TSLA - Toyota: Stock Performance Competition And 'Electrification'

2024-01-24 14:01:39 ET

Summary

• Toyota Chairman Akio Toyoda doesn’t believe BEVs will exceed 30% penetration, with hybrids and hydrogen-powered cars making up the balance.
• Toyota sold 14,715 BEV vehicles in the US in 2023, just 0.7% of its total sales.
• The argument by Toyota that hybrids result in reduced emissions is contestable.
• Toyota is resisting electrification even as companies (e.g. Tesla, BYD) driving the BEV revolution are doing so successfully.
• Investment in legacy car company Toyota requires discounting what's happening in the car industry as electric vehicles rapidly take market share.

It's a very interesting time for the car industry with massive change underway. For those not paying close attention, this can mean that all is not what it seems. I’m beginning to think that we may be starting the see how major manufacturers like GM ( GM ) and Ford ( F ) may end up disappearing from the scene. I don’t think that it's a solution for major manufacturers to lose their nerve about electrification as seems to be happening in the US.

One company, Toyota ( TM ), stands firmly outside of acceptance of the coming dominance of the BEV (Battery Electric Vehicle), with Chairman Akio Toyoda claiming yesterday that penetration of BEVs will not exceed 30% . This is a pretty bold call considering that in China in 2023 BEVs made up 26% of new car sales and this is based on dramatic increase in BEV sales in 2023. Norway has 80% BEV sales. Does Chairman Toyoda think that China will suddenly stop expanding the BEV market? Toyota seeks to have it both ways with a big focus on hybrids and a currently barely existent market for hydrogen powered cars. Toyoda is a strong believer in the internal combustion engine. Toyota is riding high with reinforcement of its leading global position (top manufacturer again in 2023) and significant recovery of its share price. Here I analyze whether Toyota’s stance is sustainable and where it sits with the global shift to electrification....

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