Elon Musk’s Tesla is off to a difficult start in 2024, and it’s probably no surprise to Akio Toyoda. The Toyota chairman has long been skeptical of electric vehicles hype, steering his company to focus more on hybrids. That’s turned out to be a smart strategy.

Tesla shares are down about 24% year-to-date, knocking Musk off his perch as the world’s richest man, an honor now bestowed upon French luxury tycoon Bernard Arnault.

Investors did not react well to Tesla’s fourth-quarter earnings, when the EV maker warned that this year’s sales growth might be “notably lower” than last year’s—not reassuring when it cut prices in 2023 to prop up demand. In California, a key market, registrations of Teslas actually fell in the fourth quarter, the first time that’s happened there in more than three years.

Toyota, by contrast, can’t make its hybrids quickly enough, and demand for them is strong without price cuts. The Japanese giant was the world’s top-selling carmaker for the fourth year in a row in 2023, selling 11.2 million vehicles globally, a respectable 7.2% increase from the previous year.

Tesla sold 1.8 million vehicles, in comparison, jumping an impressive 38% year over year.

Hybrids over EVs

Toyoda, however, does not believe that electric vehicles will take over the world. Last month, he predicted that adoption of EVs will peak at just 30%, saying they’ll share the roads with hybrid, gas-guzzling, and hydrogen-powered cars.

Hybrids, meanwhile, have been on a tear, not just for Toyota but for other automakers as well, including Ford and Honda. From January to November in 2023, hybrids accounted for 9.3% of new light vehicle registrations, beating EVs by 1.8 percentage points, reported Reuters, citing S&P Global Mobility data, and Toyota was the biggest seller of hybrids in the U.S., with more than a third of the those registrations.

Edmunds wrote on its website in mid-December that the hybrid market share in the U.S. increased to 9.7% in November 2023, a 99% jump from the year prior, whereas the EV share increased just 25%. “The transition to full EVs has slowed, and hybrids are the more comfortable choice for the majority of Americans seeking electrified options right now,” it added.

For many consumers, hybrids have the feel-good factor of burning less fuel than normal cars—friendlier on the environment and the wallet—without the range anxiety and other doubts surrounding EVs. (Hybrids maximize efficiency by alternating from gas to battery power.) It also helps that hybrids are priced much closer to traditional cars than are EVs.