On the other hand, in 2023, the Toyota Group achieved a remarkable milestone, with sales reaching a record high of 11.233 million vehicles. However, it is noteworthy that less than 110,000 of these vehicles were EVs plus FCEVs (fuel cell electric vehicles), accounting for a mere 1% of the total sales. Despite this marginal share in electrified vehicles, the Toyota Group's financial results for the period from April to December 2023 are nothing short of impressive. The Group's financial report, published at the beginning of this February, revealed a record net profit of 3.95 trillion yen, and analysts anticipate that by the end of March 2024, the annual profit will soar to an unprecedented 4.5 trillion yen (the general accounting year-end date for Japanese companies aligns with the end of March). This achievement would make the Toyota Group the first company in Japan to cross the 4 trillion-yen annual profit mark.
Amidst the Toyota Group's strong sales performance in traditional gasoline cars, Mr. Toyoda, the company's president, shared his insights during a lecture on the company's production system. It is not surprising that he believes the final market share of purely electric vehicles would likely cap at 30%, "no matter how much progress BEVs make." Mr. Toyoda even emphasized his belief in preserving internal combustion vehicles, adding, "And I think engine cars will definitely remain." While this stance reflects his personal affinity for traditional engines, it raises questions about the Toyota Group's broader EV strategy. Mr. Toyoda's viewpoint diverges from the conclusions drawn at COP28, and only time will tell whether it withstands scrutiny and prevails in the evolving automotive landscape.
U.S. President Joe Biden's recent veto of the Senate's bill to halt subsidies for EV charging stations, known as Joint Resolution 38, is indeed a significant development. The bill, which narrowly passed with a 50:48 vote, aimed to reverse the administration's waiver of "Buy America" requirements for government-funded EV charging infrastructure. It is widely acknowledged that Congress was influenced by powerful groups representing traditional automobile manufacturers, oil companies, and coal interests. These lobbying efforts subsequently impacted the government's subsidy policies for EVs. The media even uncovered contrasting political contributions from major automakers. Toyota, a company known for its conventional vehicles, spent a substantial $6.19 million in political contributions during 2023. By contrast, Tesla, a manufacturer exclusively focused on pure EVs, contributed a comparatively modest $1.13 million. This disparity underscores the complex dynamics on the path toward energy transformation. Established interest groups wield considerable influence, often prioritizing their own agendas over broader trends.
From my perspective, the shift of the automobile industry toward electrified vehicles is an irreversible trajectory. Traditional operators, with the current operational mode aiming to prolong the transition as much as possible, are simply seeking additional time and more robust buffer solutions. This scenario evokes memories of the early days of automobile invention when both the U.K. and the U.S. enacted the "Red Flag Act." The legislation mandated that a person walk ahead of a self-propelled vehicle, waving a red flag or carrying a lantern to warn pedestrians and bystanders nearby. The primary motivation behind this law was to safeguard the horse breeding, carriage, and grooming industries of that era. When these vested interests realized that automobiles would eventually replace horse-drawn carriages, their initial response was resistance and pressure on the government for regulation. However, the forces of market competition and innovation are inexorable. A harsh reality emerges: If a pioneering enterprise, once celebrated for its innovative spirit, succumbs to complacency and even derides innovative start-ups, it risks being eclipsed by these very upstarts who continue to push boundaries. This is the natural progression in a market driven by constant innovation, where even established leaders can be dethroned by those who refuse to rest on their laurels. The operator's vision and foresight play a critical role in determining the success or failure of an enterprise—not only a lesson evident throughout history, but also a fact that I do not need to expatriate on.
Now I will delve into the actual sales results of 2023 and the forecasts provided by professional research organizations. The following exploration is expected to shed light on the current progress of battery electric vehicles across various markets, allowing us to critically examine Mr. Toyoda's assertion that 30% of the market share will be the ceiling for pure EVs.
Firstly, considering the global trend in automobile sales, Rho Motion, a reputable market research organization, revealed in a mid-January interview with Reuters that the total global sales of pure EVs in 2023 reached 9.5 million units. This figure represents a year-over-year increase of 31%. Rho Motion predicts that the growth rate for pure EV sales in 2024 will land within the range of 25% to 30%. In other words, the projected sales volume for 2024 is estimated to be approximately 11.90 to 12.35 million units.
