Tesla and the Entire EV Market In Trouble After Toyota Announced a New “Engine Reborn”

Executives from big name auto manufacturers like Mazda, Toyota, and Subaru say they plan to focus their investments on fuel-based engines, specifically a new combustion engine, instead of the fully electric options. Which could mean big problems for Tesla in the coming years.

So, when Toyota makes an announcement, the industry, as well as the rest of the world listens. The most recent proclamation, given by Toyota’s chief executive, Koji Sato, explained that the mega-company will be focusing on fuel-powered engines, not electric ones.

While the engine is built like a standard gas-powered combustion engine, it does not use gasoline. Instead, it is powered by either hydrogen or bioethanol.

That was, until engineers found a way to build electric engines. Instead of fuel, electric engines receive their energy from their batteries, which are charged through electricity. For years, many have argued that electric engines are the future, but now, since Toyota’s announcement, they’re not so sure.

During the second announcement, Koji explained that the “new role” for combustion engines will be in Toyota’s popular hybrid vehicles.

This process means that a car can have a smaller, more efficient engine that requires less fuel to function. Until now, the engines were still powered by gasoline, but Toyota has a new plan. 

The idea is actually quite simple: The new engine will be smaller, more efficient, and run on hydrogen or bioethanol instead of gas, but it will fit exactly in their existing hybrids.

Toyota’s chief technology officer, Hiroki Nakajima explained, “Both the batteries for electric vehicles and international combustion engines are important.”

The new engine will be made from fuel cells that turn either hydrogen or bioethanol into energy through a chemical reaction. Which will create far less carbon emissions than a standard engine.

Meaning that if the company was to replace even just the Prius engine with the new sustainable engine, they could save the world from an immense amount of carbon dioxide emissions.

And 57% of those emissions are produced by gas-powered passenger vehicles. Therefore, by eliminating millions of gas-powered cars, humans could significantly cut down on greenhouse emissions essentially overnight.

Several Japanese companies, including Mazda and Subaru are doing the same, and Sato recently told the press that Toyota hopes they can all work together. The CEO said, “Each company wants to win, but we can be faster if we work together.”

Tesla’s first quarter sales this year were abysmal and the company’s stock has dropped more than 40% since January 1, 2024. Overall, Tesla’s profit margins are the lowest they’ve been in six years, and to combat this issue, the company has laid off almost 20% of its labor force.

While Tesla is still the leading manufacturer of electric vehicles in the United States, many other companies, such as BMW, GM, and Ford, now have their own fully electric models for sale. Essentially, the consumer now has more options than they did before.

Musk himself called BYD the “most competitive” company, and noted that it “will have significant success outside of China, depending on what kind of tariffs or trade barriers are established.”

US President Joe Biden is determined to remove the vast majority of gas-powered cars from American roads to save the planet from climate change, and he has passed extremely strict EV mandates to make that plan a reality.

Therefore, President Biden announced in May 2024 that there will now be a 100% tariff on all electric vehicles purchased from China. While one might think that this is fantastic news for Musk and Tesla, he’s actually against the tariff.

He continued, “Tesla competes quite well in the market in China with no tariffs and no deferential support. I’m in favor of no tariffs.”

It’s truly too soon to say for sure. Biden’s EV mandates do give American auto manufacturing companies the freedom to focus on hybrids as well as fully electric options. 

And many argue that this avenue would be a better option for both the planet and its people.

Those who oppose the president’s EV mandate argue that it is impractical, expensive, and bad for the economy.

Practically, in order for Americans to all transition to EVs, the government will have to spend billions of dollars on building charging stations all over the country. Something that President Biden promised to do but hasn’t been able to accomplish.

Therefore, the idea that these companies could instead make hybrid vehicles with Toyota’s “engine reborn” is certainly exciting. If this new technology becomes available for all companies, they could, in fact, save the planet without completely changing their manufacturing systems and existing models.

However, if companies like Ford, GM, and BMW follow Toyota’s lead and put their energy into affordable and efficient hybrids, Musk may be out of a job.