The European Union (EU), especially in the more developed Western and Northern Europe regions are hot spots for battery EV sales. The European trade bloc is committed to phasing out sales of new internal combustion engine (ICE) cars and vans by 2035, with a fine print that allows for a review by 2026.

Boosted by generous incentives, high fuel prices denting the appeal of ICE cars, and a political climate that lends a very positive image to battery EVs, sales of ICE cars have been dropping fast, especially in Germany. The fallout of Diesel-gate accelerated the transition too.

As of Q3 2022, sales of ICE cars, (excluding hybrids) have dropped by a shocking 31 percent from the pre-pandemic 2020. Sales of battery EVs however, reached 356,425 units, up 83 percent from 2020.

The breakdown of total 2022 sales by vehicle fuel type are still being tabulated by the ACEA (European Automobile Manufacturers Association) and will only be published in February / March.

But we already know that nearly 15 percent of all new cars sold in wealthy Germany is now fully electric, and EVs are expected to overtake diesels (19 percent) in the next few quarters.

Across the European Union, sales of battery EVs is lower, at 10.57 percent (as of Q3 2022). Although it's far from mainstream, the figure is doubled from year 2020's 5.42 percent.

The conclusion is clear, ICE cars on the way out of the Old Continent, so Tesla fans can continue to launch more attacks on the supposedly ‘anti-EV’ Toyota.

There is however one problem – Toyota (including Lexus) posted its highest ever market share in the EU, at 7.3 percent, and this is not including Toyota’s commercial vans and pick-up trucks.

Even without Lexus, Toyota’s 6.9 percent market share is already enough to solidify its position as the No.2 brand in Europe, behind Volkswagen’s 11 percent, leapfrogging other popular European brands like Peugeot (6 percent), Renault (5.9 percent), and Opel (3.7 percent).

Deliveries of Toyota-badged passenger cars grew by 8.9 percent, to 635,533 units, which is an amazing feat because the EU's passenger car market had actually contracted twice as much, -4.6 percent, excluding commercial vehicles.

EVs are growing, but hybrids are growing even more

So, what happened to the narrative about ICE car sales are losing sales because of EVs? Yes, EVs are winning more and more buyers every year, but it’s quite a stretch to say that drivers are selling the ICE cars to go electric, because simple math will tell you that this conclusion doesn’t add up.

The market share for EVs is still at around 11 percent. It’s growing, but the doesn't explain where the rest of the customers went to. Meanwhile, the market share of hybrids has doubled from 11.9 percent in 2020 to 22.8 percent by Q3 2022.

Nearly one in every four new cars sold in the EU is a hybrid, and Toyota and Lexus models make up more than half of these.

If you look at the numbers closely, ICE customers are not going to EVs, but to Toyota and Honda hybrids. All non-luxury European manufacturers saw a big drop in sales, except for Toyota and Honda, which offers only hybrid models (except for Toyota commercial vans and trucks, which are diesels).

The diesels and plug-in hybrid-heavy Volkswagen contracted 6.7 percent, Skoda -8.4 percent, Seat -12 percent, Peugeot -14.3 percent, Fiat -17.6 percent, Opel -12.8 percent, and Renault -15.2 percent.

Toyota's and Honda's line-up focus on cheaper, proven reliability regular hybrids that don’t require plug-in charging, went up 8.9 percent and 4.4 percent respectively. Toyota's hybrid tech has been continously improved since 1997, Honda since 1999.

‘The power of And’

Often lampooned for its refusal to commit to ending combustion engines, Toyota is the whipping boy for EV enthusiasts.

Toyota argues that keeping an open mind and be willing to try multiple options is always better than stubbornly insisting on only one solution, especially in the early stages of a change.

Toyota also argues that spreading the limited availability of expensive minerals required to make batteries across many more hybrids, which use 50x to 100x smaller batteries than battery EVs, is a much more effective option because it spreads the carbon reduction potential across so many more cars. But critics say this is just an excuse for not doing more for EVs.

That Greta girl might protest but one thing is certain – European customers are voting their money, and Toyota is reaping the benefit.

“Toyota’s global strategy relates closely to meeting the diverse needs of its European customers with a line-up which includes battery electric and fuel-cell and hybrid and plug-in hybrid vehicles,” said Kylie Jimenez, Senior Vice-President for People, Technology & Corporate Affairs at Toyota Motor Europe, at the company’s annual Kenshiki event.

“We call this the ‘power of And’ because rarely does one size fit all, especially when you consider the diversity of customer needs and infrastructure readiness,” he added.

Lack of EVs is trouble on the horizon for Lexus?

For now this strategy appears to be working for Toyota but there is one segment where it is very clear that EVs will dominate – the luxury car segment.

While Toyota grew its sales by 8.9 percent, sales of Lexus dropped 15.7 percent, losing more than BMW (-5.7 percent), Mercedes-Benz (+0.01 percent), Audi (+5.3 percent), and Porsche (+7 percent).

Lexus’ weak offering in EV models is one factor in it losing ground to models like the BMW iX and Mercedes-Benz EQS.

So while the general public is concerned about the practicality of EVs, wealthy buyers who already have many other ICE cars in their garage are clamoring for EVs, which are now the in-demand toy to showoff at the golf course’s parking.

Lexus has said that it will be an EV-only brand in North America, Europe, and China by 2030. At the moment, it only has two EV models in Lexus' portfolio – the Lexus UX 300e, and Lexus RZ 450e – and it’s not enough. The UX 300e isn’t hitting the right notes among EV fans, but the Lexus RZ will go on sale in the coming months (including Malaysia).

Also read: EV fans can expect the Lexus RZ to launch in Malaysia in 2023 – registration of interest opens