Why has Toyota been criticized for being slow on EVs?

The criticism: environmental and investor groups have argued that Toyota has been too slow to commit to battery-electric vehicles; Tesla bulls and EV advocates point out that Toyota's global BEV sales are a tiny fraction of its total volume (less than 1% through 2022); Toyota has been accused of lobbying against aggressive EV mandates; some investors view Toyota's multi-pathway strategy as indecision rather than strategy. Toyota's counter-argument: Toyota argues that the global charging infrastructure is not ready for rapid mass-market BEV adoption in all markets; in emerging markets (Southeast Asia, India, Africa) where Toyota sells millions of vehicles, grid electricity is unreliable and charging infrastructure barely exists; hybrids reduce emissions significantly without requiring infrastructure investment; Toyota further argues that manufacturing capacity and battery supply chains cannot instantaneously shift to 100% BEV; Toyota's massive hybrid volumes (Prius, Camry Hybrid, RAV4 Hybrid, and dozens more) are reducing CO2 at scale today rather than waiting for an all-BEV future. Strategic pivot: Toyota accelerated its BEV commitments under President Akio Toyoda's successor; Toyota launched the bZ4X electric SUV and committed to 1.5 million BEV annual sales by 2026 and 3.5 million by 2030; Toyota has invested in battery production partnerships and announced a solid-state battery development timeline (potential 2027-2028 launch); investors debate whether Toyota's BEV accelerated timeline is achievable and whether the prior delay has cost Toyota market share in key premium EV markets.

What is Honda's partnership with Sony and what is the Afeela EV?

Sony Honda Mobility (SHM): Sony Group and Honda Motor announced a joint venture in 2022 — Sony Honda Mobility (SHM) — to develop and sell electric vehicles under the Afeela brand; Sony contributes expertise in imaging sensors, entertainment, gaming content, and AI/software; Honda contributes automotive manufacturing, engineering, and regulatory expertise; the Afeela 1 sedan was unveiled at CES 2024 for U.S. delivery starting in late 2025 at approximately $89,900. Afeela brand positioning: Afeela targets the software-defined vehicle market — a car designed from the ground up around software experiences (in-car entertainment from Sony's PlayStation and movie studios, integrated imaging sensors, over-the-air updates); the concept is that the car is a platform for experiences rather than just transportation. Strategic rationale for Honda: Honda's EV technology development has been slower than Toyota or Hyundai/Kia; the Sony partnership provides Honda with technology resources (AI, sensors, content) that Honda would take longer to develop independently; the brand-new Afeela brand also avoids cannibalizing Honda's core Honda brand with EVs that may fail initially. Risks: the Sony Honda Mobility joint venture involves two very large companies with different corporate cultures; integrating consumer electronics culture with automotive manufacturing is challenging; the Afeela price point ($89,900) targets premium buyers where Tesla, Mercedes, and BMW have strong footholds; EV joint ventures have a mixed track record of execution.

How do Japanese automaker ADRs work for U.S. investors?

ADR definition: an American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing a specific number of shares of a foreign company's stock; ADRs trade on U.S. stock exchanges (NYSE, NASDAQ) in U.S. dollars, allowing U.S. investors to invest in foreign companies without directly accessing foreign exchanges. Toyota and Honda ADR structure: Toyota (TM) ADRs trade on the NYSE, with each ADR representing 1 Toyota ordinary share; Honda (HMC) ADRs trade on the NYSE, with each ADR representing 1 Honda ordinary share; dividends from the Japanese shares are converted to U.S. dollars and paid to ADR holders after deducting a small ADR depositary fee and applicable Japanese withholding tax. Currency risk: Japanese automakers earn revenues in yen (and many other currencies) but report financials in yen; ADR holders receive dividends in U.S. dollars; the yen/USD exchange rate significantly affects U.S. dollar returns from Japanese ADRs; a weak yen reduces the U.S. dollar value of yen earnings and dividends; Toyota and Honda are significant exporters, meaning they actually benefit somewhat from weak yen (products priced in USD earn more yen when converted), but U.S. investors receive fewer dollars when the yen weakens. Withholding tax: Japan imposes a 15.315% withholding tax on dividends paid to foreign investors; U.S. investors can claim a foreign tax credit on their U.S. tax return for Japanese withholding taxes paid; however, the mechanics depend on account type (taxable brokerage, IRA, 401k) and individual tax situations.

