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Future predictions for the RVP - with no EV credit, what will happen?

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Im2bz2p345

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23' RAV4 Prime XSE w/PP. Blueprint.
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Discussion starter · #1 · (Edited)
Hi all,

Given the tax incentive for Toyota going away with the Inflation Reduction Act (IRA) and the overall economic climate, I'm curious to hear what folks predict will happen to Toyota RAV4 Prime. I feel this could be a good discussion topic.

My 3 questions are:

1) Will Toyota adjust their pricing for 2023 model year by discounting from the current MSRP? Or do you think the keep the MSRP as-is or increase it? If you pick increase, how much do you feel it will go up by?

2) Will there inventory on dealer lots in 2024? The reason that I am asking about 2024 and not 2023 is because it doesn't seem like the chip supply chain issues will be resolved within a year.

3) In 2024, will the R4P continue to sell at MSRP? Or will Toyota need to provide incentives/dealerships need to discount the vehicle? Currently we're seeing MSRP that includes "DELIVERY, PROCESSING & HANDLING FEE" to the dealer lot of: $41.5K (base SE) to just over $50K (fully loaded XSE).

Thanks for responding in advance! I'll post my own predictions in a bit.

~ Im2bz2p345 :)
 
#2 ·
My take. Essentially, the Prime is now 7k more expensive than it was a few months back. Is it worth it? Not to me but they'll probably sell all they can produce and folks will just have even more interest in the regular hybrid. Watch Toyota raise the price on the regular hybrid to close the gap which will make the gas version the way to go monetarily speaking. This way Toyota can have their cake and eat it too with just a little bit of outcry as the pricing gap between the gas and the regular hybrid widens.

Once you go over 50k for a RAV, it's not about MPG's and efficiency anymore. Might as well spend some more and get a Lexus or another brand. Those that got their Primes netted in the 30's, home run and congrats but be prepared to pay a lot more when it comes time to replace. All this electrification and hybridizing is just a way to reset the purchase price level and having a gas car that gets 30mpg will be cheaper to own.
 
#3 ·
It's an interesting question. When I was in the market for a new car to replace my Prius, I looked at the RAV4 Hybrid because I was sold on the idea of a hybrid vehicle. I then found out about the Prime, but didn't know if I wanted to spend the additional money to have the option of driving some in EV mode. However, with the tax credit that was in place, the cost difference was pretty small and it seemed like a good way to get my feet wet and see what it was like to own an EV. Now that I've had it for awhile, I realize how perfect a plug-in hybrid is for me. Toyota's estimate of 42 miles proved to be conservative and I'm getting an EV range of 52-55 miles. This is enough for me to only have to recharge every 2-3 days and use very little gas. For the occasional longer trip, I just use the HV mode. I've also taken some road trips and while it was nice to find hotels with chargers, it wasn't that important, I just drove it like a regular hybrid. When I ultimately need to replace the car, I will definitely consider getting another plug-in hybrid. If the RAV4 is too expensive, I'll look at the other makes and models.

For those in the US, Toyota might start building more of their cars here. My understanding is that the batteries also have to be produced in the US to qualify for the new tax credit, and the materials have to come from the US or other countries that we have a fair trade agreement. It's also possible that with lobbying, the tax credit will be modified. It sounds like the big three want at least a temporary period while they shift their manufacturing back to the US. What about countries that don't have a tax credit? It sounds like it isn't hurting the sales of the RAV4 Prime there.
 
#4 ·
Im2bz2p345 said:
Hi all,

Given the tax incentive for Toyota going away with the Inflation Reduction Act (IRA) and the overall economic climate, I'm curious to hear what folks predict will happen to Toyota RAV4 Prime. I feel this could be a good discussion topic.

My 3 questions are:

1) Will Toyota adjust their pricing for 2023 model year by discounting from the current MSRP? Or do you think the keep the MSRP as-is or increase it? If you pick increase, how much do you feel it will go up by?

2) Will there inventory on dealer lots in 2024? The reason that I am asking about 2024 and not 2023 is because it doesn't seem like the chip supply chain issues will be resolved within a year.

