Electric cars are taking off. And Toyota wants in.

At the end of 2016, 2 million electric vehicles (EVs) were predicted to have hit the roads worldwide, with a steadily upward trend projected. The surging market, especially in China, has fueled renewed interest—and a possible strategic shift—from one of the world’s biggest automakers: Toyota.

Toyota has said, according to Fortune, that it would reserve EVs for short-distance commuting, and instead promoted hydrogen fuel cell vehicles (FCVs) and plug-in gasoline-electric hybrid cars as the best bet for long- to medium-range commuting.

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But FCVs, which have yet to transition into the current mainstream fleet of cars, may fail to reach the critical mass Toyota was betting on. According to a new study from IHS Automotive, by 2027 annual fuel cell vehicle production will surpass 70,000 units—less than 0.1 percent of all vehicles produced that year.

The biggest roadblocks for these vehicles are the lack of public hydrogen fueling stations available and the expense of building them. According to IHS Automotive analyst Ben Scott, today’s market simply does not justify the price. “[T]hat market needs to be created to encourage investment in upstream hydrogen production capability,” he said in the study.

This, along with improvements to the lithium ion batteries EVs rely on, seems to be spurring Toyota’s reported pivot. According to a report by Japanese newspaper Nikkei Asian Review, Toyota has plans to establish a team in early 2017 devoted to developing electric cars that can travel more than 300 kilometers (186 miles) on a single charge. With a goal of pushing the cars to market in Japan, California and China by 2020, the automaker aims to act fast.

It will face stiff competition. Volkswagen, Nissan and Tesla have already bet big on EVs. The Renault-Nissan partnership, for example, is launching an effort to build a low-cost EV to put on the market in China possibly in the next two years, according to CNBC, while Volkswagen has announced plans to unveil 30 all-electric cars by 2025, according to the BBC. Will Toyota be able to catch up? Share on X

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