Much has been written about how Toyota Motor Corp. (NYSE: TM) did not jump into the electric vehicle (EV) industry the way Ford Motor Co. (NYSE: F) did, as the American company lost billions of dollars when sales of the EVs faltered. A year ago, Toyota was mocked for taking a huge risk because it did not chase Tesla Inc. (NASDAQ: TSLA). Instead, it built an extensive lineup of hybrids that sold exceptionally well. The world’s largest auto company by revenue delivered for investors simultaneously as its stock price surged compared to its primary competitors. (These 11 cars are still mostly made in America.)
In the past year, Toyota’s stock has increased 76%, Ford’s 8%, and Tesla’s 1%. The stock of German rival Volkswagen, the world’s second-largest car company by revenue, has dropped 14% in the same period. Toyota does lag Tesla in market cap, $329 billion to Tesla’s $558 billion. Investors continue to believe in the EV-only company. The market has not lost its taste for the risk that EV sales will return to double-digit growth year over year and stay that way well into the future.
A criticism leveled at Toyota is that the management does not care about the environment as much as it does investor issues. Hybrids emit higher carbon dioxide equivalents than EVs. However, these emissions figures are much better than those for gasoline-powered cars. From that standpoint, Toyota needed to go green faster. Among environmentalists, that criticism will continue.
But did Toyota’s hybrid-first strategy hurt the environment? Probably not. One manufacturer’s decision did not help or hurt global demand for EVs outside China. Consumers would have worried about range, number of charging stations, and charging times regardless of Toyota’s decision. The company simply gambled about consumer preferences and won.
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