Data as of: September 18, 2026

brimindinvest.com / compare / tm-vs-hmcLIVE

TM

Toyota Motor Corporation · Consumer Discretionary - Automobiles

$193.91

+3.01% this month

VERSUS

COMPARE

HMC

Honda Motor Co., Ltd. · Consumer Discretionary - Automobiles & Motorcycles

$32.53

+1.82% this month

Comparison scoreboard

TM LEADS 3/5

AI Scorei

TM ✓42.2

HMC 39.2

1Y Returni

TM ✓-3.71%

HMC -4.66%

Fwd P/Ei

TM N/A

HMC N/A

Target Up.i

TM ✓+19.43%

HMC -9.01%

Op. Margini

TM 7.86%

HMC ✓8.76%

Metrics last refreshed: 9/18/2026

Quick take

TM vs HMC Stock Comparison: AI Score, Valuation, Performance and Upside

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TM (Toyota) and HMC (Honda) are Japan's two largest automakers with strong global brands, conservative financial management, and measured EV transition approaches — Toyota is the world's largest automaker with Prius hybrid leadership, Toyota Production System manufacturing excellence, and a multi-pathway EV strategy, while Honda is Japan's #2 automaker with the world's largest motorcycle business, strong North American manufacturing, and EV partnerships with Sony and GM.

TM vs HMC is the world's largest automaker with Prius hybrid legacy, TPS manufacturing excellence, and multi-pathway EV strategy (Toyota's massive financial strength, 3M+ annual hybrid sales, and conservative but resilient approach to BEV transition — managing China market share loss and BEV launch execution) versus Japan's #2 automaker with world motorcycle leadership and partnership-dependent EV strategy (Honda's motorcycle diversification, North American manufacturing depth, and Sony/GM EV partnerships — navigating China competitive pressure and building EV identity through external collaboration).

Live analysis · updated 9/18/2026

TM holds the edge across 3 of 5 key metrics in this comparison. TM has delivered stronger 1-year price return (-3.71% vs -4.66% for HMC). HMC leads on both revenue growth (13.50%) and operating margin (8.76%), suggesting a stronger fundamental setup on both dimensions. Analyst consensus implies meaningfully more upside for TM (+19.43%) than for HMC (-9.01%).

Normalized 1Y performance

TM

HMC

Recent returns

TM

HMC

Analyst price targets & sentiment

Human Wall Street analysts' price targets, typically implying a ~12-month view — a separate signal from this site's own AI Prediction Signal further down the page, which is a 5-/30-day machine-learning forecast based on price history alone.

TM · 4 analysts

STRONG BUYHOLDSTRONG SELL

Strong Buy (1.5/5.0)

4 Buy / 0 Hold / 0 Sell

Price target range

analyst low$220.00
analyst high$239.31
analyst mean$231.58
current price$193.91

+19.4% upside to analyst mean

HMC · 3 analysts

STRONG BUYHOLDSTRONG SELL

Hold (2.7/5.0)

1 Buy / 1 Hold / 1 Sell

Price target range

analyst low$23.00
analyst high$33.80
analyst mean$29.60
current price$32.53

-9.0% upside to analyst mean

Who should consider this stock?

