for the SUVs that they sell. And, with the popularity of those SUVs, the manufacturers see the SUV segment as their main profit generator. Thus, being able to offset the low mpg from the SUVs by selling a larger number of more fuel efficient hybrids becomes an important factor that allows them to still be able to meet the fuel economy targets for their entire fleets.
From http://fortune.com/2018/04/25/ford-s...g-cars-sedans/
In a statement, Ford said it won’t invest in new generations of sedans for the North American market, eventually reducing its car lineup to the Mustang and the all-new Focus Active crossover coming out next year. By 2020, almost 90 percent of its portfolio in the region will be pickups, SUVs and commercial vehicles, the company said.
07-17-18, 06:56 AM
#7
Lexus Champion
The "logic" is marketing (which some would interpret as no logic). Automakers price their vehicles in a manner that best positions them to the audience they are targeting (which includes demand for certain models, such as Hybrid models).
That explains why Ford-Lincoln priced their MKZ and MKZ Hybrid (ES and ESh competitors) the same. The price -- and profit -- of the MKZ is probably higher, subsidizing the lower price (and lower profit, if any) of the MKZ Hybrid.
That explains why Toyota priced the RAV4 Hybrid at only a small premium over the regular RAV4 model in the USA but continued with the larger difference in price here in Canada. Toyota USA was probably trying to attract more (different) buyers to the RAV4 Hybrid but Toyota Canada did not see a need (or want) to do that here in Canada.
Marketing is why Toyota Canada will not offer the Avalon Hybrid. The demand for the Avalon is already so low here in Canada that adding a Hybrid model would probably just confuse issues and sell in such low numbers that it is not worth trying to import and sell it in Canada.
That explains why Ford-Lincoln priced their MKZ and MKZ Hybrid (ES and ESh competitors) the same. The price -- and profit -- of the MKZ is probably higher, subsidizing the lower price (and lower profit, if any) of the MKZ Hybrid.
That explains why Toyota priced the RAV4 Hybrid at only a small premium over the regular RAV4 model in the USA but continued with the larger difference in price here in Canada. Toyota USA was probably trying to attract more (different) buyers to the RAV4 Hybrid but Toyota Canada did not see a need (or want) to do that here in Canada.
Marketing is why Toyota Canada will not offer the Avalon Hybrid. The demand for the Avalon is already so low here in Canada that adding a Hybrid model would probably just confuse issues and sell in such low numbers that it is not worth trying to import and sell it in Canada.
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07-17-18, 07:42 AM
#8
We have had three Lexus Hybrids (2010 HS, 2014 and now 2018 ES) and credit the
CAFE for making the cars possible. Without that incentive there would little reason
to build our wonderful cars. My personal reasons to own include the near silent driving,
super smooth power delivery, strong A/C performance, long brake life, a bit of "save
the planet" mentality and a general feeling that the car makes sense. Examples of
that include: the A/C compressor operates at the exact RPM designed, not at the
limits imposed by the IC motor speed, no Power Steering fluid sounds, no accessory
belt sound/maintenance.
CAFE for making the cars possible. Without that incentive there would little reason
to build our wonderful cars. My personal reasons to own include the near silent driving,
super smooth power delivery, strong A/C performance, long brake life, a bit of "save
the planet" mentality and a general feeling that the car makes sense. Examples of
that include: the A/C compressor operates at the exact RPM designed, not at the
limits imposed by the IC motor speed, no Power Steering fluid sounds, no accessory
belt sound/maintenance.
07-17-18, 03:13 PM
#9
We have had three Lexus Hybrids (2010 HS, 2014 and now 2018 ES) and credit the
CAFE for making the cars possible. Without that incentive there would little reason
to build our wonderful cars. My personal reasons to own include the near silent driving,
super smooth power delivery, strong A/C performance, long brake life, a bit of "save
the planet" mentality and a general feeling that the car makes sense. Examples of
that include: the A/C compressor operates at the exact RPM designed, not at the
limits imposed by the IC motor speed, no Power Steering fluid sounds, no accessory
belt sound/maintenance.
CAFE for making the cars possible. Without that incentive there would little reason
to build our wonderful cars. My personal reasons to own include the near silent driving,
super smooth power delivery, strong A/C performance, long brake life, a bit of "save
the planet" mentality and a general feeling that the car makes sense. Examples of
that include: the A/C compressor operates at the exact RPM designed, not at the
limits imposed by the IC motor speed, no Power Steering fluid sounds, no accessory
belt sound/maintenance.
I own a hybrid as well, but I don't credit CAFE for it. Japan builds hybrids for the domestic market first. They probably still would build them regardless of CAFE as they have in essence made a commitment to do so.
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mcomer (07-18-18)
07-30-18, 07:41 PM
#10
Advanced
Thread Starter
The 2019 ES pricing has been released : ES350 gets $500 more expensive but ES300h gets $500 cheaper. So the price difference is now only $2,000.
