From Fortune Media Group:

Toyota was skeptical of electric vehicles back when that wasn’t fashionable. In October 2022, then-CEO Akio Toyoda said that EVs “are just going to take longer than the media would like us to believe.” As other big carmakers made bold proclamations about when they go all electric, Toyota refused to play along.

“That’s our strategy and we’re sticking to it,” he insisted, vowing to focus on hybrids, which this carmaker pioneered with the release of the Prius in Japan in 1997, and three years later in the U.S. Since then, the Japanese giant has steadily increased its hybrid offerings.

Toyota’s stance was not a good look at the time—and it didn’t go over well.

“Toyota is not correctly responding to calls from the market to take a lead in electric vehicles,” Satoru Aoyama, senior director at Fitch Ratings, told the Financial Times, warning the carmaker could “lose investor confidence.”

Environmentalists were none too pleased, either. “The fact is: a hybrid today is not green technology,” blogged Katherine Garcia, director of the Sierra Club’s Clean Transportation For All campaign. “The Prius hybrid runs on a pollution-emitting combustion engine found in any gas-powered car…Rather than invest in EVs, though, Toyota is putting corporate profits and the status quo over tackling the climate crisis.”

The pressure grew so intense that, partly in response, Toyoda—the grandson of the company’s founder—left his CEO role to become chairman.

“But it turns out he was onto something. This week, the carmaker raised its operating profit guidance by nearly 9% for the fiscal year ending March 31, crediting higher sales of hybrid vehicles across all its major markets.

That contrasted with EV leader Tesla, which despite repeated price cuts to boost demand warned that this year’s sales growth might be “notably lower” than last year’s. Meanwhile there are increasing signs from carmakers and markets around the world that sales growth for electric vehicles is slowing.

With hybrids alone, Toyota sold roughly 3.4 million vehicles globally last year, up from 2.6 million in 2022. Tesla, by contrast, sold 1.8 million vehicles, all of them electric. In total, Toyota sold 11.2 million vehicles, allowing it to retain its crown as the top-selling carmaker for the fourth consecutive year.

EV sales in the U.S. grew an impressive 51% last year, according to Edmunds, but hybrid sales did even better, jumping 63%.

“We think the market is now rethinking the potential of hybrid products, which are a strength of Toyota,” Goldman Sachs analysts wrote in a recent research note.

“I want to congratulate Toyota, which was attacked for saying it was never going to go all-electric and it was going to continue to make the cars people wanted to buy,” said Diana Furchtgott-Roth, director of the Center for Energy, Climate, and Environment at the Heritage Foundation, on Fox Business.



Read more: Toyota hybrid vehicles strategy praised amid EV doubts