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Tesla suffered significant losses, and Elon Musk recently lost $28 billion According to Toyota, "people are waking up to reality" that adoption of EVs will be difficult

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Toyota’s chairman and former CEO, Akio Toyoda, has long been a skeptic of the electric vehicle hype train—it was a big reason he stepped down from the top job at the Japanese carmaker earlier this year. Now, he can finally say, “I told you so.” With Elon Musk’s Tesla reporting disastrous third-quarter earnings last week, investors are realizing that EVs are no silver bullet for profit. “People are finally seeing reality,” Toyoda said on Wednesday. 

Toyoda has long denied that electric vehicles are the only way for the automotive industry to achieve carbon neutrality, saying, “There are many ways to climb the mountain.” Other major automakers are also slowing their EV rollouts. Lucid has slowed production by 30% while GM has delayed the introduction of the Chevy Silverado EV by a whole year. 

President Joe Biden has spent much of his time in office aggressively betting on electric vehicles as part of his ambitious agenda to reduce U.S. carbon emissions and fight climate change. But the EV market is wobbling as high interest rates dampen customer demand for electric and other vehicles. That’s “preventing a lot of people from even getting into the market,” Jessica Caldwell, head of insights at Edmunds, told Fortune.

Though EV sales are still growing, the pace has slowed. In the first half of 2023, EV sales rose 49% from one year before, a slower rate than the 63% increase last year, the Wall Street Journal reported.

EV ‘growing pains’

VIDEO: Elon Musk's $28B Loss: Tesla's Downturn Unveiled

“We’re transitioning to a brand new technology. It’s expensive. It requires people to have a different relationship with their vehicle that has been largely unchanged for decades,” Caldwell said. “So to think that everything was going to roll out smoothly and we follow this nice adoption curve, it was a bit unrealistic.”

Not to mention, Musk—Tesla CEO, owner of the social media platform X, and purportedly the world’s wealthiest man—just took a $30 billion beating to his net worth. EV champion Tesla posted its lowest quarterly earnings per share (EPS) in two years, coming in 10% lower than already-negative analyst forecasts. The stock market acted accordingly, as Tesla’s shares immediately dropped over 17% and the company’s market capitalization fell by $138 billion in just over two trading days. 

“This is going to be a large speed bump in the road for automakers that I’m sure that they saw coming,” Caldwell said.

Toyota’s chairman says he saw it coming. Toyoda has long advised the industry to hedge its bets on EVs by continuing to invest in hybrids, hydrogen-powered cars, and other alternative eco-friendly vehicles. 

Ford, too, has been slow to put all of its eggs in the EV basket, announcing it would slow production of its F-150 Lightning pickup. Bill Ford, the great-grandson of the automaker’s founder Henry Ford, has described the rhetoric surrounding EVs as “heavily politicized.” 

“Blue states say EVs are great and we need to adopt them as soon as possible for climate reasons,” Ford told the New York Times. “Some of the red states say this is just like the vaccine, and it’s being shoved down our throat by the government, and we don’t want it.”

General Motors similarly announced it would slow down EV production after making bullish commitments to completely phase out gas- and diesel-powered vehicles by 2035. The company blamed drops in demand for EVs and pressures from the auto strike.

But this blip is only “growing pains” for the inevitable dominance of EVs in the auto industry, Caldwell said.

“The industry is moving towards EVs—to deny that would probably be unwise,” Caldwell said. “It’s what that path looks like—that’s what’s undefined and is causing more confusion.”

Additional reporting contributed by Shawn Tully.

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