President Donald Trump’s 25 percent tariffs on all auto-related imports have been called “a debacle of epic proportions” and a sure-fire way to tank the auto market by crushing demand. Analysts have been predicting everything from $12,000 per vehicle price hikes to the possible “Cubanization” of the US car fleet.

Now that they’ve had a few days to process the news, the automakers are starting to get their ducks in a row and make some moves.

Here’s how each company is responding:

Audi

Now that the tariffs are in effect, the German automaker is holding all vehicles assembled in Mexico and overseas at US ports until further notice, according to Automotive News. Audi currently has 37,000 units in dealer stock and at port — which remain unaffected by the new import fees and are ready to sell. Audi reportedly said it would be marking unaffected units with a $0 “No Added Import Fee” option code for easy tracking.

“We are evaluating how to best proceed for our customers and our dealers,” Audi spokesperson Mark Dahncke said.

BMW

BMW hasn’t announced any specific response yet, but the company said last month that it expected a €1 billion hit to its 2025 …

Read the full story at The Verge.

• The Toyota Tacoma has been America's best-selling small truck for the past 20 years.
• I was impressed by the Tacoma's powerful hybrid engine, solid driving dynamics, and updated tech.
• I was less impressed by the Tacoma's high price and tight rear seats.

For the past twenty years, the Toyota Tacoma has been the best-selling small pickup truck in the US, outselling rivals like the Nissan Frontier and Ford Ranger.

The current fourth generation debuted in 2024 with more power and an almost overwhelming amount of new tech.

The Mexican-made pickup is also the first Tacoma to be offered with a four-cylinder hybrid powertrain instead of the traditional V6. It's a much-welcome upgrade, but I fear it risks losing what made the truck so special: no-nonsense reliability at a relatively low price.

I recently spent a week driving a 2025 Toyota Tacoma TRD Pro Double Cab 4×4.

The base two-seat Tacoma SR Xtra Cab 4X2 starts at $31,590, while my range-topping Tacoma TRD Pro Double Cab 4X4 test truck starts at $63,900.

Shipping fees and a few optional extras pushed the as-tested price to $68,093.

The Tacoma lineup ranges from the humble work truck to the premium Limited trim.

As a result, Toyota offers the Tacoma with a variety of front grilles and facias.

My favorite is the test truck's heritage grille, which evokes the look of the brand's iconic pickups from the late 1980s and early 1990s.

The Tacoma is one of the most configurable trucks in the segment.

It has two cab types: a two-passenger XtraCab and a five-passenger Double Cab. It's also available with both a five-foot and a six-foot bed. Most of its rivals, with the exception of the Nissan Frontier, are available only with a five-passenger crew cab and a five-foot bed.

The TRD Pro trim, inspired by Toyota's off-road racing trucks, is designed for high-speed runs across the deserts of Baja California.

That means it comes with a ton of special off-road goodies like Fox adjustable shocks, a performance air intake, and massive 33-inch Goodyear all-terrain tires with 18-inch black alloy wheels. There are also beefed-up aluminum skid plates and underbody protection for the transfer case and fuel tank.

The coolest feature found exclusively on the TRD Pro is the IsoDynamic front seats.

The seats feature a system of air-over-oil shock absorbers that absorb the impact of rough terrain on the occupants. A special air pump adjusts the firmness of the shocks.

All Tacomas are powered by versions of Toyota's T24A-FTS turbocharged four-cylinder engine.

My test truck was powered by a 2.4-liter, turbocharged inline-four-cylinder engine paired with a hybrid system consisting of a 48-horsepower electric drive motor and a small 1.87 kWh Nickel Metal Hydride battery pack.

Together, they produce a robust 326 total horsepower and a whopping 465 lb-ft of torque.

A non-hybrid version of the same engine is available with 228 horsepower, 270 horsepower (manual transmission), and 278 horsepower.

My test truck boasted fuel economy ratings of 22 mpg city, 24 mpg highway, and 23 mpg combined, which aren't spectacular for a hybrid but solid for a high-performance truck of this size.

It's the Toyota Hybrid that doesn't drive like a hybrid.

For all its excellence, the old Toyota Tacoma was a chore to drive. Its V6 lacked grunt, and the driving position was uncomfortable. This time around, Toyota has fixed both.

Power from the turbo four is strong and immediate, with the electric drive motor contributing an extra kick of torque.

Despite being a Toyota hybrid, the Tacoma retains its torque converter and conventional eight-speed automatic transmission. Thus, it drives nothing like a Prius or a Camry, which depends on an e-CVT to drive the wheels.

