Toyotaâs chairman and former CEO, Akio Toyoda, has long been a skeptic of the electric vehicle hype trainâit was a big reason he stepped down from the top job at the Japanese carmaker earlier this year. Now, he can finally say, âI told you so.â With Elon Muskâs Tesla reporting disastrous third-quarter earnings last week, investors are realizing that EVs are no silver bullet for profit. âPeople are finally seeing reality,â Toyoda said on Wednesday.
Toyoda has long denied that electric vehicles are the only way for the automotive industry to achieve carbon neutrality, saying, âThere are many ways to climb the mountain.â 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. Thatâs âpreventing a lot of people from even getting into the market,â 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 âgrowing painsâ
âWeâre transitioning to a brand new technology. Itâs expensive. It requires people to have a different relationship with their vehicle that has been largely unchanged for decades,â Caldwell said. âSo to think that everything was going to roll out smoothly and we follow this nice adoption curve, it was a bit unrealistic.â
Not to mention, MuskâTesla CEO, owner of the social media platform X, and purportedly the worldâs wealthiest manâjust 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 Teslaâs shares immediately dropped over 17% and the companyâs market capitalization fell by $138 billion in just over two trading days.
âThis is going to be a large speed bump in the road for automakers that Iâm sure that they saw coming,â Caldwell said.
Toyotaâs 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 automakerâs founder Henry Ford, has described the rhetoric surrounding EVs as âheavily politicized.â
âBlue states say EVs are great and we need to adopt them as soon as possible for climate reasons,â Ford told the New York Times. âSome of the red states say this is just like the vaccine, and itâs being shoved down our throat by the government, and we donât want it.â
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 âgrowing painsâ for the inevitable dominance of EVs in the auto industry, Caldwell said.
âThe industry is moving towards EVsâto deny that would probably be unwise,â Caldwell said. âItâs what that path looks likeâthatâs whatâs undefined and is causing more confusion.â
Additional reporting contributed by Shawn Tully.
Subscribe to CHRO Daily, our newsletter focusing on helping HR executive navigate the changing needs of the workplace. Sign up for free.
Author: Jared Ferrell
Last Updated: 1699121762
Views: 1533
Rating: 3.8 / 5 (82 voted)
Reviews: 80% of readers found this page helpful
Name: Jared Ferrell
Birthday: 1965-02-07
Address: 719 Ross Rest Suite 446, Andersonhaven, ND 74612
Phone: +4138164028038019
Job: Social Media Manager
Hobby: Badminton, Stargazing, DIY Electronics, Gardening, Beekeeping, Drone Flying, Hiking
Introduction: My name is Jared Ferrell, I am a intrepid, honest, enterprising, expert, unguarded, proficient, Gifted person who loves writing and wants to share my knowledge and understanding with you.