Why not? Toyota sells sports cars.

An electric Toyota Supra would easily outsell most Tesla's. It's a much nicer looking car than anything I've seen come from Tesla, the interior is so well done too.

It's a shame they've lost it.

It probably doesn’t matter. There are plenty of people who want simpler cars, but still want an electric drive train. There must be loads of us holding out for a Corolla or Camry like EV.

I don’t understand why Toyota has not produced a model like this and is doubling down on their Hybrids and hydrogen engines.

In the US it was the experience I think. Just like Uber in some markets where taxis were a shitty experience before, buying a car was (apparently) a crappy experience in the US before Tesla. But that's a very local phenomenon. Not sure about the sports car thing though. It's not much difference between a Model Y and a Mach-E or Polestar2 when it comes to this. Tesla did have the performance angle because they were early movers and compared to an ICE car their entire lineup is obviously looking pretty snappy.

Most buyers though just want a boring reliable car. If a known and Trusted brand made a car that was just 10% more expensive and 10% less attractive on specs than a Tesla, then Toyota would eat their lunch I think.