Hybrid vehicle popularity rises despite Elon Musk and Toyota's foresight

author: FutureCar Staff    

Tesla CEO Elon Musk has expressed his disapproval of hybrid vehicles, referring to them as a "phase" that should be left behind. However, Toyota's commitment to hybrids has proven to be a wise move. According to the Wall Street Journal, hybrid sales have surged in 2023, with a 48% increase in the first three quarters compared to the same period last year. In contrast, hybrid sales experienced a slight drop of about 6% in 2022 compared to 2021.

David Christ, head of sales for Toyota's North American business, described the hybrid market as "smoking-hot." He stated that Toyota is producing as many hybrids as possible, as these vehicles combine a gasoline engine with an electric motor to save fuel.

While hybrid sales are thriving, demand for electric vehicles (EVs) has cooled off. Although the EV market is still expanding, the pace of growth has significantly slowed down. The Journal reported that after a 63% global growth in the first half of last year, EV sales only rose by 49% in the same period this year.

This shift in demand has led carmakers like GM and Ford to reconsider their investments in EV production. One of the challenges is that the initial wave of EV buyers has already made their purchases, and the next group of potential buyers is more price-sensitive and less willing to invest. Elon Musk acknowledged this during Tesla's third-quarter results call, emphasizing the need to make cars more affordable.

Tesla's recent financial performance reflects this changing landscape, as the company reported its lowest quarterly earnings per share in two years, falling 10% below already-negative analyst forecasts. On the other hand, Ford experienced a 41% increase in hybrid sales during the third quarter, surpassing EV sales, and anticipates quadrupling hybrid sales in the next five years.

These developments have given Toyota chairman and former CEO Akio Toyoda a sense of vindication. Toyoda has long been skeptical of the hype surrounding EVs and has advocated for continued investment in hybrids and hydrogen-powered cars to diversify the industry's powertrain options. He believes that people are finally recognizing the reality of the situation.

About a year ago, Toyoda addressed dealers in Las Vegas, expressing his belief that electric vehicles would take longer to gain widespread adoption than the media suggested. He emphasized that Toyota offers a variety of powertrain options and should not dictate which product consumers should buy. Last year, Toyoda stepped down as CEO due to investor pressure for Toyota to prioritize all-electric vehicles.

However, it seems that Toyota's cautious approach has been justified. The company's commitment to hybrids and other powertrain technologies has garnered more confidence from investors, contrary to the concerns expressed by some analysts in the past.

FutureCar Staff