A marathon, not a sprint
Since EVs first burst onto the scene, the prevailing wisdom has been that we’re driving towards an all-electric future. But, Toyota is betting that the journey may take longer than expected, as the world’s largest auto manufacturer unveiled plans for a new generation of smaller internal combustion engines, per the Financial Times.
The engines are set to go into production towards the end of 2026, and are the latest indication that the charge towards EV is looking more evolution than revolution, as consumers pivot towards affordable brands with longer ranges. Given its reputation for being something of a hybrid specialist, or an EV-laggard if feeling less charitable, that trend has played into the Japanese carmaker’s hands.
Indeed, the company hasn’t leaned into battery electric vehicles in quite the same way that some of its peers have: in its latest fiscal year (ended March 2024), just 1.1% of Toyota / Lexus sales were BEVs, while hybrids accounted for a whopping 35%+ of vehicles sold.
Speed limits
Although many manufacturers are still experiencing strong growth (with some positive signs in early April data, according to Bloomberg), US sales of BEVs were basically flat in Q1 ’24. Much of how the rest of the year shakes out will depend on the product pipeline of major players like Ford, GM, and Tesla — the last of which accounts for roughly half of the market, but has given only vague hints about its future product roadmap.
Toyota is hedging its bets by investing in EVs and innovating in transition technologies like hybrids and plug-in hybrids... a good strategy if you believe, as the company’s chairman does, that BEV sales may hit a ceiling at just 30% of the global market.
