Toyota, the world’s largest automaker by volume, continues to play a pivotal role in shaping the global automotive landscape. However, even industry titans can stumble. In 2024, Toyota has faced mounting challenges that have analysts, investors, and consumers alike questioning its long-term strategy and immediate ability to adapt. From supply chain disruptions to environmental controversies, and growing competition in the electric vehicle (EV) market, Toyota is at a crossroads. This article dives deep into what is ailing Toyota in 2024 and what it means for its future.
1. The Problem with Toyota: A Multi-Faceted Crisis
While no single issue defines Toyota’s problems in 2024, the automaker faces a mix of external pressures and internal strategy debates. These challenges can be categorized into five major areas:
- Supply chain vulnerabilities
- Slow adoption of electric vehicles
- Competition in the global market
- Environmental and corporate responsibility scrutiny
- Organizational infighting and legacy mindset
Each of these areas is critical to Toyota’s continued dominance, and each threatens its market position in 2024.
1.1 Supply Chain Disruptions Continue to Impact Toyota in 2024
Despite improving from the pandemic-era supply chain chaos, Toyota has not been immune to ongoing global disruptions. The company has been affected by semiconductor shortages, ongoing port congestion, and geopolitical tensions—especially those involving China and key raw material suppliers.
Several of Toyota’s manufacturing plants in Japan and overseas faced delays in production due to shortages in critical components. According to reports from Nikkei Asia, the automaker trimmed production forecasts in several key markets, including North America and Europe. Toyota’s just-in-time production system, while historically effective, has increasingly been viewed as a liability in the current volatile environment.
1.2 Slow Electric Vehicle Transition Remains a Liability
Toyota has long been associated with hybrid technology, most notably with the success of the Prius. However, in 2024, the company is increasingly criticized for lagging in the race toward full electrification. While competitors like Tesla, BYD, and even legacy automakers such as Ford and Volkswagen ramp up production of battery-electric vehicles (BEVs), Toyota remains cautious.
This strategic reluctance has several motivations:
- Belief that hydrogen fuel cell technology (H2) will eventually outperform BEVs
- Concerns over battery supply chain sustainability
- Slim profit margins on current EV models
Despite launching BEVs like the bZ4X, Toyota’s electric lineup has been sparse compared to its peers. In an interview with Reuters in early 2024, a senior Toyota executive stated that hybrids and hydrogen would remain Toyota’s focus “for the next decade at least.”
This cautious approach has created tension within the company and with its stakeholders, particularly those pushing for a faster, more committed EV shift in line with global decarbonization goals.
2. Competition Intensifies in the EV Market
2.1 Chinese Automakers Are Winning the EV Cost Battle
Toyota’s traditional competitors in the U.S. and Japan are not the only threat in 2024. China’s EV makers like BYD, Geely, and Xpeng are aggressively expanding globally, offering competitive electric vehicles at a lower price point. Toyota, which historically maintained high margins on its vehicles, has struggled to match the cost-effectiveness of Chinese BEV makers.
According to BloombergNEF, a mid-size BEV from a Chinese automaker costs approximately 25–30% less than its Toyota equivalent, partially due to the former’s domestic battery production capabilities.
This disparity undermines Toyota’s traditional competitive advantage: reliability with value. A new generation of consumers is now leaning toward affordability and innovation, favoring brands that offer cutting-edge tech with cost efficiency.
2.2 European and American Automakers Are Closing the Gap
In Europe, Volkswagen’s rapid expansion of its ID. series and Ford’s aggressive push into the BEV space with the Mustang Mach-E and F-150 Lightning have created headwinds for Toyota. Toyota lost significant market share in some European countries—especially in the UK and Germany—where its limited EV offering failed to meet changing consumer preferences.
The U.S. Department of Energy also released reports suggesting that Toyota’s EV strategy might hinder its eligibility for federal tax credits under the Inflation Reduction Act (IRA), putting it at a disadvantage compared to U.S.-based EV manufacturers, who are better positioned to capture subsidies and incentives.
3. Toyota Faces Legal and Environmental Criticism
3.1 Lawsuits Over EV Patent Withholding and Delaying Industry Growth
Critics have accused Toyota of leveraging its intellectual property monopoly over hydrogen and hybrid technologies without adequately opening them for broader industry growth. In early 2024, a class-action lawsuit was filed in California alleging that Toyota’s refusal to widely license EV battery and charging tech delayed the U.S.’s progress toward sustainable mobility.
