The automotive sector is gradually transitioning towards green mobility. While some companies are betting big on pure EV plays, others are adopting different approaches. Japanese automotive major Toyota (NYSE:TM) is betting its future on internal combustion engines (ICE) that can run on various fuels.
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A Bold New Bet
This week, Toyota showcased ICE prototypes that can run on hydrogen as well as gasoline. The company, along with other names Mazda Motor (OTC:MZDAY) and Subaru (OTC:FUJHY), is developing compact engines that are more efficient and can meet future emissions norms.
While companies such as Tesla (NASDAQ:TSLA) and China’s BYD (OTC:BYDDF) (HK:1211) are leading the charge in EVs, Toyota has largely taken the hybrid vehicle route. This approach has paid off handsomely for the company, with its fourth-quarter bottom line jumping nearly 80% recently.
Importantly, Toyota’s focus on an engine that can efficiently use different types of fuel could prove to be a winner in the long run, considering the current economic reality of the global automotive sector. In recent times, EV producers have been hit with tepid demand and a price war. Moreover, efficiency challenges have led companies such as Hertz Global (NASDAQ:HTZ) to move their vehicle fleets away from EVs. Meanwhile, Toyota has not divulged a timeline for introducing its compact engine into the market. However, it is working on introducing carbon-neutral fuels in Japan by 2030, according to Bloomberg.
Will TM Stock Go Up?
Toyota’s share price has rallied by nearly 58% over the past year. These price gains look set to continue as the TipRanks Technical Analysis tool indicates a Buy signal for TM stock on a monthly time frame.
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