Instead, it feels more like a regular pickup with an aggressive auto start-stop feature. In fact, I actually forgot I was driving a hybrid at one point and went hunting for the button to shut off the start-stop.

The engine also makes a surprisingly throaty rumble and is one of the better-sounding four-cylinder engines on the market.

The Tacoma's cabin is far more stylish and feature-laden than before, but still as intuitively designed.

Traditional Tacoma interiors are pretty spartan. This one does a full 180. It's got every creature comfort you could ever want in a truck and a few you didn't even know you needed, like seats with shock absorbers and a detachable JBL Bluetooth speaker.

What hasn't changed is that the cabin remains logically designed and easy to use.

This tech content is impressive and is a vast improvement over the previous generation.

The centerpiece of Tacoma's tech package is its massive optional 14-inch touchscreen (base models get an 8-inch unit) running Toyota's latest infotainment system, which is among the easiest to use on the market.

The front seats take out a big chunk of the rear legroom.

As a result, the back seats in my test truck would be uncomfortable for most adults. This is especially the case if the front seat occupants are taller than 6'0.

Open up the power tailgate, and you'll find a versatile bed with plenty of LED lighting and adjustable tie-down points.

There are also USB, 12V, and AC power sockets, and some models even have a built-in air compressor.

The Tacoma can tow up to 6,500 lbs.

That trails the Chevrolet Colorado's 7,700 lb and Nissan Frontier's 7,150 lb rating.

My Verdict: The new Toyota Tacoma is better in every way, but it may have lost some of the essence that made it great.

The 2025 Tacoma is a great truck. Toyota fixed pretty much everything that held it back from my good graces with more power, improved driving dynamics, and updated tech.

But the Tacoma's success has always been built on delivering no-nonsense dependability at a reasonable price. It's the very reason my father purchased one a few years ago.

Power, tech, and luxury have never been its calling card.

In fact, they've caused the price tag to skyrocket to levels that may drive loyalists toward its rivals.

As much as I like the fancy new Tacoma, I can't help but feel that they are diluting the secret sauce that made it so beloved.

Lexus is updating its RZ electric vehicle lineup and introducing new versions that include a simulated manual gearbox and a steer-by-wire system. The top-of-the-line 550e F Sport includes a “Interactive Manual Drive” system that gives the driver the feeling of shifting like a manual gas car “by synchronizing acceleration and deceleration with immersive sound.” It also features the yoke steering wheel Lexus originally showed off for the RZ in 2022, which is available as an option for other versions with drive-by-wire.

Interactive Manual Drive features 8-speed virtual gears controlled by paddle shifters and a shift guide meter to give visual feedback on when to upshift and downshift. Lexus isn’t the only company trying fake shifting on EVs; manufacturers like Hyundai include it on the Ioniq 5 N.

When the RZ launched in 2023, it had a relatively short EPA-estimated 220 miles of range on a single charge, but the new one maxes out at about 357 miles (575km), although that range is based on Europe’s more lax WLTP system.

The higher range is thanks to an updated 77 kWh battery that has more and improved cells compared to the previous 71.5 kWh one. The battery can push up to 300 kW to the F Sport’s dual motor AWD system. The new battery can recharge faster too thanks to the addition of a new preconditioning feature.

Lexus plans to “gradually roll out” the RZ starting this fall “across various regions.”

Toyota announced updates to its European EV offerings, including an electric version of the Toyota C-HR called the C-HR Plus, and a refreshed bZ4X that addresses many of the electric crossover’s shortcomings. 

The C-HR Plus is built on Toyota’s e-TNGA platform and comes in two battery options: 57.7 kWh with 455km (about 283 miles) of range, with a second trim with a 77 kWh battery that can power the vehicle for 600km (about 373 miles). Outwardly, the car has some noticeable differences from its hybrid predecessors, but keeps enough of the look to be recognizably part of the C-HR line.

The updated bZ4X — a naming strategy Toyota eventually plans to retire — will use the same dual-battery, e-TNGA platform setup as the smaller C-HR Plus, albeit with a slightly smaller 73.1kWh battery in the long-range version. Likewise, it has a lower cruising range of 445km (about 276.5 miles) or 573km (about 356 miles). 

Those are some big range gains compared to the 2023 bZ4X, which our review concluded wasn’t worth its “nearly $50,000 price tag.” The long-range version of that model offered an EPA-estimated 252 miles of range, which isn†…

Read the full story at The Verge.