3) In 2024, will the R4P continue to sell at MSRP? Or will Toyota need to provide incentives/dealerships need to discount the vehicle? Currently we're seeing MSRP that includes "DELIVERY, PROCESSING & HANDLING FEE" to the dealer lot of: $41.5K (base SE) to just over $50K (fully loaded XSE).

Thanks for responding in advance! I'll post my own predictions in a bit.

~ Im2bz2p345 :)
Click to expand...
1) Will depend on the weakening yen vs USD exchange rate
2) Possibly yes especially during a prolonged recession.
3) Once the Toyota Battery Plant near Greensboro NC is up and running, then production for the US will shift to Georgetown, KY.
 
#5 ·
Toyota should expand the plug in hybrid model with the other current hybrids they manufacture. To me our 2022 RAV 4 Prime SE is ideal. Currently with a 50 mile EV range and 45 + mpg in HV mode is ideal for us and there is no range anxiety. Looking forward to a Highlander Hybrid plug in to replace our 2020 Highlander Hybrid LE AWD.
 
#6 ·
alster said:
Toyota should expand the plug in hybrid model with the other current hybrids they manufacture. To me our 2022 RAV 4 Prime SE is ideal. Currently with a 50 mile EV range and 45 + mpg in HV mode is ideal for us and there is no range anxiety. Looking forward to a Highlander Hybrid plug in to replace our 2020 Highlander Hybrid LE AWD.
Click to expand...
It’s hard to figure what Toyota’s future emphasis will be, as their first attempt at a full BEV has been a disaster for a company whose reputation is quality construction and innovation. Are they serious about BEVs, more PHEVs, hybrids, ICE, what? It’s late in the game, IMO, to START on more PHEV models (if a couple were ready right now, they would sell) and more ICE development seems wrong headed, too.
 
#7 ·
EddieJoe said:
It’s hard to figure what Toyota’s future emphasis will be, as their first attempt at a full BEV has been a disaster for a company whose reputation is quality construction and innovation. Are they serious about BEVs, more PHEVs, hybrids, ICE, what? It’s late in the game, IMO, to START on more PHEV models (if a couple were ready right now, they would sell) and more ICE development seems wrong headed, too.
Click to expand...
I forgot to mention that back in the 90s when I worked for an environmental agency and we bought a fleet of Prius hybrids, we considered them “transitional” technology. It’s 25 years later and what is Toyota doing? Bests me.
 
#8 ·
There needs to be more competition in the plug in hybrid market. The Prime is the #1 SUV plug in thats standard with all wheel drive. Some, like the Ford Escape are not available in all wheel drive. GM is absent with a plug in SUV, even though the volt type system could have been easily fit into a GM SUV.
 
#9 ·
Im2bz2p345 said:
Hi all,

Given the tax incentive for Toyota going away with the Inflation Reduction Act (IRA) and the overall economic climate, I'm curious to hear what folks predict will happen to Toyota RAV4 Prime. I feel this could be a good discussion topic.

My 3 questions are:

1) Will Toyota adjust their pricing for 2023 model year by discounting from the current MSRP? Or do you think the keep the MSRP as-is or increase it? If you pick increase, how much do you feel it will go up by?

2) Will there inventory on dealer lots in 2024? The reason that I am asking about 2024 and not 2023 is because it doesn't seem like the chip supply chain issues will be resolved within a year.

3) In 2024, will the R4P continue to sell at MSRP? Or will Toyota need to provide incentives/dealerships need to discount the vehicle? Currently we're seeing MSRP that includes "DELIVERY, PROCESSING & HANDLING FEE" to the dealer lot of: $41.5K (base SE) to just over $50K (fully loaded XSE).

Thanks for responding in advance! I'll post my own predictions in a bit.

