Toyota is dissatisfied with Daihatsu's e-Smart Hybrid technology: The engine noise is too loud during high-speed operation

【PCauto】As a brand with deep roots in regional markets, the technical partnership between Toyota and Daihatsu has long been seen as crucial for reducing hybrid costs in entry-level models. However, reports have emerged that Toyota is dissatisfied with Daihatsu's e-Smart Hybrid technology. At the heart of this disagreement lies a deeper conflict over technical philosophy and market positioning.

The original purpose of the e-Smart Hybrid was to provide a low-cost hybrid solution for small-sized models. This series hybrid system drives the wheels directly via the electric motor, with the engine acting solely as a generator. In congested urban areas with low speeds, it delivers a smooth and quiet driving experience reminiscent of an EV – a key factor in its initial appeal to consumers.

However, issues emerge during high-speed cruising. The engine needs to maintain high RPMs to generate electricity, leading to higher-than-expected noise levels and fuel consumption figures that are merely on par with efficient petrol-powered rivals in the same segment.

For Toyota, whose core competitiveness lies in its hybrid technology, such performance falls short of expectations. After all, its self-developed THS system has long achieved efficient energy distribution across different speeds and loads, delivering consistent fuel efficiency whether in city traffic or on the open highway.

Toyota’s THS system employs a planetary gearset to seamlessly integrate the engine and motor, giving it an edge in both technical sophistication and versatility across driving conditions.

In contrast, the e-Smart Hybrid appears more as a compromise solution tailored for specific scenarios. In aiming for cost control, its simplified architecture comes at the expense of the well-rounded performance expected of a full hybrid system.

Although models equipped with e-Smart Hybrid can attract consumers with prices slightly higher than gasoline versions, criticism over its lack of a decisive fuel economy advantage leaves the e-Smart Hybrid in an awkward spot. It can neither match the all-scenario efficiency of THS models, nor convincingly justify a price premium for an enhanced experience.

In the Southeast Asian market, consumers are highly price-sensitive when it comes to small cars. Here, the cost-effectiveness of a hybrid system is a key determinant of a model’s competitiveness.

Daihatsu, as the core arm of Toyota Group responsible for small car development, was supposed to be the key to balancing cost and technology. However, Toyota’s expressed dissatisfaction has sparked external speculation regarding future adjustments: Will future models revert to the THS architecture, or will the e-Smart Hybrid's high-speed performance be substantially improved?

Whichever path is chosen, Toyota must strike a balance between “brand technological consistency” and “cost-effectiveness in the entry-level market.” Lowering the cost of the THS system for A0-segment cars could squeeze profit margins. On the other hand, persisting with the e-Smart Hybrid risks diluting Toyota’s hard-earned reputation in hybrid technology.

It is worth noting that Toyota’s obsession with technical perfection is well recognised within the industry. Since the first Prius, the THS system has always been defined by its "high efficiency in all scenarios" as a core label. This engineering philosophy pushes Toyota’s requirements for any hybrid solution well beyond mere functional adequacy.

In contrast, the design logic of the e-Smart Hybrid leans more towards "solving the problem of availability" rather than "demonstrating technological superiority," which might be the core of the disagreement between the two sides. Toyota requires a hybrid solution that reflects the brand's technology, rather than merely meeting regulations or serving as an entry-level transitional product.

As emission regulations tighten gradually across Southeast Asian countries, hybridization of small vehicles has become an irreversible trend. How Toyota and Daihatsu adjust their technical collaboration in the future will not only impact their product planning but also set the direction for the hybrid technology path in regional markets.

For consumers, the real-world experience behind the hybrid badge ultimately dictates their willingness to pay a premium. This is the benchmark Toyota refuses to lower.