Earlier today, Toyota and Lexus debuted some improved and some new electric vehicles. The event was focused on the European market, where battery EV penetration is relatively high, and I wouldn't expect either the Urban Cruiser or C-HR+ crossovers to show up on sale in the US. But we'll likely find the upgrades to the Toyota bZ4x and the closely related Lexus RZ, or at least some of them, in North American models at some point.

The revised bZ4x will come in three powertrain options, at least in the EU, all with new battery packs. There's a 165 hp (123 kW) front-wheel drive version coupled to a smaller-capacity 57.7 kWh battery pack (which I would not expect to come to the US), and then 221 hp (165 kW) FWD and 337 (252 kW) all-wheel drive options, both of which use a new 73.1 kWh battery pack.

For comparison, the bZ4xs that went on sale in the US several years ago are offered with either a 71.4 kWh pack for FWD or a 72.8 kWh pack for AWD versions.

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• Toyota's sales in China are slumping as it faces brutal competition from local EV giants like BYD.
• The Japanese automaker plans to fight back by taking a page from Elon Musk's playbook.
• It said Wednesday it would build a fully owned EV factory in Shanghai, after Tesla did the same in 2019.

Toyota is taking a page out of Elon Musk's playbook as it plots a comeback in China.

The Japanese automaker announced on Wednesday that it would build a new EV and battery factory in Shanghai, as it seeks to turn around stuttering sales in the world's most competitive car market.

Toyota will fully own the new factory, which it says will have the capacity to produce 100,000 electric vehicles a year for the Lexus brand from 2027.

The facility will see it join Tesla as part of a select group of foreign automakers who run their own Chinese operation, along with Tesla's Shanghai gigafactory and a VW plant in eastern China.

Foreign carmakers were previously required to enter into partnerships with local companies to build cars in China, though those rules were relaxed in 2018.

The new factory marks a change in strategy for Toyota, which currently sells cars in China through joint ventures with local firms FAW and GAC.

The world's largest automaker has struggled in China, with sales dropping nearly 7% in 2024 amid brutal competition from homegrown EV giants like BYD.

Toyota's decision to prioritize hybrids over battery electric vehicles has seen the company avoid the slumping sales and financial difficulties that have hit some of its rivals.

But it has also meant Toyota has struggled to compete with the wide range of low-cost electric vehicles on offer in China, with BYD selling EVs for as little as $10,000.

The Japanese giant is trying to change that, in part by following Tesla's lead.

Tesla opened its Shanghai gigafactory in 2019, after Elon Musk pushed for a relaxation in China's foreign ownership rules.

Production at the factory scaled up rapidly, and by 2021, around half the company's global deliveries came from the Shanghai site.

China has since become one of Tesla's most important markets, with Tesla selling around 657,000 electric cars in the country last year as it competed with local rivals in a brutal price war.

Toyota's strategy shift in China comes as the company reported a 27% drop in quarterly profit in its latest earnings.

Toyota's vehicle sales also dropped slightly to 10.8 million vehicles, enough to retain the title of world's largest automaker but raising concerns that the hybrid boom that has fuelled Toyota's recent growth may be slowing down.

Despite this, Toyota raised its full-year profit forecast by 400 billion yen ($2.6 billion) to 4.7 trillion yen ($30.7 billion) as it also announced its new $14 billion battery factory in North Carolina was ready to begin production.

Toyota did not respond to a request for comment, sent outside normal working hours.

• DeepSeek's AI models have taken the tech industry by storm in recent days.
• More than 20 big AWS customers have asked Amazon for access to DeepSeek models: internal document.
• AWS's strategy focuses on offering diverse AI models, unlike competitors that prioritize their own.

Big Amazon cloud customers have been pressing the tech giant to give them access to DeepSeek's AI models, the latest sign of the Chinese startup taking the tech world by storm.

More than 20 key clients of Amazon Web Services asked the company to make DeepSeek models available through Amazon's Bedrock AI development tool this weekend, according to an internal document obtained by Business Insider.

Toyota, Stripe, Cisco, Yelp, and Workday were among AWS customers asking for this access, with many wanting to test and evaluate DeepSeek's AI capabilities internally. Other companies that made similar requests include Mercado Libre and Kellogg, the document showed.

An Amazon spokesperson told BI that Bedrock customers use multiple models to meet their unique needs and the company remains focused on "providing our customers with choice."

"We are always listening to customers to bring the latest emerging and popular models to AWS," the spokesperson said.