~ Im2bz2p345 :)
Click to expand...
What we know is that Toyota (as opposed to Lexus) is a volume brand, so Big T will do what they have to to maintain volume. The full effects of the IRA will take some time to sort out (good explainer here Federal EV Tax Credits Are Getting New Rules—So Should You Buy an Electric Car Now or Wait?). If we look at what GM did with the Bolt, there was a price drop and also the creative addition of freebies ($1K towards a home L2 charger) - I think T will control R4P prices where they are or even reduce them some in the short term, but we may see even more highly regional pricing (note that some states are also increasing their incentives, and some of these are not volume limited (e.g., MA), and T will want some of that action). Note also that the R4H is not always a satisfactory alternative to the R4P e.g., if you need the higher towing capability. My strategy will be the following: 1. Hold my current vehicle for as long as possible - at least until close to the end of the battery life. Without a good reason to buy new, I may even replace the battery, which might be a lot cheaper by that time; 2. This means treating the current vehicle well - don't beat it up, observe service intervals and preventive mainteneace; 3. Don't be "brand loyal" - when the time comes, I will evaluate contenders dispassionately on their merits and not feel the need to buy another T.
 
#11 ·
Since Toyota was out of the running before the act was put in place or already reducing as of October this year. This does offer Toyota to move some of their manufacturing to get in to the reboot game. I do not know how long it would take them to gear up one of the factories here in the USA. I don't see anything happening with the price at the moment.
 
#12 ·
As long as Vroom and Carvana are selling used R4P's as fast as they can get them above new MSRP with no rebate, I think the market has already spoken. Those of us who were fortunate to get one with the rebate can enjoy the gravy, but I don't think demand is going to taper too much.
 
#13 ·
Demand dictates price and there's no shortage of people willing, in fact, hoping to be lucky enough to get a Prime well above MSRP, in some cases nearly $10k over. I'm guessing a price increase due to higher material costs and labor costs with inflation and continuing supply chain issues.
 
#14 ·
Originally the RAV4 Hybrid was only manufactured in Japan. As demand increased, the vehicle manufacturing came to Louisville, KY and Woodstock, Ontario. Now days, I see far more North American RAV4s than J VINs on dealer lots. I think, the same will happen with the RAV4 Prime. The new IRA will stimulate Toyota to build a US/Canada Assembly line along with a North American Battery Plant. After all, automakers like other industries love to harvest government tax credits. In other news, Audi is exploring a US location for manufacturing its future Q4 E-Tron SUV. At the moment, the larger version, I think RX 350 sized Electric SUV is manufactured in Belgium.
 
Discussion starter · #15 · (Edited)
Thanks for all the comments thus far! It's interesting to hear what other folks have to say on this topic as there are varying viewpoints.

My overall thoughts align with @14v6 – I feel that Prime might not be worth it to many folks and there will be other many other options for folks willing to pay the $42-$52K for a Prime.

I personally believe Toyota corporate executives are likely fuming right now as Toyota has already been in a slump & now this new law only adds fuel to the fire. I also agree with @Primestraw & @db821766 that Toyota will hastily try to get their batteries and production to comply with the IRA/new EV incentives. Not sure how quickly that will happen either, but you can bet they are not going to just handover & give the EV market to their rivals.

More of my thoughts as they relate to the questions are below:

1) Will Toyota adjust their pricing for 2023 model year by discounting from the current MSRP? Or do you think the keep the MSRP as-is or increase it? If you pick increase, how much do you feel it will go up by?

This one is difficult to predict, but I feel that Toyota probably wanted to increase their 2023 model MSRP to account for the new upgrades by a significant margin ($3K+), but with the passage of IRA, they are likely reconsidering. I feel pricing is a key driver for hybrids and PHEVs, as folks have to figure out if it is worth the "premium" over their ICE counterparts. Overall, I think they are now considering keeping the MSRP as close to 2022, but the added upgrades/higher cost to source parts/higher cost of the lithium battery will force Toyota to pass the cost to the consumer - so my prediction is a rise in MSRP from $1K to $2K.

2) Will there inventory on dealer lots in 2024? The reason that I am asking about 2024 and not 2023 is because it doesn't seem like the chip supply chain issues will be resolved within a year.

3) In 2024, will the R4P continue to sell at MSRP? Or will Toyota need to provide incentives/dealerships need to discount the vehicle? Currently we're seeing MSRP that includes "DELIVERY, PROCESSING & HANDLING FEE" to the dealer lot of: $41.5K (base SE) to just over $50K (fully loaded XSE).

