Toyota Offers Cheaper Prius If Customers Take Software Updates

Toyota Motor Corp's leasing unit said on Wednesday it will begin offering over-the-air safety updates on the new Prius, betting it can use an approach pioneered by Tesla to cut lease prices and preserve used-car values in Japan.

The lease program will require customers to opt in for a service expected to bring monthly lease payments down by 10%, Toyota's leasing affiliate said.

The service marks the first time Toyota will update its safety features, including the collision avoidance system, for a car on the road, said Shinya Kotera, president of KINTO, the Toyota leaser unit in Japan.

Tesla has routinely used over-the-air software updates to improve charging speed on its electric vehicles, unlock additional battery range and fix safety issues.

Kotera said Toyota's approach would focus on cost for the just-released version of the Prius, a 25-year-old hybrid that the Japanese automaker sees as a pillar of its strategy even as other major automakers shift toward EVs.

"Tesla's customers are, to put it simply, high-income earners, and many of them are willing to pay for new and good things so that's why their products are a hit with that segment of the market," Kotera said in an interview with Reuters on Friday.

"Toyota's customers are not like that. They are not someone who would pay extra for a new technology. They are looking for something good, reliable and inexpensive."

Toyota unveiled the new Prius last month amid criticism from ESG investors and environmental groups for its slow rollout of fully electric vehicles.

The leasing unit wants to expand the service to other vehicles within a year or two and is considering plans to make it a global offering, Kotera said.