Spokespeople for Stripe, Cisco, Yelp, Workday, Toyota, Mercado Libre, and Kellogg didn't respond to requests for comment.

DeepSeek recently rolled out AI models that are on par with, or better than, some of Silicon Valley's top offerings — at a fraction of the cost. Its cheap pricing, strong performance, and compute-efficiency have raised questions about US tech companies' massive spending on competing products.

Tech stocks, including Nvidia, Broadcom, and TSMC, plunged on Monday as investors tried to assess the long-term implications of DeepSeek's initial success.

Amazon shares dropped early on Monday trading, but rallied during the day to end up 0.2%.

The moves highlight Amazon's strategic advantage in the generative AI race. From early on, AWS focused on providing customers with as many AI models as possible through Bedrock, believing that no one model would dominate the market.

That's a contrast to other tech companies, such as OpenAI and Google, which have spent heavily on building their own frontier AI models.

AWS still has an internal AGI team developing its own AI models, and the company unveiled the latest version, Nova, in December. However, Amazon has mostly prioritized offering a range of other AI models through the cloud.

Amazon often makes decisions based on customer feedback, and the company is likely considering making DeepSeek's models available through Bedrock after such a flood of client requests, according to a person familiar with the matter.

One AWS employee told BI that the company is not in "panic" mode over DeepSeek like some other tech companies. If DeepSeek's models are good, "we'll just host it on Bedrock," this person said. They asked not to be identified discussing private matters.

"We expect to see many more models like this — both large and small, proprietary and open-source — excel at different tasks," the Amazon spokesperson told BI, while noting that customers can access some DeepSeek-related products on AWS through tools such as Bedrock.

Do you work at Amazon? Got a tip?

Contact the reporter Eugene Kim via the encrypted-messaging apps Signal or Telegram (+1-650-942-3061) or email ([email protected]). Reach out using a nonwork device. Check out Insider's source guide for other tips on sharing information securely.

• Nvidia CEO Jensen Huang used CES 2025 as an opportunity to highlight autonomous vehicle tech.
• Nvidia's Orin chips will power Toyota's driver-assist features, in a new partnership.
• The chip designer offers a "shot in the arm" for a floundering industry.

Nvidia CEO Jensen Huang says true self-driving cars require three advanced computers.

There's a computer to train the models to understand the world, the computer running simulations that allow these models to practice encountering important but unlikely scenarios, and a computer inside the car itself.

Nvidia has strategically embedded itself in all three key steps that could make every car a self-driving car.

While segment leaders like Waymo and Tesla launch robotaxi fleets and enable drivers to scroll on X while their cars drive them to work, Nvidia approaches the market as an enabler — not a consumer brand.

The chip-design company is building upon a suite of functionalities that already power your car's advanced driver-assist systems, such as automatic lane keeping and adaptive cruise control.

With its long list of heavy-hitting automotive clients, including Toyota, Uber, and Hyundai among others, Nvidia is positioning itself to be the self-driving tech supplier to the automotive industry. To Huang, all these players are headed in the same direction.

"Every single car company will have to be autonomous, or you're not going to be a car company," Huang said at a fireside chat for financial analysts at this year's Consumer Electronic Show.

Huang made autonomous vehicle technology a centerpiece of his CES keynote speech, announcing confidently that self-driving cars aren't coming — they're already here.

"With Waymo's success and Tesla's success, it is very, very clear autonomous vehicles have finally arrived," said Huang onstage.

Self-driving stops and starts

Despite the recent preponderance of driverless Waymo rides, self-driving technology has been in limbo across the auto industry as carmakers cut costs and focus investments on more near-term technology like electric vehicles.

Many traditional carmakers are rethinking expensive autonomous technology development after decades of piecemeal progress and no clear path to profitability — ceding ground to tech-first players.

Who will win the chip war that lives inside the dashboards of most cars remains an open question. But after CES, analysts are much closer to calling the race.

Today's cars are chock-full of chips. Most are far less complicated than the kind needed to offload driving tasks to the computer. Nvidia's competition includes other automotive chip giants like Qualcomm and Israel's Mobileye, which develops microchips and other technologies for the automotive industry.

As AI converges with increased adoption of self-driving technology, Nvidia now appears to be taking the lead, according to Martin French, managing director at automotive consultancy Berylls.

Toyota, the world's largest automaker, will use Nvidia's Orin chips and automotive operating system to power its next generation of driver-assist features, Huang announced.

