Explore Toyota, the Skyrocketing Electric Vehicle Shares that Refuse to Plummet
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Gone are the days when you'd associate Toyota Motor Corporation (TM 0.72%) solely with gas-powered vehicles. This pioneering Japanese automaker, renowned for its hybrids, is now racing towards electrification with extraordinary speed.
Toyota's Electric Revolution
As the world shifts towards sustainable transport, Toyota is embracing the trend with remarkable success. In 2024, electric vehicles accounted for an astounding 45% of Toyota's total sales volume. Fueled by this surge, car sales rose by 4.2%, but electric models soared an impressive 56% higher. Toyota remains unrivaled in the automotive market, but its vehicles are rapidly evolving to meet the demands of the future.
Not all Toyota's electric growth is attributed to hybrids. One of its fastest-growing luxury models in 2024 was the all-electric Lexus RZ, with a starting price of $44,000. Sales of this model skyrocketed from 5,386 in 2023 to 9,697 in 2024, marking a 79% increase. On the mass-market side, the $37,000 Toyota bZ4X nearly doubled its sales, jumping from 9,329 to 18,570 units.
While these figures still trail behind the likes of the Toyota RAV4 (up 8.5% to 475,193 units) and Camry (with a 5.9% increase to 309,876 units), electric models are rapidly catching up.
The Great Electric Leap: RAV4 and Camry, Watch Out!
The automotive landscape is rapidly changing, and Toyota is leading the charge. Smaller competitors, like Honda Motor (HMC 1.34%), are looking to merge with Nissan Motor (OTC: NSAN.Y) and potentially include Mitsubishi in a three-way partnership to stay competitive with Toyota's hybrid dominance.
This transformation isn't without challenges, though. A recent venture renting an all-electric car revealed the necessity of expanding charging networks. Research from The Motley Fool reveals that Florida, my home state, boasts 3,605 public charging stations with 11,098 ports – the third-largest count in the country.
However, my encounter with the electric rental car exposed a shortage of readily available charging stations. Nearest Tesla Superchargers could be half an hour away, while conventional gas stations maintained a few Tesla and ChargePoint chargers. My Hyundai, though, was only compatible with ChargePoint sockets.
This lack of compatibility and limited charging infrastructure spells trouble for potential electric car buyers in areas like Florida. However, with Toyota's impressive sales of conventional and hybrid vehicles, the high demand for vehicles that can run on traditional fuel sources makes sense.
Toyota's Plug-in Future
The transition to all-electric vehicles is inevitable, and Toyota is well-positioned to lead the charge. The U.S. government is phasing out light-duty fossil-fuel vehicles from its fleet by 2027, signaling this electric evolution. Toyota's reputation for engineering quality, coupled with its strategic investments in battery factories and its expanding EV lineup, will ensure its continued dominance in a changing market.
As hybrid vehicles remain the interim solution, Toyota's stock has surpassed other traditional car makers in the past four years. This growth is no surprise, given its commitment to quality and its measured approach to embracing EV technology.
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Context
Toyota is aggressively expanding its electric vehicle (EV) production and sales, with significant investments in battery factories and efforts to catch up in the global EV market.
Current Status
- Battery Plant in North Carolina: Toyota has established its first battery manufacturing facility outside Japan, called Toyota Battery Manufacturing North Carolina (TBMNC). The facility, set to start shipping batteries in April 2025, produces lithium-ion batteries for hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and battery electric vehicles (BEVs) with a 2030 annual production capacity of over 30 GWh.[1][4][5]
- Production Capacity: TBMNC supports the annual production of 40,000 to 50,000 EV or plug-in hybrid batteries per line, catering to strong U.S. demand for hybrid vehicles.[2]
- Job Creation: The North Carolina plant has created approximately 5,000 jobs, contributing to Toyota's "best-in-town" approach that focuses on local investment and production.[4][5]
- Global Market Share: Despite being slower to adopt EVs, Toyota holds a significant market share for hybrids in the U.S. with its Lexus brand holding around 60% of the hybrid market share.[4]
Future Plans
- Expansion of EV Lineup: Toyota intends to introduce at least 10 new EV models globally by 2026, with the bZ4X remaining a flagship model for the company.[3]
- Solid-State Battery Technology: Toyota is working on developing solid-state battery technology, which could significantly improve EV range and charging times in the near future.[3]
- China Operations: Toyota is establishing a wholly-owned subsidiary in Shanghai, China, to produce EVs and batteries for the Lexus brand. Production is expected to start after 2027, targeting an annual capacity of around 100,000 units.[1][2]
- Tariff Uncertainty: Despite potential tariff uncertainties and challenges, Toyota is being proactive in its electrification plans, keeping a close eye on policy developments to make informed investment decisions.[2]
- Toyota's strategic investments in battery factories, such as the Toyota Battery Manufacturing North Carolina, demonstrate its readiness to outperform competitors in the electric vehicle market.
- With its electrifying lineup of electric vehicles, Toyota has significantly outperformed other traditional car manufacturers in terms of stock growth over the past four years.3.To address the challenge of limited charging infrastructure, Toyota might consider investing in expanding and improving the availability of electric charging stations, ensuring its electric models remain competitive.
- Given Toyota's financial resources and commitment to innovation, its decision to invest in solid-state battery technology probably positions it to outperform other automakers in improvement of EV range and charging times.