While Toyota responded that it was protecting proprietary R&D investments, this stance has alienated government leaders and environmental groups seeking faster decarbonization pathways.
3.2 Accusations of Greenwashing
Despite championing the hybrid vehicle as a “clean” solution, Toyota has been called out for greenwashing by environmental organizations. In a public report by Greenpeace Japan, the automaker’s reliance on traditional hybrids and hydrogen was described as “a delay tactic that is incompatible with global net-zero commitments.”
The report argues that while hybrids reduce emissions, they still rely heavily on internal combustion engines, which cannot meet long-term decarbonization goals. Consequently, environmental policymakers across the EU and some parts of the U.S. have excluded Toyota vehicles from subsidies meant for zero-emission vehicles.
4. Toyota’s Internal Leadership Challenges
4.1 Legacy vs. Innovation: Cultural Divide
Toyota has historically prioritized stability, operational efficiency, and long-term planning. These values, rooted in the Toyota Production System, have been strengths. However, they’ve also created a culture resistant to radical change, particularly when it comes to new energy technologies.
A 2024 New York Times investigation highlighted internal disagreements within Toyota’s leadership, with the younger generation of engineers pushing for faster BEV adoption being outvoted by older executives clinging to the belief in hydrogen and hybrids.
This divide between generations within the company is stalling strategic clarity, which is vital in an industry undergoing transformation.
4.2 Executive Turnover and Inconsistent Messaging
In mid-2024, Toyota experienced unexpected leadership changes, with several EV-focused executives reportedly leaving the company due to frustration with the slow pace of change. This has sent mixed signals not only to the market but to prospective EV partners, particularly in the U.S. and Asia.
Shareholders have expressed concerns over Toyota’s shifting messaging, especially between quarterly earnings reports that at times emphasized EVs and at others downplayed their immediate importance. This has led to confusion and investor uncertainty.
5. Market Reactions and Sales Trends
5.1 Falling Behind in Key Markets
While Toyota remains the number one automaker globally, it has lost ground in key growth markets, particularly in:
- Europe – where BEV adoption is fastest
- China – where Toyota is losing market share amid strong domestic BEV competition
- North America – where it lacks a strong EV truck/SUV lineup
Data released by the International Organization of Motor Vehicle Manufacturers (2024 Q1) showed Toyota’s quarterly EV sales in Europe declined by 12% YoY, while its hybrid market share dropped to 18%.
In China, Toyota’s EV sales growth remains flat, making up less than 2% of the 3.5 million BEVs sold in the first half of 2024.
5.2 Financial Toll: Profits Decline With EV Uncertainty
Toyota’s earnings report for Q1 2024 showed both revenue growth and profit decline, partly due to lower margins from EV production, increased supply chain costs, and decreased market share in emerging EV markets.
Toyota’s quarterly profit fell by 14.6%, with operating income hit by ¥307 billion in supply chain-related losses and write-downs on older hybrid models that are increasingly seen as transitional products.
Table: Toyota EV and Hybrid Sales vs. Competitors – 2024 Q1 Comparison
| Automaker | Global EV Sales | Hybrid Sales | EV Market Share | Profit Decline (YoY) |
|---|---|---|---|---|
| Toyota | 120,000 | 350,000 | 3.6% | 14.6% |
| BYD | 440,000 | 30,000 | 13.2% | +12% |
| Tesla | 420,000 | 0 | 12.8% | +18% |
| Volkswagen | 280,000 | 70,000 | 8.5% | +6.4% |
6. Toyota’s Response and Strategic Direction in 2024
Despite the criticisms and slowdown in EV output, Toyota has not been idle. In mid-2024, the company announced several new initiatives:
6.1 Major EV Investment Plan
Toyota pledged to invest over ¥2 trillion (~$13 billion USD) into electrification over the next five years, with a focus on developing new solid-state batteries and expanding its BEV lineup to include 10 new models by 2026.
This investment includes new battery manufacturing partnerships in Japan and Thailand as well as increased outsourcing arrangements for battery raw materials—a shift from past strategies that aimed for vertical integration.