According to a late-November 2023 forecast for 2023-2035 published by EV Volumes, global pure EV sales were expected to reach approximately 10 million units in 2023 (11% share), rising to 13 million units in 2024 (14% share). The forecast further projects a significant surge in 2028, with sales reaching 31 million units (30.1% share), marking a decisive breach of the 30% ceiling predicted by Akio Toyoda.
I view this estimate as conservative, and we can substantiate it by examining the actual sales figures of pure EVs each year. Based on the sales data from several major markets in 2023, the Chinese market, witnessing 6.113 million units sold (CPCA data), is a powerhouse. The U.S. market, fueled by 1.189 million units (Kelly Blue Book data), is also significant. The European market, including the U.K. and non-EU countries, recorded sales of 2.019 million units (ACEA data). Adding Korea (162,000 units, Ministry of Land, Infrastructure, and Transport), Japan (88,000 units, Japan Automobile Dealers Association & Japan Light Motor Vehicle and Motorcycle Association), and Taiwan (24,000 units), we already reach an impressive 9.6 million EVs in just these six markets. This evidence suggests that the global EV market in 2023 likely surpassed 10 million units.
Despite the Toyota Group's global dominance with over 11.23 million vehicle sales in 2023, the company's performance in the EV market remains a topic of interest. While the total sales figure is unignorable, the combined sales of BEVs and FCEVs amounted to only about 110,000 units. As the world witnesses a rapid surge in the adoption of pure EVs and a gradual shift away from fossil fuels, Toyota's strategic decisions will play a pivotal role in its future trajectory. If the company continues to allocate resources to product development according to Akio Toyoda's viewpoints, the question looms large: Can Toyota maintain its global automotive dominance over the next five years?
At the conclusion of this article, I share insights from global surveys of EV owners conducted in the past two years about their user experience. The findings elucidate the current market ecology. According to the J.D. Power 2022 U.S. Electric Vehicle Experience (EVX) Ownership Study, pure EV owners are no longer inclined to switch back to gasoline-powered vehicles. "Making the initial leap of faith into owning a BEV is proving to be very satisfying," said Brent Gruber, senior director of global automotive at J.D. Power. "We know from our research that many consumers have concerns during the purchase consideration process with aspects like battery range and vehicle charging. However, once someone has purchased a BEV, they're pretty much hooked." The 2023 EV Driver Survey, conducted by Plug In America, reinforces this trend, with an impressive 90% of EV owners reporting they are "likely" or "very likely" to purchase an EV as their next automobile. In a survey published by S&P Global Mobility last October, up to 76.7% of Tesla owners planned to buy another EV as their next vehicle. Shell Recharge Solutions 2022 survey, covering nearly 15,000 EV owners across major European markets (the U.K., France, Germany, Belgium, and the Netherlands), has revealed that 76% of respondents are keen on purchasing an EV for their next vehicle, a considerable increase from 62% in 2021. The collective experience of nearly 30 million EV owners worldwide over the past decade accentuates a compelling narrative: Once you go electric, it's hard to turn back. The driving experience of a purely electric vehicle evidently outweighs any nostalgia for traditional gasoline cars.
Given the convergence of factors, including the clear paradigm shift in the automotive industry, the continuous introduction of affordable pure EVs (which are now nearly on par with their traditional gasoline counterparts), government policies favoring clean energy, and the gradual phase-out of fossil fuels, readers may question whether the previously perceived 30% ceiling for EV adoption still holds true.
About the author - Kenny Liu
Graduated from Dept. of Aeronautics and Astronautics, Cheng Kung University in 1988, started his auto industry career since July 1990 after two year military service. Starting as a service engineer and a temp technician, product marketing specialist in Peugeot/ Daihatsu, marketing and dealer channel specialist in VW LCV from March 1992, then field manager in GM Taiwan from Feb. 1994, sales and service / parts head in Ford Lio-Ho from Sep. 1998 till retirement in May 2019. Kenny then started to work for JLR Taiwan as sales/service head and consultant/ lecturer. After that, he was invited to work at a Suzuki dealer of Taipei as the general manager until April 2022.