By on February 17, 2017

2017 Toyota Highlander Hybrid Platinum - Image: Toyota

For far too long, the Toyota Highlander Hybrid has been an especially costly version of Toyota’s popular three-row crossover.

Fortunately, the Toyota Highlander Hybrid’s base price drops by $11,600 in 2017 as Toyota introduces two additional lower trim levels, which have eased the cost burden of upgrading to the hybrid.

Launched in 2006, the first Toyota Highlander Hybrid was 35 percent more costly than the basic Toyota Highlander of the same era. More recently, in the 2016 model year, the Toyota Highlander Hybrid AWD was 43 percent more expensive than the least costly V6 AWD Highlander; $17,380 more than the entry-level, front-wheel-drive, four-cylinder Highlander.

The gap wasn’t so vast in apples-to-apples comparisons. Toyota traditionally limited the Highlander’s hybrid powertrain to buyers who wanted particularly well-equipped Highlanders. In 2016, for instance, the only Highlander Hybrids were Limiteds and Platinums with all-wheel drive. Compared with a non-hybrid Limited, the Highlander Hybrid Limited still represented a premium option: $5,495, or a 13-percent hike. But that hike wasn’t entirely out of sync with what we’ve become accustomed to in the gas versus gas/electric world.

Having now learned with the RAV4 just how successful a hybrid SUV can be, Toyota is employing a similar strategy with the larger Highlander.

In 2016, having introduced lower trim levels and improved availability, Toyota reported 45,097 RAV4 Hybrid sales. That’s better than one-in-ten RAV4 sales; more RAV4 Hybrid sales than some 50 SUVs/crossovers managed in 2016.

2017 Toyota Highlander Hybrid Limited tailgate - Image: Toyota

The strategy for the Highlander Hybrid can’t be the same now as it was a decade ago. “When gas was $4, the market would accept a certain premium for hybrids. Today at $2.50, it’s a much smaller premium that’s acceptable,” Toyota’s North American CEO Jim Lentz told Wards Auto.

Understanding this, added to the Highlander Hybrid Limited and Platinum trims are new LE and XLE trims. At $37,265 including fees, the 2017 Highlander Hybrid LE AWD now costs $2,130 more than the Highlander LE V6 AWD. The Highlander Hybrid XLE AWD is only $1,745 more than the non-hybrid XLE AWD. The Highlander Hybrid Limited AWD and Hybrid Platinum AWD demand only a $1,620 premium compared with their equivalent non-hybrid AWD siblings.

Combined fuel economy for the regular Highlander V6 AWD tops out at 23 miles per gallon. Highlander Hybrid combined fuel economy rises as high as 29 mpg, saving the Highlander Hybrid driver roughly $300 in fuel costs per year.

In 2016, only 3 percent of the Highlanders sold were hybrid-powered. It’s unlikely the hybridized Highlander will form as significant a portion of overall Highlander sales as the hybrid power does for the RAV4. But in concert with improvements across the Highlander range for 2017, improved hybrid pricing should aid the Highlander in repeating 2016’s performance as the best-ever year for Highlander sales in America.

Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures. Follow on Twitter @goodcarbadcar and on Facebook.

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28 Comments on “Finally, The Toyota Highlander Hybrid Is Affordable And Actually Starts To Make Sense...”


  • avatar
    PrincipalDan

    The old trim strategy with the Hybrid Highlander was basically “we want efficiency and we’ll pay whatever it takes to get it!”

    I’m amazed that it took Toyota this long to introduce a lower trim variant. When I see a 2009-2013 2nd gen Highlander and it is a Limited, many of them are Hybrid.

    • 0 avatar
      bumpy ii

      I’ve always assumed Toyota’s hybridization strategy was driven by battery cost and availability.

      • 0 avatar
        psarhjinian

        No, it’s been to charge a premium where possible. Once you’ve soaked premium buyers, you move downmarket, hence the more basic trims of the Prius and Camry.

        The Highlander’s segment is one of the places where they can still command a premium, but even that’s eroding. You’ll know it’s gone when they (finally) sell a hybrid Sienna.

        • 0 avatar
          stuki

          Minivan hybridization is the proverbial double edged sword. Buyers of minivans, especially pricier ones, are prime candidates for also preferring hybrids. But just as wrt awd, which they also claim to want; per their actual buying behavior, they are clearly demonstrating that nothing, absolutely nothing, is worth sacrificing even a cubhole of additional interior space for.

          While those who pick a 3 row CUV over a minivan, have by the simple act of doing so already indicated that while they may “need” a good amount of space, they are certainly not willing to sacrifice every other facet of automotion for a bit more of it. So, they get all the cool stuff. While the minivans get the best space utilization.

        • 0 avatar
          Luke42

          @bumpy & psarhjinian:

          A lot of pricing strategies made more sense when I realized that the goal is to sell basically the same thing to the buyer at whatever price they will pay (instead of leaving money on the table).

          I can draw a very nice Econ101-style supply & demand graph illustrating the principle.

          One way to sell the same stuff at different prices is the way Tesla does it: build the most expensive cars first, and make the cheapskates wait for lower-spec the models which can cost half as much.

          Another way to do this is the way BMW does it, and make features that are readily available for a reasonable price in a mid-tier option-group on a Honda Civic (say, Honda Sensing) into expensive ala-carte options on the 3-series.

          So, the question isn’t how much the extra options cost, or how much value they add — but how much money then can shake from a financially diverse group of customers.

          With that as context, I take what psarhjinian said to mean that most people who wanted to buy a $45k+ Highlander Hybrid already own one. And Toyota can reduce the price of the hybrid variant, and shake sales out of a wider range of buyers.

