BURIRAM, Thailand – Toyota Motor Corp. TM -0.87% President Akio Toyoda said he was among the silent majority in the auto industry on whether only electric vehicles should be pursued.
Automakers are betting heavily on all-electric vehicles, investments that have been bolstered by robust demand for the limited number of models now available.
Still, challenges are mounting — particularly in securing parts and raw materials for batteries — and concerns have surfaced in some areas of the auto business about the speed at which buyers will switch, especially as EV prices have soared this year are.
“The people who work in the auto industry are largely a silent majority,” Mr Toyoda told reporters during a visit to Thailand. “This silent majority is wondering if electric vehicles really are okay as the only option. But they think it’s the trend, so they can’t say it out loud.”
While major rivals including General Motors Co. and Honda Motor Co. have set dates for when their lineups will be all-electric vehicles, Toyota has stuck to a strategy of investing in a diverse vehicle lineup that includes hydrogen-powered cars and hybrids that use batteries combine with gas engines.
The world’s largest automaker has said it sees hybrids, a technology it invented with the debut of the Toyota Prius in the 1990s, as an important option if EVs remain expensive and charging infrastructure is still being built in many parts of the world. It is also developing zero-emission vehicles that run on hydrogen.
“Because the right answer is still unclear, we shouldn’t limit ourselves to just one option,” Mr. Toyoda said. Mr Toyoda said he has been trying to get the point across to industry stakeholders, including government officials, for the last several years – an effort he sometimes described as tedious.
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Global auto companies have made a sharp shift toward electric vehicles in recent years, driven in part by the success of pure electric vehicle maker Tesla Inc.
Traditional automakers like Toyota, Ford, and GM are also facing new competition from EV-only startups like Rivian Automotive and Lucid Group Inc., which have captivated Wall Street in recent years.
At the same time, legacy automakers have a much broader customer base, including many living in rural areas and developing countries with unreliable power supplies.
And its gas engine business still drives most of the profits needed to fund its costly electric-vehicle shift, which requires not only the development of new models but also the construction of new plants and battery plants.
Meanwhile, the US and many other parts of the world still lack the infrastructure to charge electric vehicles, so owning an electric vehicle is still a challenge for many types of consumers.
According to JD Power, the market share for electric vehicles in the US has risen sharply in recent years. As of October, it was around 6.5% of the total new car market, the company said.
But that’s largely because EV sales are growing faster in places like California, where there are more options and a greater willingness among buyers to switch, analysts at JD Power say. EV sticker prices have also skyrocketed this year due to the rising cost of battery materials, narrowing the pool of buyers who can afford one.
Auto executives say EV adoption could be uneven for some time, and gas-powered models, along with hybrids and plug-in hybrids, will be around for many years to come.
“The coastal areas, the east and west coasts, will be electrified much faster than the interior,” said Jim Rowan, CEO of Sweden’s Volvo Car AB. Mr Rowan said plug-in hybrids serve to give buyers an option if they are not ready to go all-electric and are important for warming them up to the technology.
Ryan Gremore, an Illinois-based dealer who owns multiple brand franchises, said he gets many customers inquiring about electric vehicles, in part because of limited supplies.
That may give the impression of robust demand, but it’s unclear how this will translate to dealer inventory normalization, he added. “Are you interested in electric vehicles? Yes. Is it more than 10% to 15% of our customer base? No way,’ said Mr. Gremore.
Mr. Toyoda’s long-held skepticism about an all-electric future was shared by others in the Japanese auto industry.
Mazda Motor Corp executives once warned that the cleanliness of electric vehicles largely depends on where the electricity is produced. They also worried that EV batteries would be too big and expensive to replace gas-powered models and better suited to the kinds of smaller vehicles Americans don’t want.
Nissan Motor Co., which launched the all-electric Leaf over a decade ago, had taken a more cautious stance on EVs until recently, with executives saying they would wait and see how demand materialized.
Makoto Uchida, Nissan chief executive Makoto Uchida, said the company moved too aggressively with the Leaf too soon, but recently demand for electric vehicles has been growing faster than many initially expected. Nissan said last year it would spend around $14.7 billion to launch new battery-powered models. Now Mr Uchida said it may need to spend more.
The joker, he said, is regulations and government subsidies around the world that could accelerate adoption even further. “Would that be enough? The answer is that maybe it isn’t,” Mr Uchida said.
Mr Toyoda has argued that all-electric models are not the only way to reduce carbon emissions, saying hybrid vehicles sold in bulk can also have short-term impacts. “It’s about what can be done now,” he said.
Mr. Toyoda’s cautionary tone about electric vehicles has raised some concerns among investors and consumers that the automaker could be falling behind in the electric vehicle race.
Toyota has been slower than its competitors in rolling out all-electric models in key markets like the US, with its bZ4X electric SUV recalled earlier this year over a potential safety issue.
Mr Toyoda said the automaker takes all types of vehicles seriously, including electric vehicles. In late 2021, the company announced plans to spend up to $35 billion on its electric vehicle lineup by 2030. Since then, Toyota has announced significant investments in electric vehicle manufacturing capacity in the US
The Toyota boss also said that alternatives to electric vehicles, such as hydrogen-powered vehicles, are gradually gaining a warmer reception from government officials, media representatives and others involved in the auto industry.
“Two years ago, I was the only person to make such statements,” Mr. Toyoda said.
Write to River Davis at [email protected]
Corrections & Enhancements
Ford Motor Co. hasn’t set a date for when its lineups will all be EV. A previous version of this article incorrectly said that this was the case. In addition, Akio Toyoda is the CEO of Toyota Motor. The home page summary of an earlier version of this article incorrectly stated that he was Tokyo Motor’s chief executive. (Corrected 18 Dec.)
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