While all-electric is struggling, was Toyota right to bet everything on hybrid vehicles?

The hybrid is on the rise. Sales of these vehicles which combine two types of engine – a thermal engine (most often gasoline) and an electric engine – jumped by 34% in France in 2023, reported La Tribune in mid-February.

The hybrid vehicles affected by this growth are “simple hybrids”: cars which have small batteries which are recharged thanks to energy recovery carried out during deceleration and braking.

In January, the share of “simple hybrids” increased between 23% and 43%, according to the Tribune. A figure which varies depending on their degree of hybridization. From now on, manufacturers are relying heavily on this type of car, the economic and financial newspaper informs us. This preference is found on the Renault side, with its Arkana and Captur II models, but also with Toyota Yaris and Toyota Yaris Cross. Now, these vehicles are in the top 20 of car sales across France.

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Mythical Orient-Express train: a dream without a terminus

Toyota's tenacious determination to invest colossal sums in hybrids has long attracted criticism from investors and environmentalists, details the Financial Times, in an analysis published Monday February 26. Nevertheless, it seems that the position of the Japanese car manufacturer is being reassessed by its competitors – but probably not for those in favor of the quickest possible exit from fossil fuels.

“I owe Toyota an apology”

Toyota has spent the past decade being the auto industry's strongest advocate of hybrids, repeatedly believing that (more expensive) fully electric vehicles would not find favor with consumers.

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However, under the combined effect of rising prices and concerns about a possible lack of infrastructure for recharging cars, what was once considered heresy is being reassessed in European markets and Americans, observes the British economic and financial daily.

In the past, Adam Jonas, an analyst for US bank Morgan Stanley, predicted that aggressive government regulation and a consumer preference for fully electric vehicles would crush the hybrid market. But this February, he revised his position: “I owe Toyota an apology.”

The evolution of the market is noticeable if we look at Toyota's financial results. In 2023, the Japanese manufacturer sold 3.4 million hybrid cars (out of a total of 11.2 million vehicles sold, electric and hybrid combined), an increase of 31.4% compared to 2022.

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These manufacturers who are reviewing their plans

Currently, the majority of players in the automotive industry continue to believe that the development of cost-effective electric vehicles is the best long-term option, continues the Financial Times. However, the renaissance of hybrids is prompting some of them to reconsider their plans.

In a U.S. hybrid market primarily dominated by Toyota, Honda, as well as South Korean duo Kia and Hyundai, domestic manufacturers are racing to catch up. In January, General Motors, which had largely phased out plug-in hybrids, said it wanted to reintroduce the technology, conceding that customers were taking longer than expected to adopt fully electric models. For its part, Ford, which perceives hybrids as an interim technology, estimated that its sales of this type of model would increase by 40% in 2024, or double last year.

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A long-term profitable strategy

In an article published at the end of January, L'EnerGeek estimated that Toyota's successful sales in 2023 were, in large part, due to its strategic choice to favor hybrid cars over electric vehicles. For the fifth consecutive year, the Japanese manufacturer retained its title of world number one in automobile sales. A success all the more impressive as it occurs in a context of major challenges for this industry, in particular because of market turbulence and the shortage of semiconductors.

The specialist site believes that Toyota, by accumulating resources through its hybrid sales, should be able to invest massively as soon as the electric market is fully developed. Its tactics should help it quickly catch up with players who are dedicated to it, like BYD and Tesla, who sold 1.57 million and 1.81 million electric cars last year.