6.2 Strengthening Global Partnerships
Toyota renewed and expanded strategic partnerships with battery firms Panasonic, CATL, and Samsung SDI, indicating a shift toward leveraging external innovation rather than internal bottleneck creation.
The automaker has also begun engaging more with U.S. EV charging networks like ChargePoint to enable better usability of its upcoming EV models, signaling a desire to learn from the Tesla ecosystem.
6.3 Moving Toward a More Flexible Electrification Strategy
Toyota is shifting from an all-or-nothing approach to a “multi-pathway” electrification strategy that includes BEVs, hybrids, plug-in hybrids, and hydrogen fuel cells. While it does not commit to a full BEV transition, it shows a willingness to consider broader options.
This flexibility may help Toyota maintain its global position across diverse regulatory environments and consumer preferences. However, until it commits more strongly to BEVs in major markets like the EU and U.S., skepticism will remain high.
7. Toyota’s Future Prospects: Is the Company Doomed or Dealmaker?
Toyota’s long-term viability is not in doubt. However, the short- to medium-term strategy is under intense scrutiny. Two major paths lay before Toyota:
- Transformational Shift: If Toyota accelerates its EV strategy and opens up more patent licensing, it could regain momentum as a technological leader and restore investor confidence.
- Strategic Stasis: If Toyota continues hedging bets across hybrid, EV, and hydrogen with no clear leadership, it risks becoming a “sustainable automaker” in name only, while its competitors leap ahead.
In the eyes of investors and the automotive press, 2024 has been Toyota’s year of reckoning. It’s unclear if internal leadership will pivot decisively enough to reshape the brand in the EV age.
7.1 Consumer Sentiment: Generational Shifts Play Against Toyota
Another challenge lies in shifting consumer sentiment. Millennials and Gen Z buyers are increasingly seeking electric vehicles as a default. Toyota’s reputation for reliability still draws many buyers, but younger consumers are not just looking for dependable transportation—they’re often seeking vehicles with zero emissions, seamless digital integration, and modern aesthetic design.
8. Final Thoughts: Toyota’s 2024 Crossroads
Toyota’s challenges in 2024 are not a result of a single failure, but rather a convergence of operational, strategic, reputational, and competitive obstacles. The automaker that once ruled through precision manufacturing and innovation is now facing an environment where adaptability and speed are just as—if not more—important than efficiency.
The company’s refusal to fully commit to electric vehicles, combined with internal disagreements, has opened the door for more agile competitors. Toyota faces mounting pressure to adapt its business model to a rapidly changing world.
In an industry where every year counts, Toyota’s next move could determine its place in history—not just in the automotive industry, but in the broader context of global climate policy and digital mobility. Toyota in 2024 is not broken, but it is undeniably at a critical junction.
As the pressure mounts, the question is no longer just “What is the problem with Toyota?” but rather: Can Toyota change fast enough to survive—and thrive—?
What is the main issue affecting Toyota in 2024?
Toyota is facing multiple challenges in 2024, primarily due to global semiconductor shortages and supply chain interruptions that have affected production timelines and vehicle availability. These issues have been compounded by increasing competition in the electric vehicle (EV) market, where Toyota has been slower to transition compared to some of its rivals. While the company has maintained a strong reputation for reliability and hybrid innovation, its relatively conservative approach to full EV adoption has led to criticism and concerns about its competitiveness in a rapidly evolving automotive landscape.
In addition to production and strategic concerns, Toyota has faced scrutiny over its cybersecurity protocols and data protection standards following a recent breach at one of its suppliers. This has led to questions about the company’s resilience against cyber threats and digital vulnerabilities. Together, these challenges present serious implications for Toyota’s market position, customer trust, and operational strategy moving forward.
How is Toyota responding to the semiconductor shortage in 2024?
Toyota has taken a strategic approach to mitigate the impact of semiconductor shortages by redesigning certain vehicle components to utilize alternative chips and enhance flexibility in sourcing. The company has also increased collaboration with semiconductor suppliers in Asia and explored longer-term partnerships to ensure a more stable supply chain in the future. These measures have allowed Toyota to minimize production cuts compared to some other automakers, leveraging its strong supplier relationships and adaptive manufacturing capabilities.
