Toyota's Big Breakthrough Could Be Trouble For Tesla

Nobody quite understood why Toyota took so long to announce that it was going to start building electric cars in larger quantities than the limited-edition Rav4 EV, the second generation of which was built with help from Tesla. Sure, the Japanese automaker had been banking on hydrogen fuel cell technology in a big way, but sooner or later it was going to have to build EVs to compete with a broader market, especially when considering that it's tough to find hydrogen fueling stations outside of dense California cities.

So it was welcome news when Toyota announced that it was going to start expanding into the electric car world by building EVs and plug-in hybrids, which it's supposed to have out in the early 2020s. That's especially the case when some of those could be built with the automaker's new partner, Subaru.

What we didn't know, however, is the exact reasoning behind Toyota's pivot into the EV domain. Thankfully, Toyota Executive Vice President Shigeki Terashi sat down with Automotive News and broke it down. As one might expect, Terashi cites the "sudden surge" in EV demand and the powertrain's popularity in markets around the world as a good reason Toyota wants to join the race to build an electric car.

"Progress has surpassed the target," Terashi said. "We have entered a new age." Thing is, the concept EVs Toyota put on display during the announcement of its electric ambitions were all small one-to-two person vehicles with around 60 miles of range per charge, meaning they're intended to sell in Japan and not in the US. But despite the fact critics would cite the US EV market only represents 1.3% of the country's total auto market, Toyota wants to build electric cars for America too, since it's still the world's 2nd largest EV market behind China (which is about 3.5 times the size of the US EV market) and ahead of Norway (which is roughly half the size of the US EV market).