Why Brands Like Ford And Toyota Aren’t All-In On EVs Yet

The path towards full electrification won’t be instant and in full force. That’s because not everyone is on board yet with owning an electric vehicle (EV). It’s somewhat of a chicken-and-egg situation, wherein there’s a dilemma whether the infrastructure should be built first, or should there be enough public demand for EVs first before the infrastructure finally gets laid out. Also, not everyone is sold on the idea of owning EVs at the moment, whether it’s due to resale values, long-term ownership concerns, or a mixture of both.

This is why the road towards electrification is inevitably a slow and fragmented one. There will be countries, states, or territories that are more open to EVs than others. This is why companies like Toyota and more recently, Ford, have either pulled back or aren’t enthusiastic about going all-in on EVs at all. Is it a case of these brands being too stubborn, or is there really a business sense as to why they are deliberately slowing down their EV developments?

In order to give you the most up-to-date and accurate information possible, the data used to compile this article was sourced from various manufacturer websites and other authoritative sources, including New York Magazine, Ford, Toyota, Cox Automotive, Kelley Blue Book, and CNBC.

The EV Sales Slow Down Is Real

Over the past few months, a number of automakers who used to be so aggressive in declaring and proclaiming to the world that they are going all-in on EVs have either scaled down or slowed down their EV production plans.

This includes Ford, which near the end of last year said that it is cutting F-150 Lightning production because the current sales situation isn’t meeting their initial projections. As for Toyota, well, Chairman Akio Toyoda was probably feeling smug in his office as his call to not go all-in on EVs was right.

EV Market Is Currently Not Growing As Fast As It Did

Perhaps it’s a story that we’ve written numerous times now, but the EV sales slowdown is real and is currently happening. Let’s just make things clear at the moment. The term here is “slow down”, which is different from not growing, which we’ll be getting into more detail about later. At the turn of the decade, the sales growth of EVs was high–to the point that it seemed like a huge missed opportunity if an automaker wasn’t making any EVs at that time.

Now in 2024, the growth rate of EV sales isn’t as fast as it was a couple of years ago. The problem with having so much momentum is that this will influence a company’s sales forecasts into thinking that this will be the same for the coming years.

Well, the reality is, that there will be external factors influencing the market’s sales momentum–whether that’s the continued chicken-and-egg dilemma between prospective EV owners and charging station providers, long-term ownership concerns, or the ever-changing regulations on which EVs benefit from the incentives provided by the Inflation Reduction Act.

Yet, EV Sales Will Still Grow In 2024

And this is why I wanted to clarify the difference between slowing down and no growth. 2024 is still a year when more EVs than ever will be sold, but the growth this year is going to be lower compared to past years. Cox Automotive even thinks that in the years ahead, we’ll be reporting the first quarter-over-quarter EV sales decline.

Remember in 2021 when the Blue Oval brand even reached a point where demand for the F-150 Lightning far outstripped supply, thus leading them to stop accepting orders? Well, that was then, but now, the reverse has happened and Ford has cut back on F-150 Lightning production. Furthermore, as of mid-February 2024, there were still several 2023 model-year F-150 Lightnings left in their inventory, leading Ford to offer discounts and incentives for the electric pickup.

Why EV Sales Growth Has Slowed Down

To understand why the sales growth of EVs has slowed down in recent months, it is important to understand who bought them in droves in the first place. At the end of 2023, a record 1.2 million EVs were sold, and that translated to an overall market share of 7.6 percent, higher than the 5.9 percent market share that EVs had in 2022.

That market share means EVs still don’t even account for one-eighth of total vehicle sales in the United States. This means EVs are still mostly being bought and are considered attractive enough to own by a certain demographic as opposed to the general car-buying public, right?

Those Who Bought EVs In Droves Were The Early Adopters

Remember when the smartphone first came out? It was practically new and novel tech that was cutting-edge and expensive at the time. Those who bought one were the early adopters, and that case also applied to the EV market. Now in 2024, it’s impossible to find someone without a smartphone. We’ve eventually reached a point where smartphones have become affordable, and we’ve already built a society around the smartphone.

As for EVs, the early adopter market is already saturated, since most of those who were willing to own an EV already have one. Most of them also have multi-car garages, which is why it’s pretty much risk-free for them to have an EV since it can be treated as a secondary car. The mainstream mass-market buyer, however–the one who is dependent on just one car, has less room for risk.

Mainstream buyers are less willing to place all of their resources in a vehicle where long-term ownership is still unknown (especially battery replacement), and the aforementioned chicken-and-egg problem between consumers and EV charging station providers continues to linger. It’s this market that automakers find it challenging to crack.

What The Mainstream Buyer Is Purchasing

While these buyers continue to find it difficult to switch to an EV, whether it’s due to the change in lifestyle or way of operation associated with an EV, there is one electrified vehicle type that the market currently finds attractive – hybrids.

Whether we’re talking about the type that needs to be plugged in or not, this is what the typical American consumer currently wants. This is even the case in the used car market. While EVs are practically free-falling when it comes to resale values, hybrids are currently having the best resale values–even when compared to a pure ICE vehicle.

What Automakers Are Focusing On As A Result

As automakers scale back on their EV plans, what are they now going to produce in order to satisfy consumer demand whilst also incrementally going one step closer to achieving carbon neutrality? This is, after all, why automakers and politicians have scrambled to make EVs in the first place.

Automakers Are Now Doubling Down On Hybrids

Reflected by the heightened interest in hybrids, automakers have scaled back their EV production and development plans in favor of releasing more hybrids. With Ford scaling back F-150 Lightning production, it will now increase its production output of the F-150 PowerBoost hybrid, whilst adding more hybrid models to its lineup. Toyota, the biggest seller of hybrids in the United States, is cashing in on this heightened demand for hybrids as they report record profits for the fiscal year ending March.

Their move is reflected by what the market also currently wants. A while ago, we mentioned that more than 1.2 million EVs were sold in the United States last year, which represents a 46 percent growth and 7.6 percent market share. How about hybrid sales? Well, that rose by 65 percent to more than 1.2 million sold (the bulk of which comes from Toyota), which represents an eight percent market share. Combine it with the plug-in hybrids as well, and nearly 1 in 10 cars sold in 2023 was a hybrid; whether with or without the need to be plugged in.

Why Americans Are Choosing Hybrids

There’s a simple reason why hybrids are very popular in 2024. You practically have no adjustments to make in your life with a hybrid. Whatever you’ve been doing for decades with an ICE car doesn’t change with a hybrid, and that’s why more and more people are finding hybrids the perfect electrified vehicle for their lifestyles. It’s a vehicle that you don’t need to adjust to, whilst experiencing massive tangible benefits through significantly improved fuel efficiency.

As for plug-in hybrids, it’s also a great stepping stone for those who want to own a vehicle that drives and operates like an EV for distances that fit within the average daily driving distance of an American, whilst having the peace of mind of an ICE on longer drives.

The thing is, unlike a hybrid, wherein you have nothing to think about, a plug-in hybrid is only as good when you use it as intended and charge it every day. But, when treated right, what you’ve got is two vehicles in one–a short-distance EV for your daily commute and a fuel-efficient hybrid when traveling across different cities or states.