Toyota is riding a windfall of hybrid vehicle sales on its way to posting projected net profits of more than $30 billion for the fiscal year ending in March, more than a year after then-CEO Akio Toyoda cautioned that the EV transition will “take longer than the media would like us to believe,” according to Fortune. While the company drew the ire of environmentalists and activists for its hesitance on EVs, the company’s measured approach has been vindicated given the major losses that Toyota’s competitors are taking on their EV product lines, market experts told the Daily Caller News Foundation.
Toyota, including its subsidiaries, has posted impressive 2023 numbers. The company complemented its profit projections with a 6.6% increase in sales relative to 2022, thanks in part to its hybrid sales: Toyota sold nearly 15,000 pure EVs, 40,000 plug-in hybrids and more than 600,000 non-rechargeable hybrids in the U.S. in 2023, according to InsideEVs.
The Biden administration is regulating and spending big to push EVs on American consumers, with a stated goal of having EVs make up 50% of all new vehicle sales by 2030. Proposed tailpipe emissions standards from the Environmental Protection Agency (EPA) would go even further if finalized, effectively requiring two-thirds of all new light-duty vehicles sold after model year 2032 to be EVs. Despite these efforts, the EV market is struggling, evidenced by slower-than-anticipated growth in consumer demand and reports of EVs piling up on dealers’ lots.
“In the automotive world, as with almost everything else, there’s no one-size-fits-all option for consumers,” Mark Mills, a distinguished senior fellow at the Texas Public Policy Foundation and an expert on the automobile market, told the DCNF.
The overt and subtle pressures of the administrative state are primarily responsible for the American manufacturers’ continued commitment to massively increasing EV production, Mills said, adding that mandates that seem far away today are not too distant for automakers because design cycles, capital investments and supply chain plans must be made several years in advance of the eventual manufacture and sale of a line of vehicles.
Ford, for example, much more readily embraced the EV transition under the Biden administration. The company previously planned to be able to produce 300,000 EVs per year by 2023, and 2 million annually by 2026, but it delayed or missed both targets, according to NPR.
Moreover, Ford lost approximately $65,000 on every EV that it did sell in 2023, posting a $4.7 billion loss on its EV product line, according to a summary of the company’s 2023 financial performance. This year, the company is expecting to lose somewhere between $5 billion and $5.5 billion on its EV products. The company had a net profit of $4.3 billion in 2023.
Ford plans to mimic Toyota and more significantly lean into its hybrid models in the near future, according to Electrek. The company is also “slowing down” about $12 billion of investment into its EV business, as CFO John Lawler put it.
Toyota appears to be in better shape than competitors like Ford “because Toyota chooses to be less guided by central planners and political correctness and more by consumers, who want affordable, fuel-efficient vehicles that are not battery range-limited, do not take hours to recharge, and have convenient access to widespread refueling infrastructure,” Marlo Lewis, a senior fellow for the Competitive Enterprise Institute, told the DCNF. “The EV production cutbacks, Ford’s multi-billion-dollar EV losses, and the bloated inventories of unsold EVs on dealer lots amply vindicate Toyota’s initial skepticism. That skepticism has paid off in both sales and profits, big time.”
Notably, Toyota was late to arrive to the EV market in the first place, deciding against widely marketing any all-electric products until 2020, trailing many competing companies that had been manufacturing and selling EVs for years before Toyota established an EV-focused office, according to Slate.
Ford is not the only major American manufacturer that has struggled with the relatively rapid embrace of EVs. General Motors, the largest automaker in the U.S., has backed off of its goal to manufacture 400,000 EVs by the middle of this year. The company missed its 2023 EV production target by about 50%, but it said in December 2023 that it anticipates EVs will begin to generate profits at some point in 2025.
Ford is different from General Motors in that it separates most of the financial information about its EV product lines from the other segments of its operation, whereas the other companies do not. Thus, it is difficult to gauge exactly how General Motors’ EV products are performing relative to those of Ford, but the fact that General Motors is revisiting previously-stated EV production commitments suggests that the firm may not have extreme confidence in EVs’ ability to generate considerable profits in the near-term. Stellantis, the third major American manufacturer, is bringing its first EVs into the U.S. market during the first quarter of 2024.
“Toyota most definitely has been vindicated,” Diana Furchtgott-Roth, the director of the Center for Energy, Climate and Environment at the Heritage Foundation, told the DCNF about Toyota’s measured approach to the EV transition. “We have seen numerous pieces of evidence that Americans don’t want to take up this technology at the rate that the government wants to see … Inexpensive transportation is an American birthright and iconic — it is celebrated in American movies and American songs. Trying to interfere with something that is a birthright for Americans is a complete anathema to the diverse majority of people who live in America.”
About half of all Americans have little or no interest in purchasing an EV the next time they go to buy a car, while 13% do not plan to purchase a vehicle of any variety, according to a July 2023 Pew Research poll. About 38% of respondents indicated that they are at least somewhat interested in purchasing an EV as their next automobile.
The administration’s policies are principally to blame for the fact that legacy American manufacturers are losing vast sums of money on EVs, as major corporations typically do not voluntarily continue to engage in practices that lose them billions of dollars, Furchtgott-Roth told the DCNF.
Toyota declined to comment for this story. Ford and General Motors did not respond immediately to requests for comment.
