Toyota reports crummy Q4 earnings after slow-walking the EV transition. Coincidence?

Toyota’s latest financial results have revealed significant challenges as the company reported a 21.5% drop in operating income for the fourth quarter of 2025, alongside a sharp decline in profit margins and a $2 billion operating loss in its North American division. These figures come amid rising oil prices and ongoing US tariffs, placing additional strain on the automaker’s profitability. The results have reignited scrutiny over Toyota’s cautious approach to electric vehicles (EVs), with critics suggesting that the company’s slow transition away from combustion engines is undermining its competitiveness in a rapidly evolving market. For years, Toyota has prioritised hybrid technology and hydrogen fuel cells over battery electric vehicles (BEVs), a strategy that is now drawing criticism from industry experts and investors alike. The company’s BEV sales remain below 2% of the global market, with fewer than 200,000 units sold worldwide in 2025, and its ambitions for 1.5 million EV sales by 2026 have been repeatedly scaled back. Meanwhile, Toyota’s development of solid-state batteries, once hailed as a game-changer, continues to face delays, with pilot production now pushed to 2027. This cautious stance has left Toyota trailing behind competitors such as BMW, which is already on its fourth generation of EVs. Ben Scott, Head of Energy Demand at the Carbon Tracker Initiative, has been vocal in highlighting the consequences of Toyota’s strategic missteps. He attributes the company’s financial woes to its heavy reliance on fossil fuel supply chains and combustion engine products, which expose it to volatile oil prices and geopolitical risks. Scott argues that Toyota’s underinvestment in BEVs and overcommitment to hydrogen technology have resulted in a product lineup that is out of step with global market trends, particularly in China, where Toyota’s sales have declined for three consecutive years amid growing competition from both domestic and European EV manufacturers. Despite growing concerns, there has been little organised shareholder activism targeting Toyota’s EV strategy, unlike the pressure seen recently at Daimler Truck’s annual general meeting. While some investors have voiced unease, coordinated efforts to push for a faster EV transition at Toyota have yet to materialise. However, with petrol prices remaining high and profits under pressure, the company may soon face increased demands from investors and the market to accelerate its electric vehicle ambitions and rethink its long-term approach to sustainable mobility.