TM may suit investors who:

Want the world's largest automaker with the most efficient automotive manufacturing system (TPS) and exceptional financial strength to fund the EV transition without balance sheet stress
Value Toyota's proven hybrid leadership (Prius, 3M+ annual hybrid sales) as a profitable bridge technology generating real emissions reductions and customer satisfaction during the EV infrastructure buildout period
Prefer Toyota's multi-pathway approach (HEV/PHEV/BEV/FCEV) as providing strategic optionality across multiple possible EV technology outcomes rather than betting exclusively on battery electric

HMC may suit investors who:

Want Japanese automaker exposure with the added diversification of the world's largest motorcycle business, providing revenue resilience across different economic cycles and geographies
Value Honda's strong North American manufacturing presence (Ohio, Alabama) as providing favorable positioning for U.S. automotive demand with limited tariff exposure from domestic production
Believe Honda's engineering culture and EV partnership strategy (Sony Afeela, GM collaboration) will produce competitive EV products and that Honda's Civic/Accord/CR-V brand loyalty will transfer to EV models

Performance & AI score

Performance & AI score
Metric	TM	HMC
AI scorei	42.2	39.2
AI ranki	#959	#1275
Latest closei	$193.91	$32.53
1M returni	+3.01%	+1.82%
6M returni	-7.19%	+32.18%
1Y returni	-3.71%	-4.66%

$10,000 invested — hypothetical growth (dividends reinvested)

How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?

$10,000 invested — hypothetical growth (dividends reinvested)
Period	TM	HMC
1Y ago	$9.63K (-3.7%) started 2025-09-17	$9.53K (-4.7%) started 2025-09-17
5Y ago	$13.44K (+34.4%) started 2021-09-17	$14.27K (+42.7%) started 2021-09-17
10Y ago	$28.73K (+187.3%) started 2016-09-19	$19.55K (+95.5%) started 2016-09-19

Hypothetical — past performance does not guarantee future results.

Valuation & upside potential

Valuation & upside potential
Metric	TM	HMC
Market capi	$229.63B	$42.21B
Trailing P/Ei	8.45	N/A
Forward P/Ei	N/A	N/A
Price/Salesi	0.00	0.00
EV/Revenuei	0.68	0.41
Analyst targeti	$231.58	$29.60
Target upsidei	+19.43%	-9.01%

Growth, profitability & risk

Growth, profitability & risk
Metric	TM	HMC
Revenue growthi	10.40%	13.50%
Earnings growthi	86.90%	147.50%
EPS growthi	+86.90%	+147.50%
FCF margini	-6.93%	+1.19%
Operating margini	7.86%	8.76%
Profit margini	8.63%	-0.75%
ROIC proxyi	12.40%	-0.76%
Return on equityi	12.40%	-0.76%
Dividend yieldi	3.23%	4.09%
Payout ratioi	26.38%	55.35%
Dividend growth streaki	No increase yet	No increase yet
Betai	0.34	0.31
Debt/equityi	114.97	113.84
Current ratioi	1.17	1.29
Quick ratioi	0.95	0.95

Correlation

Over the past year, TM and HMC have moved strongly in the same direction (correlation of 0.74), based on daily returns.