Orin is Nvidia's solution for putting the computing power and intelligence of AI inside a car. The system debuted in 2019 and has developed into a more all-encompassing solution over time.

Mercedez Benz, China's BYD, and many luxury EV makers have also adopted Orin.

Most of these are not fully self-driving, but the long road between cruise control and realizing the dream of sleeping in the back seat while a car drives itself will have many stops along the way.

Winning Toyota's business is a big deal. McKinsey estimates that the assisted and autonomous driving market could be worth $400 billion by 2035. Nvidia forecasts a $5 billion run rate for its automotive business in fiscal year 2025, a five-fold increase in the company's automotive business from 2023.

Nvidia is also joining forces with trucking startup Aurora Innovation and automotive supplier Continental to deploy self-driving trucks — an announcement that sent Aurora's stock soaring 35% last week.

Beyond the data center

Tesla's self-driving technology, which Huang frequently lauds, is trained on Nvidia GPUs. However, the chips that make Tesla's full-self-driving run are designed in-house and manufactured by Samsung.

As far back as 2019, Tesla and Nvidia shared an understanding of the importance of accelerated computing. But they've been on-and-off partners. Today the partnership is very much on, with Huang and Musk regularly trading praise.

Cementing relationships with Toyota, Tesla, and Aurora puts Nvidia in a good position to be the primary supplier of self-driving technology to the automotive industry.

Few companies can provide chips for cars and also the chips to train the AI needed for self-driving capabilities.

Despite a two-hour CES keynote presentation spanning humanoid robots to AI laptops, Philips Capital analysts called Nvidia's automotive offering the "most significant" revelation at the tentpole event. Averaging less than 2% of total revenue in the first three quarters of 2024, Nvidia's automotive business still pales in comparison to its data center business.

On the company's February 2024 earnings call, CFO Colette Kress said $1 billion of the firm's data center revenue, which is reported separately from the automotive chip business, was attributable to automotive customers.

"They are absolutely positioning themselves as the leader for autonomous technologies, period," French said.

'A shot in the arm' for self-driving

In recent years, major car companies have abandoned their expensive self-driving car projects to focus on electric vehicles.

Ford and Volkswagen pulled funding from now-defunct self-driving startup ArgoAI in 2022, while GM said at the end of 2024 it would end its Cruise division's robotaxi development.

"We've had a lot of bad news around self-driving tech in the past few years — it's been quite downbeat," said French. "Nvidia has reversed that and just gave autonomous driving an absolute shot in the arm."

Investors were growing impatient with the drag on car companies' profits and lacked faith in legacy automakers' ability to develop software, French said. What it took to get investors back on board with self-driving tech was to hear it from a tech company.

"For Jensen — one of the leading people in tech — to get up onstage and tell everyone autonomous driving is here and robotics are just around the corner holds a lot of weight with investors," French said.

Huang is well-known for having an appetite for market-making — frequently saying he looks for "zero-billion-dollar markets" to simultaneously create and conquer. The AV market could still yet be won by one company, according to French.

In a complex regulatory environment, the automotive industry often strives to find a single standard to follow on new tech. That usually creates a period of stiff competition as companies vie to develop the winning technology.

Take electric vehicle charging, for example.

For years, the industry couldn't agree on a single charger type, leading to mismatched plugs and ports for EV drivers searching for juice. But in 2023, the industry finally coalesced around the North American Charging Standard chargers used by Tesla.

Since AI has closed the technological space between self-driving cars and robotics the entire auto industry is about to find out what it's like to be part of Nvidia's next zero-billion dollar market.

• Toyota's North American employees have been recalled back to the office starting in September.
• Salaried employees will be required to be in the office from Monday through Thursday.
• Toyota employs more than 64,000 people in North America.

Many of Toyota's North American employees are being recalled back to the office Monday through Thursday starting in September.

Bloomberg first reported on the move. A spokesperson for the Japanese automaker confirmed the news to Business Insider but offered no further details.

Employees will be allowed to work from home on Fridays "subject to business needs," the outlet reported.

Toyota is the latest corporate giant to order employees back to the office. Amazon, AT&T, Boeing, and Salesforce have all recently issued to return to office requirements for their employees.

Toyota employs more than 64,000 people in North America in 14 factories, as well as in design, engineering, and corporate offices.

The automaker sold more than 2.3 million Lexus and Toyota-branded cars, trucks, and SUVs in the US in 2024, up 3.7 percent from 2023.

Are you a Toyota employee affected by the news? If so, reach out to this reporter at [email protected].