I'll answer both of the above questions together as I feel they are related. My personal belief is that Toyota will have excess inventory as demand wears off. Perhaps what @Bkush stated will hold true that once Toyota realizes there is less demand for one of their vehicles, they will shift distribution to other places which don't have strict EV laws and sell there (even if that means slightly less profit).

For those that think the Prime demand will not decrease, check out this article & the FB poll of potential buyers (or those who have a deposit/are on a waitlist - including myself): Big Chunk of Owners Will Not Buy 2022 Toyota RAV4 Prime Because of Tax Credit Phaseout | Torque News

There are lot more overall economic factors that some folks may not be thinking about/considering. We already see the general market for used car prices coming down (meaning there will be MORE options for folks who are considering spending $42-$52K -- maybe a slightly used luxury SUV will makes more sense).

Watched these recent videos for proof:

I'm betting interest rates will rise even more (making car loans even more expensive), inflation is not slowing down any, Toyota will likely increase MSRP on the 2023 model for the added upgrades, if fuel prices continue to come down (in the low to mid $2.XX average that we experienced for 5-6 years) and lastly as supply chain (chip) shortages ease up later in 2023.. a cumulation of all this will lead to the the tide turning.

Forget about pricing going at dealerships; those same dealerships will be forced to offer incentives to move their vehicles (you guys still remember those days pre-pandemic, right? lol).

Let's continue to have more opinions on these questions so we can refer back to this thread to see what happens down the road.

~ Im2bz2p345 :)
 
#16 ·
Im2bz2p345 said:
1) Will Toyota adjust their pricing for 2023 model year by discounting from the current MSRP? Or do you think the keep the MSRP as-is or increase it? If you pick increase, how much do you feel it will go up by?

2) Will there inventory on dealer lots in 2024? The reason that I am asking about 2024 and not 2023 is because it doesn't seem like the chip supply chain issues will be resolved within a year.

3) In 2024, will the R4P continue to sell at MSRP? Or will Toyota need to provide incentives/dealerships need to discount the vehicle? Currently we're seeing MSRP that includes "DELIVERY, PROCESSING & HANDLING FEE" to the dealer lot of: $41.5K (base SE) to just over $50K (fully loaded XSE).
Click to expand...
Apologies I’m late. This is the fb buddy.

1.) If Toyota is concern at all about the IRA, they’ll probably keep the rise in mrsp to be what was done between 2021 and 2022.

2.) There will be inventory on the lot in 2024 and as I’ve mentioned before, it will not last any longer than the average RAV4 on the lot and it will still get mrsp pricing. Having inventory on the lot and still being sold for mrsp is not contradictory. If it didn’t stick around on the lot much at all, that means the dealers are probably still asking some markup of some sort cus demand is still too high.

3.) I’m predicting no incentives in 2023 and probably just the typical $500 or $750 incentives tops in 2024. I do wish we can go back to the good ole days of getting $6K off a $50K new Toyota but I don’t see that happening anytime soon.

Bottom line, the key question we’re trying to answer is, will there be enough buyers of the Prime to want it at mrsp or not? With the Prime being only 7%’ish of RAV4 sales, the supply continues to be a bottle neck for the Prime. Assuming that percentage stays similar, I’m not seeing Toyota having enough for the buyers. Yes, it’s a good chunk of change more than the regular hybrid but we also got to remember some buyers like the extra power. IMO, anyone who doesn’t care for the extra power will buy the hybrid over the Prime.

With it being the 2nd fastest Toyota on the lineup, it’s a good selling point. Hell, people buy a slower GR86 and do they actually autoX it on a regular basis? Probably as much as a RAV4 or 4Runner owner taking their vehicles off road. It’s a $32K car, pretty much a 2 seater, to do what? Look pretty in the garage most of it’s life? What about the Supra? The $44K GR Supra 2.0 is barely a tad faster than the Prime and it’s pretty much a one trick pony. Sure its totally worth it if you actually track it on a regular basis but do many people? Sure, the Prime doesn’t have a 6MT and not as fast around the cones but it does a little bit of everything while having a sweet kick to it.

