Electric cars will never dominate market, says Toyota

Akio Toyoda, the leader of Toyota, the largest car manufacturer by sales, has expressed skepticism about the dominance of electric vehicles (EVs) in the market, suggesting that they should not overshadow other technologies such as hybrids and hydrogen-powered vehicles, which Toyota specializes in.

In a discussion with employees, Toyoda emphasized the importance of tackling CO2 emissions and advocated for a diverse approach to automotive technology. He projected that EVs would not surpass a 30% market share, a figure slightly higher than their current status in the UK, expecting the rest to comprise fuel cell EVs, hybrids, and hydrogen-fueled cars.

Toyoda stressed that consumer choice, rather than regulatory or political pressure, should drive the market’s direction. He pointed out the limitations of EVs, noting the lack of electricity access for a billion people globally, their high cost, and the need for charging infrastructure.

Despite criticism of Toyota lagging in EV development, Toyoda defended the company’s focus on alternative technologies but acknowledged the challenges of pioneering such efforts. He also highlighted Toyota’s work on a new combustion engine, underlining the need to integrate engine factory workers into the transition towards greener technology, while acknowledging the potential financial constraints from banks reluctant to fund fossil-fuel engine projects.

Toyoda’s long-endorsed “multi-pathway approach” suggests that the transition to EVs might not be as swift as anticipated. This approach seemed validated by Toyota’s record production of 9.2m vehicles in 2023 with a month to spare, anticipating an annual total exceeding 10m. Moreover, sales from January to November rose by 7% to 10.2m vehicles.

Koji Sato, Toyota’s CEO, pledged to ramp up battery EV sales to 1.5m by 2026 and 3.5m by 2030. This is in contrast to Tesla, the leading EV manufacturer, which reported 1.8m deliveries the previous year.

Despite these developments, EV sales in the UK and Europe decelerated towards the end of 2023. The market share of EVs in the UK slightly declined from 16.6% in 2022 to 16.5% in 2023, falling short of the predicted 17.2% share.

The Society of Motor Manufacturers and Traders is now lobbying for a reduction in VAT on electric car purchases to boost demand, ahead of the new Budget set for March 6. In contrast, the government is pushing manufacturers to increase the share of EVs sold, with escalating targets culminating in an 80% mandate by 2030.

Toyota, opposing the immediate implementation of this mandate, argued that the targets for the current year were unattainable and could harm the company financially and reputationally. The company sought a one-year postponement of the policy and proposed that hybrids should count towards the mandate.

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