In the stories of corporate missteps, Kodak's failure to embrace digital photography at the end of the 1980s and early 1990s stands as a cautionary tale. As a titan of the film industry, Kodak developed digital camera technology as digital imaging technology began to emerge, but then hesitated, fearful of disrupting its lucrative film business. This reluctance ultimately paved the way for competitors to dominate the burgeoning digital market, leading to Kodak's dramatic decline. Today, as the automotive world electrifies at an accelerating pace, one can't help but ask: Is Toyota, the long-reigning champion of hybrid technology, risking a similar fate by seemingly dragging its feet on electric vehicles (EVs)?
For years, Toyota has been a global leader, particularly in hybrids, championing a "multi-pathway" approach to carbon reduction. Akio Toyoda, then-CEO and now Chairman of Toyota, has often expressed a more cautious stance on a rapid, all-in transition to EVs. He articulated concerns that, at the time, presented significant challenges to a rapid EV transition, including the environmental impact of battery production, the limitations of charging infrastructure, and the diverse needs of global markets. For instance, Toyota has often argued that "we don't want to leave anyone behind," suggesting a gradual transition with hybrids as a bridge.
This philosophy is reflected in Toyota's sales figures. While they have made significant strides in overall "electrified" vehicle sales (which include hybrids and plug-in hybrids), their pure EV sales have lagged behind many competitors. In Europe, for example, while Toyota Motor Europe's electrified vehicle sales grew to 74% of their total in 2024, battery electric vehicle sales, though increasing, still represent a smaller portion compared to their hybrid dominance. They've stated ambitious goals, aiming for 3.5 million annual EV sales over the next decade and introducing 30+ EV models, yet their current rollout has been perceived by many as slow.
Compare this to Kodak's approach to digital. Despite having developed the core technology, Kodak leadership reportedly engaged in internal debates for years, struggling to reconcile the disruptive potential of digital with the immense profitability of their film and chemical divisions. They saw digital as a threat to their existing business model, rather than an opportunity to lead a new one. As one analysis of Kodak's downfall noted, the company "made short-term profit-maximizing decisions in favor of film over long-term digital investments."
Is Toyota making a similar calculation? While their emphasis on hybrids has undoubtedly yielded significant short-term profits and contributed to emissions reduction, the landscape of battery technology is evolving at an unprecedented rate. We are witnessing continuous breakthroughs in battery density, cost reduction, and charging speed. Ranges are extending, and "fill-up" times are shrinking. While challenges remain concerning charging infrastructure and the environmental footprint of battery mining and disposal, the global momentum towards EVs is undeniable.
Beyond simply missing sales opportunities, a more profound question arises: By retreating from the forefront of EV development, is Toyota also retreating from its historical role as a market leader, one that sets the tone and dictates trends? For decades, Toyota was synonymous with innovation and efficiency, influencing the direction of the automotive industry. Their current approach, however, seems to position them as a follower, preferring to observe others' successes and challenges before fully committing. This strategic shift risks ceding crucial ground in technological advancement and industry influence to competitors who are aggressively pursuing EV dominance.
Critics argue that Toyota's focus on hybrids, while a pragmatic solution in the short term and in markets with less developed charging infrastructure, may prevent them from gaining crucial expertise and market share in the rapidly expanding pure EV segment. While Toyota has stated intentions to accelerate their EV strategy, and even adjusted their EV production targets to be more realistic, some worry that their inherent caution could lead to them playing catch-up in a market they once seemed poised to dominate.
In a world where rapid innovation is key, and in every direction the trajectory of this market points strongly towards EVs, the question lingers: Is Toyota's measured approach a shrewd long-term play, allowing them to perfect the technology before a mass rollout, or is it a classic case of an established leader underestimating the speed and inevitability of a disruptive technological shift, much like Kodak did with digital photography? Only time will tell if Toyota's multi-pathway strategy will lead them to sustained success or if it will be remembered as a missed opportunity in the electric revolution, and become a chapter in a business school's textbook.