Japanese carmakers’ hybrid-vehicle surges boost EV push

Rather than rush headlong into EVs, Toyota, Honda, and Mazda have focused on hybrid vehicles as a more practical transition—to great success. They’ve each enjoyed surging sales of hybrids, which has helped them achieve record or near-record profits. That’s positioned them well financially to invest in EVs today, with an eye toward entering the fray in earnest in the second half of this decade.

Meanwhile, the sales growth of electric vehicles, while still strong, has recently slowed, prompting Ford and GM to pare back their production plans. This is partly because an initial wave of EV enthusiasts have already bought their vehicles, and everyday car shoppers are more likely to be turned off by higher prices, range anxiety, and poor resale value, among other concerns.

Tesla, in a call with investors last month, warned of “notably lower” sales growth this year after a disappointing fourth quarter. CEO Elon Musk said his EV maker is “between two major growth waves” as it aims to start production of a more affordable new model late next year. One difference with that second growth wave for Tesla is that, unlike in the first, it will face intense competition from Japanese carmakers, whose EV pushes have been helped by surging hybrid profits, putting them on a stronger financial footing.

Hybrids more than ‘a phase’ 

In 2022, Musk dismissed hybrids as a phase, saying that it’s “time to move on” from them. He might be right in the long run, especially as regulators around the world push harder for EV adoption to meet climate goals. In California and New York, zero-emission mandates loom over the automotive landscape. Both states will require that all new passenger vehicles sold be zero-emission by 2035.

But for now, many consumers are…