2018 Lexus ES350 (V6): $38,950
2018 Lexus ES300h (hybrid): $41,820 <---- ~$3,000 more expensive
2019 Lexus ES350 (V6): $39,500
2019 Lexus ES300h (hybrid): $41,310 <---- ~$2,000 more expensive
2019 Toyota Avalon XLE (V6): $35,500
2019 Toyota Avalon XLE (hybrid) : $36,500 <--- $1,000 more expensive
2018 Toyota Camry XLE (V6) : $34,550
2018 Toyota Camry XLE (hybrid) : $32,400 <--- ~$2,000 cheaper
A few other thoughts: 2018 ES300h was made in Japan while ES350 made in USA - so this can make the hybrid more expensive. On the other hand 2013-2015 ESs were all made in Japan and the price difference was about the same. I wonder if Lexus continues to build ES300h in Japan.
Camry XLE V6 comes with panoramic sunroof and the Camry XLE hybrid does not (and there may be other options) so that would at least partially explain the price reversal there.
2018 Lexus ES350 (V6): $38,950
2018 Lexus ES300h (hybrid): $41,820 <---- ~$3,000 more expensive
2019 Lexus ES350 (V6): $39,500
2019 Lexus ES300h (hybrid): $41,310 <---- ~$2,000 more expensive
2019 Toyota Avalon XLE (V6): $35,500
2019 Toyota Avalon XLE (hybrid) : $36,500 <--- $1,000 more expensive
2018 Toyota Camry XLE (V6) : $34,550
2018 Toyota Camry XLE (hybrid) : $32,400 <--- ~$2,000 cheaper
A few other thoughts: 2018 ES300h was made in Japan while ES350 made in USA - so this can make the hybrid more expensive. On the other hand 2013-2015 ESs were all made in Japan and the price difference was about the same. I wonder if Lexus continues to build ES300h in Japan.
Camry XLE V6 comes with panoramic sunroof and the Camry XLE hybrid does not (and there may be other options) so that would at least partially explain the price reversal there.
07-31-18, 08:22 AM
#11
Lexus Champion
The 2019 ES pricing has been released : ES350 gets $500 more expensive but ES300h gets $500 cheaper. So the price difference is now only $2,000.
2018 Lexus ES350 (V6): $38,950
2018 Lexus ES300h (hybrid): $41,820 <---- ~$3,000 more expensive
2019 Lexus ES350 (V6): $39,500
2019 Lexus ES300h (hybrid): $41,310 <---- ~$2,000 more expensive
2019 Toyota Avalon XLE (V6): $35,500
2019 Toyota Avalon XLE (hybrid) : $36,500 <--- $1,000 more expensive
2018 Toyota Camry XLE (V6) : $34,550
2018 Toyota Camry XLE (hybrid) : $32,400 <--- ~$2,000 cheaper
A few other thoughts: 2018 ES300h was made in Japan while ES350 made in USA - so this can make the hybrid more expensive. On the other hand 2013-2015 ESs were all made in Japan and the price difference was about the same. I wonder if Lexus continues to build ES300h in Japan.
Camry XLE V6 comes with panoramic sunroof and the Camry XLE hybrid does not (and there may be other options) so that would at least partially explain the price reversal there.
2018 Lexus ES350 (V6): $38,950
2018 Lexus ES300h (hybrid): $41,820 <---- ~$3,000 more expensive
2019 Lexus ES350 (V6): $39,500
2019 Lexus ES300h (hybrid): $41,310 <---- ~$2,000 more expensive
2019 Toyota Avalon XLE (V6): $35,500
2019 Toyota Avalon XLE (hybrid) : $36,500 <--- $1,000 more expensive
2018 Toyota Camry XLE (V6) : $34,550
2018 Toyota Camry XLE (hybrid) : $32,400 <--- ~$2,000 cheaper
A few other thoughts: 2018 ES300h was made in Japan while ES350 made in USA - so this can make the hybrid more expensive. On the other hand 2013-2015 ESs were all made in Japan and the price difference was about the same. I wonder if Lexus continues to build ES300h in Japan.
Camry XLE V6 comes with panoramic sunroof and the Camry XLE hybrid does not (and there may be other options) so that would at least partially explain the price reversal there.
The primary factor that comes to mind is that the price of the battery, and other components in the parallel electric drivetrain (such as the electric motors) have dropped as the market and these products mature. It may also be that the early, initial incremental engineering costs to design the hybrid system have all been recouped so there is no longer a need to earn back those engineering costs in higher hybrid vehicle prices.
Another major factor is marketing. This factor is harder to explain and more difficult to understand, especially if the difference in pricing between the ES 350 and the ES 300h is different (likely a greater difference in prices) here in Canada than it is in the USA. Pricing of cars is not just done to recoup costs, but to encourage sales of a particular model. So reducing the price premium of the ES 300h compared to the ES 350 may be a sign that Lexus is trying to push for more sales of the Hybrid model.
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