Toyota Chairman Says People Are Finally Seeing the Reality About EVs – WSJ:

Toyota Motor Chairman Akio Toyoda, when asked about electric-vehicle challenges including a recent lull in U.S. demand, said the industry was coming to recognize that there isn’t a single answer to reducing carbon emissions.

“People are finally seeing reality,” Toyoda said Wednesday, speaking in his capacity as the head of the Japan Automobile Manufacturers Association.

Toyoda, who stepped down this year as Toyota chief executive after nearly 14 years on the job, has long said the auto industry should hedge its bets by continuing to invest in hybrid gasoline-electric cars and other options beyond just electric vehicles.

As EV sales momentum lags behind in the U.S. and more buyers gravitate to hybrids, he may be enjoying an “I told you so” moment.

“There are many ways to climb the mountain that is achieving carbon neutrality,” Toyoda told a small group of reporters at the Japan Mobility Show, formerly the Tokyo Motor Show, which is opening this week for the first time in four years.

There have been a lot of stories recently about the slow down in electric car sales in the US. This “slow down” for the 3Q 2023 means that EV sales were up 49.8% year over year. Fully electric vehicles had a 7.9% market share in Q3 2023 up from 6.1% in Q3 2022. The “slow down” critics are referring to is a slow down in the growth rate of EVs which was around 70% in the first half of 2023.

Notably, this is only new car sales. The used EV market has finally started to see the benefits of EV longevity in the marketplace. Some 140,000 used EVs were sold during the first half of 2023. The used EV segment is now larger than the sales of every new EV car except Tesla’s Model 3 and Model Y. The average sales price for a used EV was $27,800. Pricing cuts by Tesla on their new vehicles continue to apply a lot of downward pricing pressure on the used market, so it’s not unreasonable to think used prices will continue to fall.

Tesla’s seen a big marketshare drop, from 70% to 50% in the last couple years, simply because their initial influence was so outsized. Now that we’re getting more manufacturers ramping and more products in the marketplace, Tesla’s market share is coming down even as they ship substantially more vehicles. (Many of us are very curious about the market reaction to the forthcoming Cybertruck since (1) it’s an odd-looking duck and (2) the truck segment is the largest vehicle segment in the US.

It is worth noting, among other things, that no other vehicle manufacturer has even a double-digit EV marketshare in the US. Generally, I attribute this to several things. First, poor long range infrastructure for their vehicles—now hopefully solved with the adoption of Tesla’s charging connector standard and access to Tesla’s SuperCharger network. Second, poor software quality in-vehicle. All the world’s major car manufacturers are capable of making a solid vehicle, but software is clearly not a strength (witness the offloading of much of it to Apple’s CarPlay) and it’s driven, no pun intended, a poor customer experience. Finally, car dealers generally have done no one any favors. EVs are an existential threat to dealers who rely on service centers to fund much of their business.

This latter point about existential threats is important. It means that there are a lot of companies and people attempting to inject Fear, Uncertainty, and Doubt (FUD) into the EV marketplace. The shift to EVs spells the end of tens of thousands if not hundreds of thousands of jobs. (I’m reminded of the Upton Sinclair quote: “It is difficult to get a man to understand something when his salary depends on his not understanding it.”)

The car culture that is embedded in the United States is changing. Legacy automobiles that use internal combustion engines (ICE) are on the way out for practical and environmental reasons. (To say nothing of health: There are studies linking increased EV usage to reduction in air pollution and corresponding ER visits for respiratory causes.) It is understandable that a great many people do not want the future that is coming.

But coming it is. Electric vehicles have vastly fewer moving and servicable parts (good bye to auto dealership service centers, third-party automative repair centers, lube/oil change companies) and can be recharged at home like your iPhone (goodbye gas stations).

For Toyota, an early leader in hybrids, the bet on hydrogen-power appears to have been disastrous in the US market. They are way behind in pure EV sales. The question is whether the market will shift to a transitional hybrid gas/plug-ev architecture or just go pure EV. If the former, Toyota will be fine. If the latter, they may be in for a rough ride.