Guest Column: Toyota can say 'I told you so' on EVs

TOKYO—Toyota is too polite to gloat, but the world's biggest carmaker may be close to a told-you-so moment when it comes to waning enthusiasm for electric vehicles.

As many of the Japanese giant's global rivals plunged into EVs, plowing billions of dollars into new factories, Toyota often seemed like a lone voice in warning the EV revolution wouldn't be so easy.

Everyone from investors and environmentalists to techie hipsters blasted Toyota Motor Corp. as a hopelessly petrol-addicted relic with its head in the sand. Toyota, the once-lauded progenitor of the Prius hybrid green machine, somehow became an EV activist punching bag.

Fast-forward to today, and Toyota's not looking so foolish after all.

Industry optimism in the meteoric rise of EVs is suddenly wobbly.

Layoffs, canceled IPOs, dealer skepticism, slowing sales, slashed investments, ruthless price wars — these are the new-reality buzzkills taking the shine off the EV segment as it starts to lose steam.

Meanwhile, Toyota's hybrids are selling like hotcakes.

Some people just don't seem to be listening to the market, suggests Toyota's North American sales chief.

"Our strategy is based on what dealers are telling us the customer wants," Jack Hollis said at the Automotive News Retail Forum earlier this month.

"Our dealers are not telling us that the customer wants EVs more than other things," he said.

"They're telling us they want EVs as a choice. They want plug-in hybrids as a choice. They want hydrogen as a choice. In fact, they would like to have gas engines [as a choice] but also have cleaner-burning fuels," Hollis said.

He might be right. Check out these recent headlines:

• Dealers say Biden's EV strategy is too aggressive for U.S. market
• EV sales start to fall in California, an industry bellwether
• EV production cuts give suppliers more uncertainty — and opportunity
• Renault cancels planned IPO for Ampere EV unit
• Ford cutting jobs at F-150 Lightning plant, adding 3rd shift for Bronco, Ranger
• EV demand slowdown hits auto makers, suppliers
• Polestar to cut around 450 jobs globally

Not a pretty picture.

Speaking last month to a group of businesspeople in Japan, Chairman Akio Toyoda said good-old internal combustion technology still has lots of potential, even in the age of battery-electric vehicles.

"No matter how much BEVs progress, I think they will have a market share of 30 percent," Toyoda said. The remainder, he predicted, will be hybrids, fuel cells and hydrogen combustion.

"I have no doubt that engine vehicles will survive," he said.

Toyota is not anti-EV. The company said last year it would expand its EV lineup by releasing 10 new models by 2026. CEO Koji Sato reckons Toyota will be ready to sell 1.5 million EVs globally that year as a "baseline" – meaning if demand actually materializes to that level.

The company, which is spending $13.9 billion to build EV and hybrid batteries in North Carolina, announced this week it will invest $1.3 billion more into battery pack assembly in Kentucky. That comes on top of $5.9 billion in funding Toyota had already announced for the operation.

But to actually get there, Toyota really needs to pump up the volume.

Last year, Toyota's global sales of EVs quadrupled. Sounds impressive, until you learn shipments totaled just 104,018. In the U.S., where Toyota offers only two EV nameplates, full-electric sales amounted to just 14,715. Tesla, by contrast, delivered 1.8 million vehicles globally last year.

In the meantime, Toyota is busy cashing in on its trademark hybrid technology to do its part in reducing carbon emissions.

Last year, hybrids powered a 7.7 percent surge to record global sales of 10.31 million vehicles for the Toyota and Lexus brands. Standard hybrids soared 31 percent to 3.42 million vehicles.

They accounted for 33 percent of worldwide deliveries, up from 27 percent in 2022.

Because they have relatively higher margins, hybrids are also driving record profits at Toyota.

As early as 2025, Toyota could be selling 5 million hybrids a year globally, CFO Yoichi Miyazaki predicted Feb. 6, while announcing a 76 percent jump in operating profit to nearly $12 billion in October-December. Hybrids are selling hotter than even Toyota predicted, Miyazaki said.

In the U.S. market, he told reporters, overall inventory is running about 14 to 15 days' supply.

For hybrids? American dealers are coping with less than five days. Models such as the Toyota RAV4 Hybrid, Highlander Hybrid, Corolla Hybrid and Lexus RX Hybrid are flying off lots.

"Our expectations were defied. Production capacity was exceeded by actual demand," Miyazaki said. "As a realistic solution, hybrids are still favored by our customers."

Investors are are starting to get the message. Toyota shares have surged 70 percent over the last 12 months and are up 24 percent since Jan. 1.

Not even Toyota can predict the future. But when it comes to the Toyota haters, the world's biggest car company may just have the last laugh.