          P.S. I’m an example of that kind of buyer: I’m a minivan dad, and I like hybrids, but I’ll never pay $45k for any vehicle with a tailpipe — but a Hybrid at $30k could be a possibility. At $20k, I’d be camping out at the Toyota dealer.

  • avatar
    jeoff

    I wonder if this could be a hedge against the possibility that the hybrid Pacifica will do well?

  • avatar
    28-Cars-Later

    “Having now learned with the RAV4 just how successful a hybrid SUV can be, Toyota is employing a similar strategy with the larger Highlander.”

    *cough cough* RX400/450

  • avatar
    dal20402

    Shifting business strategy in response to CAFE. Before, they pursued profit per unit on the hybrid, on the theory that there was a small group of wealthy buyers in wealthy, eco-conscious cities that would pay for the image. Now, they are actually trying to sell these things in volume, like they do with the Prius and Camry Hybrid.

  • avatar
    Master Baiter

    What about impact to cargo space?

    $300/year is $25/month. Not much relative to payments on a $37K vehicle.
    .
    .

    • 0 avatar
      brandloyalty

      The Escape Hybrid fitted the battery between the cargo floor and the spare tire. It’s only a few inches thick. All that was lost was a small cargo bin under the cargo area floor.

      • 0 avatar
        Luke42

        Big vehicles have lots of extra space.

        My Sienna had lots of unused volume under the 2nd row floorboard that could have been used for a battery. That volume just contained an open truss that you could see from underneath my Sienna.

        I won’t say you could just bolt a battery there. But I will say that you could engineer that part to be able to hold a battery, which is exactly what FCA did with the Pacifica.

    • 0 avatar
      HotPotato

      Tim seems to be computing based on the PEAK figures for MPG. But the non-hybrid attains those figures only in perfect conditions at moderate highway speed, whereas hybrids shine in inefficient driving conditions like city traffic. Real world combined MPG is probably in the mid to high teens for the non hybrid and in the high 20s or better for the hybrid.

  • avatar
    djoelt1

    It still doesn’t make sense. It comes only in AWD with a V6. Both of these are antithetical to high fuel economy, which is presumably what the hybrid feature is for.

    Will someone PLEASE make a 7 seat, 2WD hybrid vehicle with good space utilization that is also light and handles like a passenger car? Like the Ford Transit Connect?

  • avatar
    brandloyalty

    The existing Highlander Hybrid has been 3% of Highlander sales. That’s the same as the Escape Hybrid was. Both came with somewhat severe price premiums. Comparable to diesels, actually.

    The Rav4 Hybrid is only a little more expensive than the non-hybrid and is 10% of Rav4 sales.

  • avatar
    slavuta

    See those prices? This is why I will keep our 2009 Highlander for another 7-8 years. I got it under $25K new. And new ones are almost same. The changes are mostly in decorations. Same parameters everywhere. And even if tranny got couple more cogs, I don’t even need them

  • avatar
    InsideMan

    Highlander Hybrid was on a strictly sold order allocation for over 4 years during my tenure as a District Manager (2011-2015). There was little desire by TMS and TMC to increase production and often customers with deposits would have to wait 3-6 months before their order was even allocated (add 2 months for production and delivery to the dealer). At the time, these were only produced in Japan which likely made the vehicle less profitable when the yen was under 100 per dollar and likely factored in to the availability and pricing.

  • avatar
    yakswak

    I actually purchased one of these recently. 2017 Limited Hybrid. I didn’t buy for the fuel savings….I don’t drive enough to offset the initial buy in costs. But I felt that in driving both hybrid and non hybrid models, the hybrids had much better initial throttle response with the electric motors kicking in before the engine. There are no noticeable effects to cargo capacity. The battery pack also has the effect of lowering the center of gravity so the hybrid felt more stable around corners.

    The price came out to be about $2000 for me between the hybrid and non hybrid…there is an extra rebate on the non hybrid version and due to low availability dealers will negotiate a lower price on the non hybrid. I had to wait weeks to get my car since they are hard to find…if Toyota intends to sell more of these they better manufacture more. I have a hard time believing they can get >5% of total sales based on current inventory.

    I think with higher resale prices I will come out about even after 5-6yr ownership. For me that was not a bad trade off to pay $2000 more upfront.

  • avatar
    DC Bruce

    If memory serves, early Highlander Hybrid buyers were sorely disappointed in their expectations of better mileage. The biggest advantage of the hybrid drivetrain was more vigorous acceleration, as compared to the standard V-6, especially in the mid-range (i.e. passing power). A friend of mine owns the RX version of this; that’s what he says.

    • 0 avatar
      HotPotato

      The RX Hybrid’s MPG is underwhelming. Granted though, MPG is a misleading number for thirsty rigs: just a few MPG more on a big SUV adds up to a lot more gallons of fuel saved than 10 MPG more in a small compact.

      Also, if your friend is enjoying that “more vigorous acceleration” frequently, he’s probably canceling out some of the advantage. When I stopped constantly indulging my C- Max’s “more vigorous acceleration” vs the standard Focus, I magically gained 4 MPG.

      • 0 avatar
        markogts

        There is this unit of measure called “liters per 100 km”, you know? Less than 5 excellent, more than 10 shameful.

        Come on, join the SI/metric party, you’ve already wasted too much time ;-)

  • avatar
    APaGttH

    So what does this do to depreciation for 2016 and older owners?

    I’m guessing it isn’t pretty…

  • avatar
    tjh8402

    Toyota needs to pair this with a 4 cylinder to get a more serious mpg improvement. Make it cheaper than the Pacifica hybrid and the most fuel efficient 3 row vehicle aside from that.


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