Tesla shares are down about 24% year to date, knocking Musk off his perch as the world’s richest man, an honor now bestowed upon French luxury tycoon Bernard Arnault.

Investors did not react well to Tesla’s fourth-quarter earnings, when the EV maker warned that this year’s sales growth might be “notably lower” than last year’s—not reassuring when it cut prices in 2023 to prop up demand. In California, a key market, registrations of Teslas actually fell in the fourth quarter, the first time that’s happened there in more than three years. 

Toyota, by contrast, can’t make its hybrids quickly enough, and demand for them is strong without price cuts. The Japanese giant was the world’s top-selling carmaker for the fourth year in a row in 2023, selling 11.2 million vehicles globally, a respectable 7.2% increase from the previous year.

Tesla sold 1.8 million vehicles, in comparison, jumping an impressive 38% year over year.

Hybrids over EVs 

Toyoda, however, does not believe that electric vehicles will take over the world. Last month, he predicted that adoption of EVs will peak at just 30%, saying they’ll share the roads with hybrid, gas-guzzling, and hydrogen-powered cars.

Hybrids, meanwhile, have been on a tear, not just for Toyota but for other automakers as well, including Ford and Honda. From January to November in 2023, hybrids accounted for 9.3% of new light vehicle registrations, beating EVs by 1.8 percentage points, reported Reuters, citing S&P Global Mobility data, and Toyota was the biggest seller of hybrids in the U.S., with more than a third of the those registrations.

Edmunds wrote on its website in mid-December that the hybrid market share in the U.S. increased to 9.7% in November 2023, a 99% jump from the year prior, whereas the EV share increased just 25%. “The transition to full EVs has slowed, and hybrids are the more comfortable choice for the majority of Americans seeking electrified options right now,” it added.

For many consumers, hybrids have the feel-good factor of burning less fuel than normal cars—friendlier on the environment and the wallet—without the range anxiety and other doubts surrounding EVs. (Hybrids maximize efficiency by alternating from gas to battery power.) It also helps that hybrids are priced much closer to traditional cars than are EVs.

Toyota, which will report earnings on Tuesday, with analysts expecting a strong quarter, does sell EVs, but despite their rapid sales growth they make up just a sliver of its shipments.

The carmaker has taken pains to emphasize that it is not “anti-EV” but rather lets consumers choose which type of vehicle they want and offers each. Toyoda hinted at his philosophy a few years ago when he said, “Toyota is a department store of all sorts of powertrains. It’s not right for the department store to say, ‘This is the product you should buy.’”

To be sure, Toyota has its problems, among them recent recalls and, last month, the suspended shipments of 10 vehicle models owing to testing irregularities for engine certifications. And some industry observers fear the auto giant will be caught flat-footed if consumers switch to EVs faster than it expects. 

But it clearly called things right with regard to hybrids, if not in the long run then certainly for now.

In 2011, Musk laughed at the electric vehicles made by Chinese rival BYD, which recently passed Tesla in global EV sales. And in 2022, Musk dismissed hybrids as a “phase,” saying it was “time to move on” from them. 

But many car buyers, we now know, do not feel the same way.