Toyota is teaming up with Mazda and Subaru to build a new line of next-gen gasoline engines, bucking the wider auto industry's push to go all-in on EVs.

"This is a declaration of, 'Let’s make internal-combustion engines together,'" says Toyota President and CEO Koji Sato, according to Nikkei Asia.

The new engines will be smaller, more efficient, and "support a diverse product lineup, from family cars to sports cars." They will go in hybrids and plug-in hybrids and be compatible with carbon-neutral fuels—like e-fuels, biofuels, and liquid hydrogen—according to The Wall Street Journal. This will effectively decarbonize the engines without relying on battery technology.

Rather than fully converting its lineup to electric vehicles, Toyota is embracing a "multi-pathway" approach to reducing emissions, which includes continuing to invest in gasoline-powered cars. The world's largest automaker is also investing in EV technology, and last year made headlines with claims it will commercialize long-range, fast-charging solid-state batteries by 2027.

Recommended by Our Editors

Waymo Halts Freeway Operations, Stops Service in Some Cities Without Clearly Communicating What's Up

Waymos Get Way More Roomy With the Addition of Spacious Minivans to Its Robotaxi Fleet

Tesla Recalls Over 14,500 Model Y Cars to Check for a Missing Weight Label

(Credit: Bloomberg / Contributor / Bloomberg via Getty Images)

"We are serious about [developing] both battery EVs and internal combustion engines," Sato says, according to Nikkei Asia.

Toyota has been vocal about its hesitancy to convert its lineup to all EVs. That sets it apart from its Chinese, American, and European competitors, though it did not always appear as confident in its approach. The company removed its previous president, Akio Toyoda, in February 2023 after he publicly expressed resistance to an all-EV strategy. Sato replaced him and planned to accelerate EV efforts; it now appears the two are of a similar mindset.

For wider context, Japan is a surprising laggard in EV adoption despite being an automotive powerhouse. Fully battery-powered vehicles made up just 1.8% of new car sales in Japan in 2024, according to The Japan Times, compared to around 25% in China and 8% in the US. However, 55% of new cars sold in Japan are hybrids, TrendData reports.

"It is important to consider the future of energy and come up with diverse options to ensure reductions in CO2 emissions," says Sato.