Even before CES 2025 kicked off a few trends began to emerge — or more accurately, some gaps appeared.  All U.S. and some European automakers that have helped turn CES into an auto show were absent. Several Chinese automakers filled that void, notably Zeekr, the EV brand owned by China’s Geely Holdings. Wey, a premium […]

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• Woven City, Toyota's $10 billion smart city, is set to welcome its first residents in 2025.
• The company said the 175-acre site at the base of Mount Fuji would be a testing ground for robotics and self-driving tech.
• Chairman Akio Toyoda said the city could include "pet robots" for older people and drones for joggers.

Toyota's "Woven City," a $10 billion smart city at the base of Mount Fuji, is beginning to take shape.

The Japanese automaker announced the "city of the future" in 2021, with the 175-acre site set to serve as a testing ground for advanced technology such as robots, self-driving vehicles, and flying cars.

Toyota gave an update on Woven City at CES on Monday, saying the "living laboratory" has now completed the first phase of construction with an official launch planned for 2025.

The city is also set to welcome its first residents this year. Toyota said the first 100 residents would move into the site in fall 2025. The first inhabitants will primarily be Toyota employees and their families, with Woven City eventually expected to accommodate 2,000 "weavers."

Woven City is part of Toyota's attempt to rebrand itself as a "mobility" company, as storm clouds gather over its core car business.

The world's largest automaker may have cashed in on the growing popularity of hybrids, but a sluggish rollout of electric vehicles has seen it come under pressure from upstart Chinese automakers.

Toyota reported a major drop in quarterly profits and slumping sales in China in its November earnings.

The company is banking that its investments in advanced technology will help it compete with the likes of Tesla and BYD, with Woven City serving as a testing ground for the most futuristic ideas.

Toyota said in 2021 that the city will feature AI-powered smart homes and a road plan with three different kinds of streets, accommodating robotaxis, bikes, and pedestrians.

Designed by Bjarke Ingels, the architect behind 2 World Trade Center in New York City and Google's California and London headquarters, Woven City will also heavily incorporate robotics.

Toyota chairman Akio Toyoda told a press conference at CES that the city could include "pet robots" for older people and personal drones that would escort joggers to ensure their safety.

The first batch of "inventors" set to trial their products in Woven City, which Toyota announced on Monday, were slightly less futuristic.

They included air-conditioning manufacturers, an instant noodle maker, and a coffee company that promised to "explore the potential value of coffee through futuristic café experiences."

Toyota Motor Chairman Akio Toyoda revealed Monday at CES 2025 his vision for a living laboratory chock-full of startups and technology. His message: Woven City — a prototype city on a 175-acre site at the foot of Mount Fuji in Japan — is open for business and searching for inventors. “Today, I say to anyone […]

© 2024 TechCrunch. All rights reserved. For personal use only.

Japanese automaker Toyota is “exploring rockets,” chairman Akio Toyoda announced on stage at CES 2025 on Monday, while hinting at the idea of moving people through space. The rocketry mention on the CES 2025 stage came while Toyoda was in the middle of explaining how he views his company’s myriad technologies as “invention by kakezan,” […]

© 2024 TechCrunch. All rights reserved. For personal use only.

Monday’s Toyota CES press conference was all about Woven City, the carmaker’s planned community at the base of Mount Fuji. Robotics will undoubtedly play a major role in the company’s bid to automate as much of the 2,000-person city as possible, including autonomous cars and drones designed to chaperone people back home after dark. One […]

© 2024 TechCrunch. All rights reserved. For personal use only.

Five years ago, Toyota Chairman Akio Toyoda went to CES to share with the world his “personal field of dreams” — a plan to build a prototype city on a 175-acre site at the foot of Mount Fuji in Japan, where people would live and work amongst all of Toyota’s projects, including autonomous vehicle technology, […]

© 2024 TechCrunch. All rights reserved. For personal use only.

• As demand for EVs cooled, hybrid cars took off in 2024.
• Companies that placed early bets on hybrids reaped the rewards.
• Hybrids will likely play a big role in the electric transition.

Hybrid cars had a huge comeback in 2024.

These cars, which use a mix of battery-electric and gas power, emerged as the winner in a year when demand for EVs hit a plateau.

A new group of green-car shoppers flooded the market in 2024, and unlike their wealthy early adopter counterparts, these new consumers are much more practical. The compromise of a hybrid appeals to these shoppers, who tend to be both environmentally conscious and budget-conscious.

