Bloomberg — A Toyota has decided to scrap the gasoline-powered version of its best-selling vehicle in the United States as the Japanese automaker pushes further into introducing hybrids.

The latest generation of the RAV4 compact crossover, available later this year, comes equipped with a standard or plug-in hybrid powertrain, which will mean abandoning the gasoline-only option that accounts for the majority of current sales, the company said Tuesday.

The move follows last year's move to a fully hybrid Camry sedan.

Also read: Toyota Chairman Plans Record Acquisition of Auto Parts Division for US$42 Billion

“The overall success we've had selling hybrids gives us complete confidence that we could do it with this car as well,” said Mark Templin, director of Toyota Motor's U.S. operations, about the new RAV4.

The latest model will also be the first in Toyota's lineup to come equipped with Arene, the software platform developed by its technology arm, Woven By Toyota.

This version encompasses the car's power steering and cockpit functionality, while future models will be connected to the body and powertrain.

The RAV4 is, in many ways, the ideal model to implement Toyota's long-awaited software architecture, as the car is sold in many markets around the world and this would help with data collection efforts.

Toyota has long been skeptical of the industry's push to go all-in on all-electric vehicles, opting instead for a multi-pronged approach that sees a place for hybrids, gasoline cars and even hydrogen-powered cars in its lineup.

While the slow rollout of EVs has left the automaker open to criticism, the strategy has helped Toyota weather a slowdown in demand for all-electric cars.

At the same time, demand for hybrids has soared in recent years and Toyota has emerged as the North American market leader.

Electrified models accounted for more than half of Toyota and Lexus' U.S. volume in the first three months of the year, compared to just 37% in the same period a year ago.

A 25% tariff in the US poses a major threat to the new RAV4, with imports accounting for more than 60% of US sales volume.

Nearly half of the 475,000 RAV4s sold in the U.S. last year came from Canada and nearly 20% were built in Japan. The company has not released pricing as it awaits greater clarity on trade policy.

Also read: Honda cuts electric budget by 30% and increases investment in hybrids

Templin said Toyota has no plans to stop importing RAV4s from its factories in Ontario and Japan, and remains hopeful that U.S. President Donald Trump's administration will get some tariff relief.

"We need more capacity than we can produce in any one of these factories. We need all three," Templin said in an interview. “I believe there will be some form of tariff, I just don’t think it will be 25%.”

The RAV4 competes with similar compact crossovers such as the Honda CR-V, Nissan Rogue, Hyundai Tucson and General Motors' Chevrolet Equinox.

These models also rely on foreign production to achieve at least some sales volume in the US.

The current RAV4 was introduced seven years ago and has started to show signs of age. It came in sixth place out of eight in a comparison test carried out by the magazine. But it's still the best-selling vehicle outside of pickup trucks.

Hybrid options

Michael Speigl, director of a Toyota dealership in Ann Arbor, Michigan, said he is confident the new version will be a hit with buyers, noting that the current RAV4 hybrid is among his dealership's most popular vehicles.

“I’m not in the business of second-guessing Toyota,” Speigl said. “The numbers speak for themselves.”

Toyota has promised to offer an electrified option for every model it makes globally by this year. To date, just under 80% of models from Toyota and its Lexus brand sold in the U.S. offer a hybrid or all-electric powertrain.

The automaker sells two all-electric vehicles in the U.S. and last week announced plans to sell a third electric vehicle next year.

The latest RAV4 isn't a complete redesign: It uses the same chassis and underpinnings as the current version, and borrows the Camry's hybrid powertrain.

The hybrid version of the current model starts at $32,300, which is about $3,000 more than the cheapest gasoline RAV4.

Templin said Toyota's goal is to keep the vehicle affordable for new-car buyers at the lower end of the scale.

“I’m not saying it’s going to go below $30,000, but it needs to stay at the entry-level price point,” he said. “And a lot of that depends on what happens with tariffs.”

The sixth-generation RAV4, a model that debuted in the U.S. in 1996, increases horsepower by up to 236 horsepower, compared to 219 today.

Toyota didn't specify expected fuel economy, but the plug-in's electric-only mode range increases to 50 miles, which is 20 percent greater than the current version.

This vehicle is manufactured by Toyota Industries Corp., which is the target of a takeover bid by Toyota Motor President Akio Toyoda.

See more at bloomberg.com

©2025 Bloomberg L.P.