Toyota Motor Corp (Toyota (TM)) had a mixed bag in May. Overall sales dropped, but electric vehicle sales went through the roof. The culprit? High gas prices, which are both a blessing and a curse for the world's largest automaker.

The company sold 834,279 vehicles in May, down 7.2% from a year ago. That's the fourth straight month of year-over-year declines. In North America, sales slipped just 0.1% to 280,539 units, with a 0.6% drop in the U.S. China was the biggest drag, with sales plunging 31.7% to 102,299 units. Europe was nearly flat, down 0.3%.

Toyota blamed the weakness on "a challenging market environment, including rising gasoline prices," according to a statement reported by Electrek. But here's the twist: those same high gas prices are driving a boom in electric vehicle sales. Toyota's EV sales jumped 170% in May to 37,313 units. Year-to-date, battery electric vehicle (BEV) sales are up 138%. Still, BEVs make up only about 7% of Toyota's total sales, so there's a long way to go.

Then there's the Middle East conflict. Toyota said the war cost it $4.3 billion in the first quarter alone, and the full-year impact could be around $24 billion. That would represent a 22% drop in operating profit from earlier guidance. Ouch.

Investors are feeling the pain. Toyota stock fell 2% to $168.01 on Tuesday, near the bottom of its 52-week range of $166.10 to $248.90. The stock is down 22.9% year-to-date in 2026. So while EVs are a bright spot, the headwinds from geopolitics and gas prices are keeping the pressure on.