I’ve said it before, I personally wouldn’t buy the Prime w/o the credit either. Period. But I have a feeling that there will be enough people buying Primes at mrsp and with a small kickback from Toyota, even in 2024 because the supply will continue to be pretty low vs all the ICE and hybrid RAV4s out there. We can’t be fixated on how we feel and see what the market says. Sure, 53% say they will cancel their reservation but how many reservations does each dealer have? If they have 100 people on the list and 53 decide to cancel, will that dealer have 47 Primes for those buyers in the coming two years?
 
#17 · (Edited)
One more thing to add is there are going to be more introductions of EVs like the Equinox that will have a good price point and Stellantis just announced the Hornet which is well priced in plug in and 2.0t form. I think that Toyota will be able to sell all the RAVs they can produce for the next year or two. I never understood how the ICE and Hybrid RAVs could be so similar in price but that was what helped me justify the hybrid purchases regardless of how much better they hybrid drove.. Primes are unobtanium and then who knows what pricing schemes dealers will have so it was just a fantasy to get a Prime for 41k plus tax minus the credit on your tax return. I got into the hybrid game too late to capitalize.

From what I read the name of the game with the Prime is to use it as an EV and have the gas engine as a backup. All the hype about it being the second fastest Toyota isn't the real mission. If you have multiple cars, and mostly do short trips my thinking is you might as well plug in a pure EV, not a plug in Hybrid. A regular hybrid is probably a nice place to hang out until the dust settles on all this EV and plug in stuff. I fill up a regular hybrid once or twice a month, it seems a lot more convenient that tripping over cords and leaving a filler door open only to get broken.

In the past it was always an ICE was cheaper than a hybrid or EV when factoring in purchase price and this legislation does nothing to change that. Toyota's got it all figured out though as the credits were going to expire anyway so they can just shift production around as they see fit. One thing I learned was that margins are tighter on EVs, I thought with fewer parts and labor they would be way cheaper but apparently that's not the case.
 
#19 · (Edited)
Don't forget the R4 Prime is a global car. The US tax credit only affects one part of their market. Toyota certainly would not reduce the price much more below the world market pricing. With the just ended Fed and state tax credits factored in, it was a bargain at mid $30's, a red SE with weather package and a thousand dollars of port options, plus your state fees. Right now, what other small wagon has AWD, 2500 lbs towing, low gas and fuel costs, with likely good reliability? I saw the Jeep mentioned as an alternative, but I think it hardly compares for road travel. Noisy, rougher ride, and burns much more fuel. If there was no R4Prime, I'd buy another Forester, alas no turbo anymore, but Much Better AWD, more drivers legroom, useable roof rails, bigger moonroof, and better rearward visibility. Fuel however would be more costly, probably almost double. Instead of a second R4Prime, we would have kept the Camry another year and would have bought a Nissan, Kia, or Hyundai BEV. Sorry the Subaru-Toyota BEV black fenders are a no go. Kinda like the Mustang EV, but the last two Fords poor reliability we had made me swear off them. Hardly any better than Fiat and all their nameplates.
I see the R4Prime continuing to be in demand, just not the super bargain it was for most US buyers.
 
#20 ·
mww33458 said:
Ford just hiked the price of their electric F-150 by $8,500 which more than offsets the IRA subsidy 😂.
Click to expand...
GM did the same. What a crock, but not unexpected.

www.washingtonexaminer.com

Inflation Reduction Act promises $7,500 electric vehicle credits after Ford and GM raised prices - Washington Examiner

Ahead of the Inflation Reduction Act extending the tax credit of up to $7,500 for purchases of new electric and hybrid vehicles, Ford and General Motors announced price increases at similar rates. Last week, Ford announced price hikes between $6,000 and $8,500 for most of its lineup for F-150...
www.washingtonexaminer.com www.washingtonexaminer.com

This whole thing (the “IRA”) is such a scam. From the subsidy perspective and this thread topic I’m glad I got my superior Japanese-made ‘22 R4P already as I refuse to buy domestic North American automobiles anymore unless it’s made in Canada.
 
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