Despite these efforts, the semiconductor situation has not fully stabilized, and Toyota has had to delay some model launches and reduce output at key plants. The company has acknowledged the ongoing risk and is working with governments and industry groups to advocate for increased regional production of semiconductors, aiming to build a more resilient and diversified supply chain. These steps are seen as critical for Toyota’s future operations and maintaining its global market position.
Why is Toyota struggling in the electric vehicle (EV) market in 2024?
Toyota has been traditionally focused on hybrid and hydrogen fuel cell technologies, which has slowed its transition to full electric vehicles compared to competitors like Tesla and BYD. This strategic emphasis has left the company playing catch-up in the EV space, where consumer and governmental pressures have rapidly shifted toward full electrification. Additionally, Toyota’s cautious approach to phasing out internal combustion engines has drawn criticism from environmental groups and some markets that are adopting stricter emissions regulations.
In 2024, Toyota has announced plans to invest more heavily in EV development, but many analysts argue that the company is still lagging in terms of vehicle variety, charging infrastructure, and battery innovation. Toyota is attempting to address the gap with new EV platforms and partnerships but faces the uphill task of reshaping brand perception while balancing its existing hybrid and hydrogen-focused technology investments.
What impact have recent cybersecurity issues had on Toyota?
In 2024, Toyota experienced disruptions following a cybersecurity incident at one of its key suppliers, which temporarily halted production at several plants. While Toyota itself was not directly hacked, the incident highlighted the vulnerabilities in the automotive industry’s increasingly interconnected supply chains. This has raised alarms among investors and customers about the company’s readiness for digital threats and the resilience of its third-party partnerships.
Toyota has since taken steps to enhance its cybersecurity infrastructure, including collaborating with tech firms to conduct regular audits, improve threat detection systems, and implement more stringent supplier protocols. However, the incident has served as a wake-up call for the company to prioritize digital defenses with the same rigor as its traditional manufacturing and safety standards, especially as vehicles become more software-dependent.
How is Toyota’s global market position changing in 2024?
Toyota’s global market position has seen subtle but significant shifts in 2024 due to a combination of production constraints, intensifying competition in EVs, and evolving regulatory landscapes. While the company remains a leader in hybrid vehicle sales, it no longer holds the same dominance in terms of growth projections, particularly in markets like China and Europe where full EV adoption is accelerating. These regions are increasingly shaping the future of the auto industry, and Toyota’s slower EV rollout has affected its market share and brand perception.
Still, Toyota maintains strong footholds in North America, Southeast Asia, and emerging markets where hybrids and internal combustion vehicles are more prevalent. Its reputation for reliability, fuel efficiency, and resale value continues to support its brand loyalty. However, to maintain long-term leadership, Toyota must successfully pivot toward electrification and digital integration while preserving its core strengths.
What steps is Toyota taking to stay competitive in 2024?
Toyota has announced a multi-billion-dollar investment plan aimed at expanding its electric vehicle lineup, improving battery production, and strengthening software capabilities for future connected vehicles. Part of this effort involves the creation of a new dedicated EV brand and the introduction of more aggressive EV development targets to bridge the gap with competitors. Toyota has also partnered with key battery suppliers and is exploring solid-state battery technology, which could offer significant performance advantages.
In addition, the company has initiated cost-saving and efficiency measures across its manufacturing operations to offset some of the financial pressures associated with supply chain disruptions and shifting technology demands. Internal restructuring and leadership changes in 2024 reflect Toyota’s intent to modernize and adapt to changing global trends. These initiatives signal a company in transition, balancing its legacy strengths with the need to innovate at pace with the market.
What does the future look like for Toyota in light of these 2024 challenges?
The future for Toyota hinges on its ability to adapt to an increasingly electric and digital automotive landscape while maintaining its core strengths in reliability and hybrid innovation. The challenges faced in 2024—ranging from supply chain bottlenecks to market shifts—have forced Toyota to rethink some of its long-held strategies and accelerate its transformation plan. Though the automaker remains financially strong, the coming years will test its leadership and innovation capabilities as it competes with a new generation of EV-first companies.
Toyota’s roadmap includes substantial investments in electrification, battery research, and cybersecurity resilience. Given the company’s history of resilience and long-term planning, many industry experts believe Toyota can still emerge as a formidable player in the future mobility space. However, the success of this transition will heavily depend on how effectively the company addresses current vulnerabilities and aligns with the evolving expectations of consumers, regulators, and investors around the globe.