Toyota Motor Chairman Akio Toyoda says because of sagging demand for electric vehicles in the U.S., the industry is beginning to recognize that EVs may not be the key to carbon neutrality.
“People are finally seeing reality,” Toyoda, who stepped down this year as Toyota CEO after 14 years, told reporters this week at the Japan Mobility Show.
He also said that the automotive industry should hedge its bets by continuing to make investments in cars other than EVs.
“There are many ways to climb the mountain that is achieving carbon neutrality,” Toyoda said.
He added, “I have continued to say what I see as reality,” warning that “if regulations are created based on ideals, it is regular users who are the ones who suffer.”
Despite EV sales continuing to grow, the rate of growth has slowed from last year, as buyer demand cools, causing inventory to pile up for certain manufacturers.
“The curve isn’t accelerating as quickly as I think a lot of people expected,” John Lawler, Ford Motor’s chief financial officer, said at a conference in September, speaking about the EV adoption rate. “We’re seeing it flatten a bit.”
Financial sector woes are a contributing factor to slumping EV sales, with high interest rates keeping demand below the expectations of climate regulators and auto manufacturers, who have made multi-billion-dollar investments into EV production.
“I am worried about the high interest rate environment that we’re in,” Tesla CEO Elon Musk, who was quoted by Reuters, said on a recent company earnings conference call. “As I just can’t emphasize this enough that the vast majority of people buying a car is about the monthly payment. If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car.”
Reuters cited two other industry leaders concerned about the short-term future of EV sales.
“We’re taking immediate steps to enhance the profitability of our EV portfolio and adjust to slowing near-term growth,” GM CEO Mary Barra told analysts.
Lee Chang-sil, chief financial officer at South Korean battery maker LG Energy Solution, said, “EV demand next year could be lower than expectations.”