This shift toward hybrids was great news for companies like Toyota, which remained steadfast in the hybrid market as others fled to focus on pure EVs. Meanwhile, other companies were left scrambling last year as their expensive plans to phase out gas-powered cars hit a roadblock.

Here's how 2024 became the year of the hybrid car.

1. Shoppers cooled on EVs

In 2024, demand for electric cars pulled back as wealthy early adopters fled the segment.

What automotive executives and industry watchers initially identified as price sensitivity turned out to be a bigger problem for EVs. A different breed of car shoppers started flocking to dealer lots, and they were more drawn to the compromise of a hybrid.

Tesla CEO Elon Musk once blamed the popularity of hybrid cars for the company's poor sales performance in the first half of the year.

Read more about how automakers were forced to rethink their EV plans.

2. Hybrids weren't immune to rising prices

Affordability became a key issue for car shoppers last year as higher interest rates kept shoppers on a budget. Hybrids were often considered a more affordable option, but that rule didn't always hold true.

Massive demand for a specific type of hybrid car, the plug-in hybrid, sent prices of these already expensive models soaring.

Read more about how everyone wanted a plug-in hybrid, and how that demand sent prices soaring.

3. EV demand took a hit

Greater numbers of average customers were in the market for electric cars last year, and these shoppers weren't as easily swayed as the wealthy early adopters who drove the segment's early growth.

Car companies weren't prepared for this stark drop-off in demand and were stuck slashing prices on their big, expensive EVs while they quickly pivoted to offering more hybrids.

Read more about how automakers over-estimated EV demand.

4. Hybrid bets paid off

Sales of hybrid cars took off in the first quarter of last year, benefiting companies like Toyota and Ford. Both of these big-name brands have a wide range of hybrid options, including the more expensive plug-in variety.

The Ford F-150 and Toyota RAV4 were the two most popular cars of 2024. Both saw huge sales increases last year due to interest in their hybrid models, executives have said.

"Hybrids are just rockin'," Toyota Motor North America Sales Chief David Christ said in March.

Read more about how Toyota was right about hybrid cars all along. And how Ford's secret weapon in the fight against Tesla has been hybrids.

5. Hybrids proved that they were here to stay

While the first wave of early adopters only lasted a few years for EV sellers, this more practical shopper is here to stay — at least for now.

Studies last year showed plenty of interest in pure electric vehicles, but many average consumers will require hybrids as a stepping stone as issues like charging infrastructure and affordability continue to exist.

While companies remain steadfast in their commitment to all-electric futures, several are making hybrids a bigger part of that transition.

Read more about how a hybrid-car comeback is in the making — and it could be great news for your wallet.

• Andy Palmer, the "godfather of EVs," explains how China took the lead in the electric-car race.
• Palmer got the moniker after developing the Nissan Leaf, the world's first mass-market EV.
• He said Chinese EVs offered "remarkable" value for money and better battery tech than Western rivals.

The man often known as the "godfather of EVs" has a warning for automakers thinking of ditching electric vehicles for hybrids.

Andy Palmer, a former Aston Martin CEO and Nissan exec, told Business Insider that delaying transitioning to EVs in favor of selling hybrids was a "fool's errand" and warned that automakers doing so risked falling even further behind Chinese EV companies.

Palmer's moniker comes from his time as chief operating officer at Nissan.

He led the development of the Nissan Leaf, the world's first mass-market electric car, which has sold more than half a million units since it launched in 2010.

"I wish I could say that it was driven by a motivation to better the world. But actually, it was driven by the Toyota Prius kicking our ass," Palmer told BI.

Rather than copying the success of the hybrid Prius, Palmer said, he pushed Nissan to build a fully electric vehicle, eventually securing the support of the CEO at the time, Carlos Ghosn.

Over a decade later, he's skeptical of automakers — including Aston Martin, the company Palmer ran as CEO from 2014 to 2020 — who have taken the opposite path and turned to hybrids as EV adoption has slowed.

"Hybrids are a road to hell. They are a transition strategy, and the longer you stay on that transition, the less quickly you ramp up into the new world," Palmer said.

"If you just delay transitioning to EVs by diluting it with hybrids then you are more uncompetitive for longer, and you allow the Chinese to continue to develop their market and their leadership. I honestly think it's a fool's errand," he added.

China races ahead

Over the past few years, the auto industry has been shaken by the booming growth of Chinese brands such as BYD, which have conquered their home market with a range of affordable and high-tech EVs and hybrids and are now rapidly expanding abroad.

