Lexus Australia ready to go all-hybrid by 2030, all-EV by 2035

Lexus is staring down the barrel of almost two years of sluggish EV sales as it awaits the new breed of all-electric models the company is working on globally.

While Lexus has committed to selling only electrified vehicles from 2030 and battery-electric vehicles from 2035 – sidestepping the hydrogen-powered models still being developed by parent company Toyota – the brand is taking the slow road to that EV future.

But Lexus Australia chief John Pappas says that all changes in 2026.

“Later this decade, the next generation of Lexus BEVs will adopt advanced batteries that improve performance with extended cruising range and dramatically lower recharging time,” said Pappas.

One of those imminent technologies is solid-state batteries, which parent company Toyota has promised by 2027 or 2028, in turn roughly doubling the energy density of current lithium-ion battery tech.

Lexus also says it’s working on batteries with a prismatic structure.

“From 2026 onwards you’ll see a lot more of the BEVs rolling out,” said Pappas.

One of those is expected to be an EV-only replacement for the discontinued IS medium sedan to compete with the Tesla Model 3.

Lexus has been without the once-popular four-door since late 2021 when it was discontinued for failing to meet tougher safety standards.

At last year’s Japan Mobility Show Lexus showed the LF-ZC, which provides an idea of what the company is thinking.

The company also showed off the larger and more opulent LF-ZC electric limousine, which would sit towards the top of the Lexus range.

And they can’t come soon enough given the booming sales of EVs in Australia (albeit off a small base).

In 2023 EV sales grew 161 per cent and while the growth isn’t expected to be anything like that this year, pundits are still expecting Aussies to comfortably set a new EV record.

So Lexus has plenty of catching up to do.

Last year just 2.5 per cent of Lexus Australia’s sales were electric, comprising the UX300e small SUV and RZ medium SUV, the latter only on sale for three-quarters of the year.

That’s well below the 7.2 per cent average across the entire industry and miles off the 36 per cent take-up across the luxury and prestige segments.

Tesla dominates EV sales Down Under – the company sold three times more cars than the entire Lexus tally of petrol, diesel and hybrid vehicles in 2023 – but even fledgling EV brand Polestar sold over six times more EVs than Lexus in Australia last year.

And key rivals have much higher EV sales mixes than Lexus: 35 per cent of Volvo sales in Australia were pure electric in 2023, along with 13 per cent of Mercedes-Benz sales, 11 per cent of BMW and nine per cent of Porsche sales.

But Pappas says Australia still needs to work on infrastructure as a key piece of the puzzle when it comes to widespread EV take-up.

“BEVs for us in Australia, we need infrastructure,” he said. “There’s a lot of things that still need to happen in order to support peace of mind for a person to have a full BEV living their daily lives in a country like Australia.

“It’s not an overnight competition to go to a BEV, it’s not for everyone.

“It’s not just about BEVs… it’s about electrified. It’s a multi-pathway approach to in time go to full EV.”

Pappas points to a 60 per cent take up of electrified vehicles – the vast majority of them being hybrids that run purely on petrol – as the focus for the Japanese luxury brand.

“I’m not really looking at my BEV sales versus the luxury brands, I’m more interested in my electrified sales mix and making sure that that is to the aim of getting to that 80 per cent mark [by 2025].”

A lack of scale for parent company Toyota – which supplies mechanical, battery and electrical systems for Lexus EVs – is also hurting the premium brand.

“One of the challenges we’ve got with electric is the price,” said Pappas. “How much it’s costing us to build these cars when you don’t have scale.”

He also pointed to lacklustre residual values, which is something that has hit the RZ hard. Less than a year after it went on sale, near-new examples and demonstrators of the mid-size electric SUV are advertised on carsales for up to 30 per cent below their original asking price.

“EVs are dropping in price… and the residuals aren’t holding,” said Pappas. “Residual values take time for people to trust the technology.”

There is one brand that bucks that residual value trend: Tesla. The general manager of Redbook.com.au, Ross Booth, says the EV brand holds up strongly.

“Tesla has historically behaved differently… to other EVs,” he said. “The demand for Tesla has been stronger both new and used, which has held up the used market stronger than other EVs.”

Still, that hasn’t stopped Lexus talking boldly of an EV revival towards the end of this decade, before it becomes an EV-only brand in a little over a decade.

Before then, however, Lexus Australia will sell only electrified (hybrid and plug-in hybrid) vehicles, from 2030 – and that means large luxury SUVs like the LX flagship and upcoming GX will have to ditch their twin-turbo 3.4-litre petrol V6 (and V6 turbo-diesel, in the case of the LX) in less than seven years.

“By 2035 Lexus globally is seeking to shift to 100 per cent battery-electric vehicles – that is our aim,” said Pappas.

“But we’re not shying away from being 100 per cent electrified by 2030 and that means hybrid, plug-in hybrid or EV.

“It’s all part of our multi-pathway transition so we don’t leave anybody behind on our journey to becoming a BEV company, based on the right technology for this market to meet the demands of our customers and based on things like infrastructure and a whole raft of policies that will come into play in time.

“We’re still fully committed to that and it’s not far away. That’s our plan but we’ve got to make sure we’re going on the journey with the market.

“So we’re not shying away from the 2035 EV goal, but the market also has to be ready,” he said.

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