After sweeping changes to its leadership team, Japan’s Toyota Motor Corp is considering an overhaul of the factory floor as it plans a move to a new platform dedicated to battery electric vehicles, four people familiar with the matter said. .
Koji Sato may confirm that the new electric vehicle architecture is in the works at his first briefing as CEO on Friday, one of the people said.
However, it was unclear Thursday evening whether the plan had been formally approved.
The world’s largest automaker is increasingly recognizing that it must match Tesla Inc’s design and manufacturing innovations if it wants to lower production costs and turn its all-electric business into a higher-margin one as the its Silicon Valley rival, another person said.
Keep studying the subject, this person said.
A new electric vehicle platform, if implemented, would be the result of a far-reaching overhaul of Toyota’s electric car strategy carried out last year.
Slow to push hard into battery electrics, such a move by Toyota would put the automaker in line with other global rivals. Its current production architecture, the e-TNGA system, was launched in 2019 and produces electric vehicles on the same assembly line as gasoline cars and hybrids.
E-TNGA, however, cannot offer the cost savings that Tesla has achieved with its massive Giga Press casting machines and other manufacturing innovations.
The sources were not identified because the information was confidential. When asked for comment, Toyota said questions could be asked at Friday’s briefing.
Sato, Toyoda’s handpicked successor, recently attended an internal presentation that focused on the need for a dedicated battery electric platform, a more competitive system to manage the heat generated by the battery, as well as other innovations influenced by Tesla’s playbook, according to a third person.
The briefing was given by the former competitive director in charge of the electric vehicle strategy review, Shigeki Terashi, according to the person.
Several projects that were supposed to take advantage of the e-TNGA platform are now being delayed or cancelled, an independent person said.
IT’S A LONG TIME
Critics say a change is long overdue for Toyota.
Under former CEO Akio Toyoda, the founder’s grandson who became chairman on April 1 when Sato took the top job, Toyota saw global demand for battery electricity surpass its modest estimates .
“Some of the statements that came out of Toyota when Akio Toyoda was CEO made it sound like hybrids are going to be around forever. No, it’s your standby, it’s your hedge. EVs have to come first,” he said CLSA. analyst Christopher Richter.
Environmentalists and investors have also become increasingly vocal about the need for Toyota to move faster.
Tesla earned nearly eight times the profit per vehicle of Toyota in the third quarter, in part because of its ability to simplify production and cut costs.
Electric vehicles are now expected to account for more than half of total vehicle production globally by 2030. Meeting this demand will be critical for Toyota. So far it has fallen short: its initial battery EV, the bZ4X, suffered an early recall and has had only limited sales.
In the United States, where EV growth is outpacing the overall market, Toyota’s lack of battery electric models appears to be hurting sales. Toyota reported that U.S. sales fell nearly 9% in the first quarter, while General Motors saw an 18% increase, helped by higher demand for electric vehicles from fleet and commercial customers.
GM sold more than 20,000 electric vehicles in the first quarter, while Toyota and its luxury brand Lexus sold about 1,880 electric batteries. And while Toyota/Lexus sales of electrified vehicles, mostly hybrids with some EVs and battery hydrogen, came in at just under 119,000, that represented a 10.7% drop.
US consumers making the switch to electric vehicles are largely doing so from Toyota and Honda, data from S&P Global Mobility showed in November.
If Toyota doesn’t pursue electric vehicles under Sato, the company will be “leaving money on the table,” said Katherine Garcia, director of the Sierra Club’s Clean Transportation for All campaign, noting the growth of electric vehicles in U.S. states.
At his briefing on Friday, Sato is also expected to lay out a strategy that emphasizes “diverse engines,” one of the people said. In doing so, it will emphasize that gasoline hybrids will remain key to its business, even as electric vehicles increase.
Some of Toyota’s suppliers have also privately expressed concerns about its slow adoption of electric vehicles.
According to an executive at a Toyota supplier who declined to be identified, some have been looking to increase business with other manufacturers to hedge their risk when it comes to electric vehicles.
But that could change depending on the automaker’s strategy, the executive added.