"The Chinese cars are bloody good. The Chinese vehicles offer remarkable value for money for what they deliver," Palmer said.

"Their battery technology's class-leading, and they've concentrated very much on their software," he said.

Palmer told BI that the success of China's EV industry was down to the country's long-running industrial strategy.

One study found that the Chinese government had spent at least $230 billion on subsidies for EV makers since 2009.

Palmer, who previously served on the board of Dongfeng Motor Company, a joint venture between Nissan and the Chinese state-owned automaker Dongfeng, said he saw firsthand how aggressive China's EV strategy was.

"The edict [from the Chinese government] was to move to new energy vehicles," he said.

"It starts with an industrial strategy. That's the big thing to learn. For the best part of 14 years, we have not had an industrial strategy," Palmer added.

Both the US and Europe have responded to the rise of Chinese automakers by imposing tariffs aimed at protecting their own auto industries, but Palmer said tariffs would only harm Western companies' ability to compete with their Chinese rivals.

"My experience with tariffs is it just makes your indigenous industry lazy. The gap becomes even bigger," he said.

Instead, he argued that automakers should prepare for a "survival of the fittest" battle with Chinese automakers, especially in Europe, where the likes of BYD and Xpeng have ambitious expansion plans.

"I think the Chinese firms will learn from competing in Europe, because that's the toughest market in the world. If they can do that, then they're going to be unbeatable," Palmer said.

Japanese carmakers stumble

The surging growth of China's EV giants has put Palmer's former employer Nissan and its Japanese rivals Toyota and Honda under severe pressure.

Nissan announced it would lay off 9,000 workers in November, while both Toyota and Honda are facing declining sales in China and slumping profits. In December, it was reported that Nissan and Honda were in merger talks.

Palmer said that while Toyota's decision to focus on hybrids paid off initially, it had left it and other Japanese automakers exposed as key markets such as China transition quickly to EVs.

"Toyota took the Japanese industry down a cul-de-sac, which it is going to struggle to recover from," he said.

The former Nissan executive said his old company, meanwhile, had "shot itself in the foot" and squandered a promising lineup of electric vehicles and a 10-year lead in EV tech.

"My last board meeting in July 2014, I was under enormous attack from the bean counters who were saying; these things don't make money, we are going too fast. I managed to win the day in that meeting, but I left the company," Palmer said.

"Nissan finds itself now with a very poor lineup of products and without obvious leadership in EVs, and that's the direct result of poor management," he said.

How to get EVs moving again

The past year has been tough for electric vehicles. While sales are still growing, the pace of adoption has been slower than expected, causing automakers across the globe to roll back investments.

For Palmer, the reason some consumers have proven reluctant to go electric is simple: EVs are too expensive.

"Prices have got to align to those of internal combustion engines. And to make that happen, you've got to be able to offer cars with smaller batteries," Palmer said.

The average price of an electric vehicle in the US in October was $56,902, according to Kelley Blue Book, compared with $48,623 for gas-powered vehicles.

Palmer said selling cheaper vehicles with smaller batteries and less range would require governments to incentivize the rollout of charging networks to alleviate range anxiety.

He added that the West could learn from China's approach to industrial strategy — especially when it comes to batteries, an industry that China dominates.

"If the West wants to catch up, I would advocate copying the Chinese," Palmer said.

"The alternative is everything is Chinese at the moment — even if you were building your own battery cells, you've still got to get all the minerals from China," he said. "The whole supply chain is stuck."

Yesterday, US Senators Jeff Merkley (D-OR), Elizabeth Warren (D-MA), and Joshua Hawley (R-MO) sent letters to the heads of Ford, General Motors, and Tesla, as well as the US heads of Honda, Hyundai, Nissan, Stellantis, Subaru, Toyota, and Volkswagen, excoriating them over their opposition to the right-to-repair movement.

"We need to hit the brakes on automakers stealing your data and undermining your right-to-repair," said Senator Merkley in a statement to Ars. "Time and again, these billionaire corporations have a double standard when it comes to your privacy and security: claiming that sharing vehicle data with repair shops poses cybersecurity risks while selling consumer data themselves. Oregon has one of the strongest right-to-repair laws in the nation, and that’s why I’m working across the aisle to advance efforts nationwide that protect consumer rights."

Most repairs aren’t at dealerships

The Senators point out that 70 percent of car parts and services currently come from independent outlets, which are seen as trustworthy and providing good value for money, "while nearly all dealerships receive the worst possible rating for price."

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