BURIRAM, Thailand—Toyota Motor Corp. TM -0.87%decrease; red down pointing triangle President Akio Toyoda said he is among the auto industry’s silent majority in questioning whether electric vehicles should be pursued exclusively, comments that reflect a growing uneasiness about how quickly car companies can transition.
Auto makers are making big bets on fully electric vehicles, investments that have been bolstered by robust demand for the limited numbers of models that are now available.
Still, challenges are mounting—particularly in securing parts and raw materials for batteries—and concerns have emerged in some pockets of the car business about the speed to which buyers will make the shift, especially as EV prices have soared this year.
“People involved in the auto industry are largely a silent majority,” Mr. Toyoda said to reporters during a visit to Thailand. “That silent majority is wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly.”
While major rivals, including General Motors Co. and Honda Motor Co., have set dates for when their lineups will be all-EV, Toyota has stuck to a strategy of investing in a diverse lineup of vehicles that includes hydrogen-powered cars and hybrids, which combine batteries with gas engines.
The world’s biggest auto maker has said it sees hybrids, a technology it invented with the debut of the Toyota Prius in the 1990s, as an important option when EVs remain expensive and charging infrastructure is still being built out in many parts of the world. It is also developing zero-emission vehicles powered by hydrogen.
“Because the right answer is still unclear, we shouldn’t limit ourselves to just one option,” Mr. Toyoda said. Over the past few years, Mr. Toyoda said, he has tried to convey this point to industry stakeholders, including government officials—an effort he described as tiring at times.
Global car companies have made a sharp pivot to electric vehicles within the last few years, driven in part by the success of EV-only maker Tesla Inc.
Traditional auto makers such as Toyota, Ford and GM are also facing new competition from startups such as Rivian Automotive and Lucid Group Inc., which make EVs exclusively and have captivated Wall Street in recent years.
At the same time, the legacy auto makers have a much broader base of customers, including many living in rural areas and developing economies with unreliable electricity supplies.
And their gas-engine businesses are still driving the bulk of profits needed to fund the costly shift to electric vehicles, which not only requires the development of new models but also construction of new facilities and battery plants.
The infrastructure to charge electric vehicles is meanwhile still lacking in the U.S. and many other parts of the world, making owning an EV still a challenge for many types of consumers.
According to J.D. Power, the market share for EVs in the U.S. has risen sharply in the last couple of years. As of October, it was around 6.5% of the total new-car market, the firm said.
But that is largely because EV sales are growing faster in places such as California, where there are more options and a greater willingness among buyers to make the shift, J.D. Power analysts say. Sticker prices for electric vehicles have also jumped this year because of the rising cost of battery materials, limiting the pool of buyers who can afford one.
Auto executives say the uptake on EVs could be uneven for some time, and that gas-powered models, along with hybrids and plug-in hybrids, will endure for many years to come.
“The coastal areas, the East and West Coast, that’s electrifying much quicker than the interior of the country,” said Jim Rowan, chief executive of Sweden’s Volvo Car AB. Mr. Rowan said plug-in hybrids serve the purpose of providing buyers with an option if they aren’t ready to go full electric and are important to warming them up to the technology.
Ryan Gremore, an Illinois-based dealer, who owns several brand franchises, said he gets a lot of customers inquiring about EVs, in part because of limited supplies.
That might give the impression of robust demand, but it is unclear how it will materialize when inventory levels at dealerships normalize, he added. “Is there interest in electric vehicles? Yes. Is it more than 10% to 15% of our customer base? No way,” Mr. Gremore said.
Mr. Toyoda’s long-held skepticism about a fully electric future has been shared by others in the Japanese car industry, as well.
Mazda Motor Corp. executives once cautioned that whether EVs were cleaner depends largely on where the electricity is produced. They also worried that EV batteries were too big and expensive to replace gas-powered models and better suited to the types of smaller vehicles that Americans didn’t want.
Nissan Motor Co., which launched the all-electric Leaf over a decade ago, had until recently taken a more cautious stance on EVs with executives saying they were waiting to see how the demand would materialize.
Nissan Chief Executive Makoto Uchida said the company moved too aggressively with the Leaf early on, but lately demand for EVs has been growing faster than many had initially expected. Nissan said last year it would spend roughly $14.7 billion to roll out new battery-powered models. Now, Mr. Uchida said it may need to spend more.
The wild card, he said, is regulations and government subsidies globally that could speed adoption even more. “Would that be enough? The answer is it may not be,” Mr. Uchida said.
Mr. Toyoda has argued that fully electric models aren’t the only way to reduce carbon emissions, saying hybrid vehicles sold in large volumes can also deliver a short-term impact. “It’s about what can be done now,” he said.
Mr. Toyoda’s cautionary tone toward EVs has caused some concern from investors and consumers that the auto maker could be falling behind in the EV race.
Toyota has been slower than rivals to roll out fully electric models in major markets such as the U.S., with its bZ4X electric SUV being recalled earlier this year because of a potential safety problem.
Mr. Toyoda said the auto maker was taking all types of vehicles seriously, including EVs. In late 2021, it revealed plans to spend up to $35 billion on its EV lineup through 2030. Since then, Toyota has disclosed sizable investments in EV manufacturing capacity in the U.S.
The Toyota chief also said alternatives to EVs, such as hydrogen-powered vehicles, were beginning to get a warmer reception from government officials, members of the media and others involved in the auto industry.
“Two years ago, I was the only person making these kinds of statements,” Mr. Toyoda said.
https://www.wsj.com/articles/toyota-president-says-silent-majority-has-doubts-about-pursuing-only-evs-11671372223?mod=hp_lead_pos5
Comments 2