Toyota Chairman Says Electric Cars Will Fail to Dominate Market

By Tom Ozimek

Toyota’s chairman and former CEO, Akio Toyoda, said that fully electric vehicles (EV) will never manage to capture more than a third of the market and that governments shouldn’t push them on a reluctant public.

Mr. Toyoda made the remarks during a Jan. 23 company Q&A session, in which he said that peoples’ individual choices—and not regulations or taxpayer-funded subsidies—should be what drives EV adoption.

“Customers—not regulations or politics—should make that decision,” he said.

He pointed out that there are serious structural barriers that hinder EV adoption, including that around 1 billion people around the world live in areas without electricity.

Toyota supplies vehicles to these regions, he noted, and so battery-powered EVs simply can’t be a transportation solution for everyone.

No matter how much progress is made with battery EVs, Mr. Toyoda predicted that they would never exceed a 30 percent market share. Internal combustion engine vehicles will “definitely remain,” he insisted.

Some have gone further in their pessimistic take on EV adoption.

Stephen Moore, senior economist at FreedomWorks and a onetime senior economic adviser to former President Donald Trump, recently issued a grim prediction about America’s EV market, saying EVs are poised to be automakers’ “next big flop.”

Toyota Chief’s Warning

Mr. Toyoda called for a “multi-pathway approach” to reducing carbon emissions that includes a combination of vehicle types, including gasoline and diesel-powered vehicles, hybrids, and hydrogen cars.

He also warned that companies that continue to make fossil fuel-powered vehicles might be starved of financing by banks that have bought into the climate change-panic movement.

Major banks have faced growing pressure from activist shareholders to cut their financing of fossil fuels to meet global climate aims.

This isn’t the first time that Toyota’s chairman has delivered a wake-up call for fans of total electrification of transport.

“People are finally seeing reality” about EV technology, Mr. Toyoda told reporters at an auto show in Tokyo in October 2023, adding that waning EV demand is a sign that consumers are waking up to the reality that EVs aren’t a silver bullet against the supposed ills of carbon emissions.

Meanwhile, President Joe Biden has sought to position the United States as a leader in fighting the supposed harms of global warming.

Since taking office, President Biden has signed a number of executive orders to boost EV sales, while outlining a plan that seeks to have 50 percent of new vehicles be either plug-in hybrids or fully electric by 2030.

Further, the Biden administration in April 2023 proposed tough new vehicle standards that seek to reduce the number of cars that produce emissions by 2032.

There has been notable opposition to the Biden administration’s EV push.

Several thousand car dealership owners signed an open letter to the Biden administration in November 2023, saying they oppose the White House’s aggressive EV push as the vehicles pile up on lots because enthusiasm for EVs “has stalled.”

A coalition of 17 retired military officials, led by retired U.S. Army Maj. Gen. James Marks, recently warned that President Biden’s push for mass EV adoption is a threat to national security, in part because regulatory initiatives meant to incentivize EV adoption “intensify America’s vulnerability to political interference by the Chinese Communist Party.”

The Biden administration’s oft-repeated messaging that rapid electrification of transportation would lower greenhouse gases quickly and so reduce global warming is a view that has been challenged, including by climate strategists who generally back climate action but warn that the dash to go electric could lead to unsustainable costs and needless damage to the environment.

Waning Demand

Even though the Biden administration has been pushing EVs on the public, including an offer of a $7,500 subsidy, less than 10 percent of all new car sales over the past two years were electric, according to a study published in early September by GOBankingRates.

More recently, executives at General Motors, Ford, and Mercedes-Benz conceded that there’s weakening demand for EVs, with some announcing they would tap the brakes on their own EV targets.

Several months ago, Honda and General Motors announced that they were scrapping a $5 billion plan to develop EVs together, while GM said that it was slowing its electrification strategy.

Ford CEO Jim Farley said in an earnings call with investors in October 2023 that the situation with EVs has been “challenging,” with Ford suspending $12 billion in spending on EV manufacturing capacity.

Transportation Secretary Pete Buttigieg, who has been helping the Biden administration push EVs onto reluctant drivers, recently acknowledged some of their drawbacks, saying he’s had trouble finding reliable EV charging stations.

Range Anxiety

A major worry among Americans considering the wisdom of switching to an EV is range anxiety, which is the fear of running out of power without being able to find a charging port—and ending up stranded on the side of the road.

A recent study by the American Automobile Association (AAA) found that an EV’s range can fall by as much as a quarter when the vehicle is carrying heavy loads.

“Range anxiety remains a top reason consumers are hesitant to switch from gasoline-powered vehicles to EVs,” AAA spokesperson Adrienne Woodland said in a statement.

Another recent study by consultancy Ernst & Young in collaboration with European energy industry body Eurelectric found that range anxiety is the second-most cited concern about switching to an EV, with a lack of public charging stations in the top spot.

The study points to an estimated need for 68.9 million chargers across the United States and Canada by 2035 to support the pace of the EV transformation.

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