Maybe Toyota was right

The Japanese are too polite to say to the world’s face that they were right, we are not in the United States. But the recent upheavals in the direction the automotive industry is taking at the moment seem to vindicate Toyota, which had from the beginning of the electric revolution advocated for a cautious approach, stating that it would be a long and very costly process.

Other manufacturers are noticing the same thing

Investors, environmentalists, and electric advocates all criticized Toyota, calling it a desperately gasoline-dependent relic practicing ostrich politics. These same people reacted in a similar way when Toyota launched its hybrid revolution with the Prius. Yet, it was Toyota that was correct. The industry’s optimism about the rapid rise of EVs is suddenly faltering. Companies like Ford and GM have reduced production. Others like BMW claim that combustion engine production will continue beyond 2035. There are also canceled IPOs, dealer skepticism, slowing sales, reduced investments, and ruthless price wars, all of which are new realities that challenge the EV segment.

Revision of timelines

We are not saying that electric models will cease tomorrow, but we need to broaden our perspective beyond Quebec. Many places in the world are far too poor to even consider venturing into electric vehicle production. Many countries have no environmental laws. Frank Weber, head of product development at BMW, stated at a press conference in Portugal last week that no manufacturer is making money with electric models and that production costs are increasing. We must face the reality that this technology is currently out of reach for many people and that the transformation of infrastructure will still take time.

And what about hybrids

Meanwhile, hybrid vehicles are selling like hotcakes. Several manufacturers are preparing hybrid models with longer range that could satisfy many potential electric car buyers. Sales of 100% electric models are progressing much more slowly than expected in the United States and Europe. Automakers are revising their targets downward. Combustion engines still have a future. Many are looking at how combustion engines could coexist with electric models for a longer period.

Electric investments are not being shelved

Toyota CEO Koji Sato estimates that Toyota will be ready to sell 1.5 million EVs worldwide this year. The company, which is spending $13.9 billion to build electric and hybrid vehicle batteries in North Carolina, announced this week that it will invest an additional $1.3 billion in battery assembly in Kentucky. This additional amount complements the $5.9 billion already announced by Toyota for this operation. These are colossal sums that not all manufacturers can afford to spend.

Should we follow Toyota’s path again?

Investors are beginning to understand the message. Toyota’s shares have surged 70% over the past 12 months and 24% since January 1. Even Toyota cannot predict the future. But when it comes to Toyota’s critics, the world’s largest automaker may well have the answers to their questions. Only time will tell.