1Y

0.74

-1.0+1.0

5Y

0.74

-1.0+1.0

10Y

0.73

-1.0+1.0

Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

TM max drawdowni32.94%

HMC max drawdowni31.15%

TM max wkly dropi11.45%

HMC max wkly dropi9.91%

5Y risk snapshot

TM max drawdowni36.80%

HMC max drawdowni35.20%

TM max wkly dropi13.96%

HMC max wkly dropi12.70%

10Y risk snapshot

TM max drawdowni36.80%

HMC max drawdowni43.12%

TM max wkly dropi13.96%

HMC max wkly dropi16.80%

Performance metrics by period

Performance metrics by period
Period	Metric	TM	HMC
1Y	Growthi	-3.71%	-4.66%
	CAGRi	-3.71%	-4.66%
	Volatilityi	26.49%	29.07%
	Sharpe ratioi	-0.18	-0.17
	Sortino ratioi	-0.26	-0.25
	Max drawdowni	32.94%	31.15%
	Current drawdowni	21.90%	4.66%
	Avg drawdowni	13.53%	15.13%
	Ulcer Indexi	17.38%	17.15%
	Max daily dropi	5.24%	5.27%
	Max wkly dropi	11.45%	9.91%
5Y	Growthi	+19.69%	+21.89%
	CAGRi	+3.66%	+4.04%
	Volatilityi	27.14%	27.59%
	Sharpe ratioi	0.10	0.12
	Sortino ratioi	0.15	0.17
	Max drawdowni	36.80%	35.20%
	Current drawdowni	21.90%	8.80%
	Avg drawdowni	19.67%	14.82%
	Ulcer Indexi	22.13%	16.83%
	Max daily dropi	7.48%	8.02%
	Max wkly dropi	13.96%	12.70%
10Y	Growthi	+116.69%	+45.57%
	CAGRi	+8.05%	+3.83%
	Volatilityi	23.69%	25.74%
	Sharpe ratioi	0.26	0.10
	Sortino ratioi	0.38	0.15
	Max drawdowni	36.80%	43.12%
	Current drawdowni	21.90%	8.80%
	Avg drawdowni	13.09%	15.90%
	Ulcer Indexi	16.63%	18.35%
	Max daily dropi	8.62%	8.96%
	Max wkly dropi	13.96%	16.80%

AI Prediction Signali

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+1.1%HOLD

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+6.4%BUY

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+3.2%HOLD

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Business comparison

Business comparison
Category	TM	HMC
Company	Toyota Motor Corporation	Honda Motor Co., Ltd.
Sector	Consumer Discretionary - Automobiles	Consumer Discretionary - Automobiles & Motorcycles
Industry	Auto Manufacturers	Auto Manufacturers
Core business	Toyota Motor Corporation is the world's largest automaker by annual vehicle sales volume (approximately 10 million vehicles per year), producing vehicles under the Toyota, Lexus, Hino (commercial trucks), and Daihatsu (mini-vehicles) brands. Toyota operates manufacturing facilities in 28 countries and sells vehicles in over 170 countries. Toyota pioneered the mass-market hybrid electric vehicle with the Prius (launched 1997), and now sells millions of hybrids annually globally. Toyota's approach to EV transition emphasizes a multi-pathway strategy — pursuing HEV (hybrid), PHEV (plug-in hybrid), BEV (battery electric), FCEV (fuel cell, primarily Mirai) rather than committing exclusively to battery electric. Toyota's massive financial strength, Toyota Production System (TPS) manufacturing excellence, and diversified powertrain strategy make it a conservative but resilient competitor.	Honda Motor Co. is Japan's second-largest automaker and the world's largest motorcycle manufacturer, producing automobiles under the Honda and Acura brands and motorcycles under the Honda brand in markets worldwide. Honda's automotive lineup includes the Civic, Accord, CR-V, HR-V, Pilot, Odyssey (minivan), and Ridgeline (light duty pickup) in the U.S., with significant manufacturing in Ohio, Alabama, and other states. Honda's motorcycle business (scooters, sport bikes, adventure bikes, off-road) is the world's largest by volume and provides a geographically diversified revenue stream across Asia, Europe, and the Americas. Honda has entered partnerships with Sony (for the Afeela EV brand), GM (for a planned EV platform collaboration), and other tech companies for its EV strategy.
Investor focus	Investors track Toyota's global vehicle delivery volumes, operating margin (exceptional vs. peers), hybrid sales growth, BEV launch timeline (bZ series), currency impact (strong yen reduces Japanese earnings when converted to yen but benefits when yen is weak), and governance improvements.	Investors track Honda's automotive and motorcycle volume trends, EV partnership execution (Sony Afeela, GM collaboration), North American manufacturing performance (U.S.-built Accord, CR-V, Pilot), and currency effects on yen-denominated earnings.

TM strengths

World's largest automaker with the Toyota Production System — Toyota's TPS (the foundation of modern lean manufacturing) is the most efficient and quality-focused manufacturing system in the automotive industry; TPS advantages compound over time as suppliers adopt Toyota's quality standards
Hybrid leadership provides a profitable bridge technology during EV transition — Toyota sells 3+ million hybrids annually; hybrids are profitable vehicles that reduce CO2 emissions significantly vs. pure ICE; hybrid momentum allows Toyota to maintain profitability while the EV infrastructure matures
Financial strength (net cash position) provides exceptional flexibility — Toyota holds one of the largest net cash balances in the automotive industry; this financial strength allows R&D investment, acquisitions, and dividend sustainability through the EV transition without distress

