Much has been written about how Toyota Motor Corp. (NYSE: TM | TM Price Prediction) lagged in aggressively pursuing the electric vehicle (EV) market, only to shine because it took a path of building hybrids, which have been and remain highly popular. What is discussed less is the remarkable extent to which its stock has outperformed those of other major auto manufacturers. It is up over 88% in the past year, compared to an increase of 31% in the S&P 500. (Here are the 10 best Toyotas to drive forever.)
The contrast to its rivals is even greater. General Motors Co. (NYSE: GM) shares are up 27% in the past year. Ford Motor Co. (NYSE: F) stock is higher by 12%. But the share price of Tesla Inc. (NASDAQ: TSLA) is 10% lower in that time.
If Toyota’s stock is risky, it is because global EV sales may begin to rise sharply after a near collapse in demand over the past few months in all significant markets other than China. Tesla would benefit from a change of heart among consumers. More than Tesla, China’s BYD stands to spread its great success from China to other developed markets. BYD is the largest EV maker in the world.
BYD might have the greatest chance of restoring EV demand. It sells EVs in China for as little as $10,000. However, government policies have blocked significant sales of its cars in Japan, the European Union, and the United States. At some point, consumer demand for BYD models may break the hold of tariffs and incentives that help local manufacturers.
Until EV companies like BYD expand outside China, Toyota’s lead in hybrids will keep it ahead of the rest of the industry in sales and probably in stock price.
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