"EVs Failed, Japan Was Right With Hybrids"? It's Too Early to Celebrate

Scrolling through my social media timeline lately, I keep seeing posts like these:

“Europe’s shift to EVs has failed.”

“Chinese EV makers are on the verge of collapsing together from cutthroat competition.”

“American EVs only survive on subsidies.”

And they almost always end the same way:

“By comparison, the Japanese automakers making money on hybrids were right.”

I understand the feeling.

Stories about Japan beating the world are pleasant to read.

And if you look only at the current numbers, it is true.

But Japanese automakers have not pulled out of EVs. Demand fell, so they are simply putting more effort into hybrids.

Selling the product that reliably makes money right now is an obvious decision for any company.

Still, as a bystander, something bothers me.

AI Is Losing Money, but Nobody Calls It a “Failure”

The obvious comparison is AI.

Right now, IT companies around the world are pouring staggering amounts of money into AI.

Yet most AI companies are still not making real profits.

Between server costs and development costs, they keep digging themselves deeper into the red.

Even so, investors keep putting in money, and nobody says, “AI has failed.”

Because everyone believes society will run on AI in the future.

Aren’t EVs something similar?

There aren’t enough charging stations, and batteries are still expensive.

It is not a business that makes money right away.

Even so, in the long run, the direction the world is heading seems unlikely to change.

AI losing money is called “an investment in the future.” EVs losing money are called “a failure.”

The same losses, treated very differently.

Will “We’ll Enter Once the Conditions Are Right” Work?

What worries me is what happens when EVs really do become profitable.

Suppose Japanese automakers raise their hands and say, “All right, the conditions are in place, so now we’re entering in earnest.”

By then, the companies that dug through years of losses first will have already locked down the technology, the parts supply chains, and the rules of the industry.

I doubt there will be any good seats left for customers who arrive late.

Of course, it is true that Japanese companies do not have the stamina of the giant American and Chinese companies.

They cannot afford to keep investing for years while bleeding money.

So they rely on the technology that makes money today.

They hold back on investing in new fields.

They lose their place in the markets of the future.

And their stamina drops even further.

I feel like I have seen this pattern before, in semiconductors and in consumer electronics.

Japan’s Old Flip Phones Were Selling Right Up to the End

The logic of using hybrid profits to fund development for the next era sounds neat.

But in real markets, it is often the companies willing to take losses to grab market share and data that end up owning the next era.

Japan’s old flip phones, nicknamed “Galápagos phones” because they evolved in isolation from the rest of the world, were once the best-made mobile phones on the planet.

They were packed with features, sold well at home, and made solid profits for their manufacturers.

Everyone thought, “We’re winning with the technology we have now, so we’re fine.”

Those phones, too, were selling perfectly well in Japan right up until the very last day.