Japanese Automakers Continue to Invest in EVs despite Grim Outlook

Japan's automakers are continuing to invest in electric vehicles despite the slowdown in EV sales growth reported by executives this earnings season. These automakers have always known that the electrification process would take time and that batteries would need to become cheaper and more charging infrastructure would need to be built to ensure that electric cars are more widely accepted by consumers. Therefore, the manufacturers have been content to let the rest of the world lead the race to electrify. 

While EV expansion has slowed down, carmakers like Tesla have adjusted their expectations. Many consumers are still unable to afford electric cars due to high inflation and interest rates. Additionally, several automakers are yet to release products that appeal beyond luxury buyers or early adopters. These factors have contributed to record hybrid sales for Toyota. The weaker yen has also increased profits across Japan's auto sector, allowing companies to build capacity and develop EVs more deliberately.

Nathan Furr, a professor of strategy at the Insead Business School in France, warns that there is always a risk that a hybrid may become so attractive to an incumbent like Toyota that they may be too slow in responding to the disruption. However, the current slowdown in the adoption and enthusiasm for EVs among consumers may indicate that a more calculated approach to developing EVs is a wise strategy.