HMC strengths

World's largest motorcycle manufacturer provides a diversified, high-margin revenue stream beyond automotive — Honda's motorcycle business has global leadership in Asia (India, Southeast Asia, Japan, China) and the Americas; motorcycles have different economic cycles than automobiles; the motorcycle business contributes significant EBIT and cash flow
Strong North American manufacturing presence and Honda/Acura brand loyalty — Honda has deep manufacturing roots in Ohio (Marysville, East Liberty) dating from 1982; the CR-V, Accord, Pilot, and Ridgeline are produced domestically, providing favorable tariff and supply chain positioning
Creative engineering culture and R&D capability — Honda's engineering heritage (jet aircraft — HondaJet, marine engines, power equipment, humanoid robots — ASIMO) reflects a deep engineering and innovation culture; this capability extends to powertrain development including fuel cell technology

Risks to watch — TM

BEV transition is slower than Western peers and some investors have questioned Toyota's EV commitment — Toyota's BEV sales have been far below Tesla, BYD, and even Korean competitors (Hyundai/Kia); Toyota's multi-pathway strategy may spread investment too thinly across HEV, PHEV, BEV, and FCEV
China market share has been declining as Chinese EV brands gain dominance — Toyota has historically been strong in China but Chinese consumers are rapidly switching to domestic EV brands (BYD, NIO, Li Auto); Toyota's ICE-heavy product lineup is less competitive in China's rapidly electrifying market
Governance and cross-shareholding structure has been criticized by institutional investors — Toyota's corporate governance (including cross-shareholdings with suppliers and related companies) has been criticized; improving governance to align with international investor standards is an ongoing process

Risks to watch — HMC

EV strategy has been less clear and more partnership-dependent than Toyota or Hyundai/Kia — Honda's announced collaborations (Sony Afeela, GM EV collaboration later narrowed) suggest Honda is hedging rather than building a fully proprietary EV platform; partnership-dependent strategies create execution and alignment risk
China market challenges similar to Toyota — Honda's China joint ventures (Dongfeng Honda, GAC Honda) face growing competition from local Chinese EV brands; Honda's ICE-dominant lineup is increasingly less competitive in China's rapidly electrifying market
Motorcycle business exposure to emerging market economic cycles — Honda's motorcycle volumes in Asia depend on economic conditions in India, Southeast Asia, and Latin America; currency devaluation and economic slowdowns in these markets create revenue volatility

Frequently asked questions

TPS definition: the Toyota Production System is Toyota's renowned manufacturing philosophy developed over decades by Taiichi Ohno and others; TPS is the foundation of 'lean manufacturing' — a methodology adopted globally by manufacturers in automotive and non-automotive industries; TPS's core principles: Just-in-Time (JIT) — producing exactly what is needed, when needed, in the exact quantity needed, eliminating inventory waste; Jidoka (autonomation) — machines that automatically stop and signal when a defect is detected, preventing defects from propagating; kaizen (continuous improvement) — every worker is expected to identify and propose improvements; Andon cord — any worker can stop the production line if a quality problem is detected; Heijunka (production leveling) — smoothing production volume and variety to avoid overproduction and underproduction. Competitive impact: Toyota's quality is consistently among the highest in the automotive industry (J.D. Power and Consumer Reports reliability surveys regularly show Toyota/Lexus at or near the top); high quality means lower warranty costs, higher customer satisfaction, and higher resale values; high resale values reduce monthly lease payments (more competitive leasing), increase customer loyalty, and enhance brand perception. EV transition applicability: TPS principles apply to EV manufacturing — Toyota has been applying TPS to its battery production and assembly processes for hybrid vehicles for decades; as Toyota scales BEV production, TPS provides a manufacturing advantage in achieving quality and efficiency; however, TPS was developed around ICE manufacturing processes and EV manufacturing has some fundamentally different characteristics (larger, heavier battery modules, different assembly sequences) that require TPS adaptation.

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