Moody's Japan reckons the release by Toyota Motor of its hybrid vehicle technology patents could increase demand for full hybrids but the rise of competing hybrid systems and increased product diversification mean it is uncertain how much the automaker will benefit from its patent release.

"If Toyota's strategy is successful, increased demand for full hybrids would drive down the cost of auto parts and increase sales for related systems or know how which would be credit positive for the automaker," said Motoki Yanase, a Moody's vice president and senior credit officer.

"However, the company's full hybrid cars are facing competition from 'mild hybrids' developed by a number of European automakers, as well as from the ongoing development of battery electric vehicles (BEVs)," added Yanase.

European automakers, including Volkswagen, Daimler and BMW AG (A1 stable) have been building their own mild hybrids since the early 2010s.

Such hybrids – some using 48v systems – use a small starter/generator and a battery to assist a petrol engine and cost less but are less fuel efficient than Toyota's full hybrids.

Nonetheless, mild hybrids have made strides in quality development, supported by parts manufacturers such as Continental and Valeo, Moody's said.

Meanwhile, Nissan Motor has also developed its own hybrid technology called e-Power and its Note e-Power became the top selling model in Japan in 2018, excluding minicars.

Finally, Moody's said, the product life cycle of hybrids may also be affected by the development of BEVs.

If competitors, such as Volkswagen, succeed in bringing down costs and speed the expansion of BEVs, it would likely hinder Toyota's efforts to broaden industry adoption of full hybrids.