Exclusive: Toyota battles Tesla’s EV relaunch with attention


Oct 24 (Reuters) – Toyota ( 7203.T ) is considering a reboot of its electric vehicle strategy to better compete in a fast-growing market it has been slow to enter and has halted some work on existing EV projects, four people familiar with the matter said. He mentioned plans that are still being developed.

The proposals under review, if accepted, would be a dramatic shift for Toyota and would rewrite the $38 billion EV sales plan the Japanese automaker announced last year to better compete with the likes of Tesla ( TSLA.O ).

A task force within Toyota has been tasked with identifying plans for an upgrade to the existing EV platform or a new architecture by early next year, the four people said.

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Meanwhile, Toyota has halted work on some of the 30 EV projects announced in December, including the Toyota Compact Cruiser crossover and the battery-electric Crown, according to sources and a document reviewed by Reuters.

Toyota said it was committed to carbon neutrality, but declined to comment on specific initiatives.

“To achieve carbon neutrality, Toyota’s own technology, as well as the work we do with a number of partners and suppliers, is important,” the company said in response to questions from Reuters.

The four sources declined to be identified because the plans are not made public.

The update under consideration could slow the rollout of EVs already on the drawing board. But it will also give Toyota a chance to compete with a more efficient production process, as industry-wide EV sales exceed Toyota’s previous forecasts.

In addition, it will face criticism from green investors and environmental groups who argue that Toyota, once a favorite of environmentalists, has been too slow to adopt electric vehicles.

As part of the review, Toyota is considering a successor to its EV-based technology called e-TNGA, introduced in 2019. That will allow Toyota to cut costs, the people said.

The first EV based on the E-TNGA – the bZ4X crossover – hit the market earlier this year, although its launch was marred by a recall that forced Toyota to halt production from June. Production resumed earlier this month.

AS A TESLA BENCHMARK

The investigation, the sources said, was prompted in part by the realization by some Toyota engineers and executives that Toyota was losing the factory cost war to Tesla in EVs.

Toyota’s planning assumed demand for electric cars would not increase for several decades, the four people said.

Toyota designed the e-TNGA so that electric vehicles are produced on the same assembly line as gasoline-powered cars and hybrids. That would mean Toyota would need to sell about 3.5 million EVs a year by 2030, about a third of its current global volume, to remain competitive, the sources said.

Toyota vehicles are seen during a briefing on the company’s strategy for battery EVs in Tokyo, Japan on December 14, 2021. REUTERS/Kim Kyung-Hoon/File Photo

But sales of electric cars are growing faster. Globally, automakers now predict that electric vehicles will account for more than half of total vehicle production by 2030, part of a wave of industry-wide investment that now totals $1.2 trillion.

The person leading Toyota’s EV investigation is former Chief Competition Officer Shigeki Terashi, according to six people with knowledge of the work, including two people close to Toyota. Terashi did not respond to a request for comment.

Terashi’s team has been designated the “BR” or “business revolution” group within Toyota, a term used two decades ago for major changes, including the restructuring of its development and production processes.

“Mr. Terashi’s push is driven by EVs taking off faster than expected and rapid adoption of cutting-edge innovations by Tesla and others,” one of the people said.

All six did not want to be named because of the confidential nature of the plans.

Terashi’s team is considering extending the e-TNGA’s usefulness by combining it with new technologies, three of the sources said.

Terashi may also suggest retiring the e-TNGA sooner and opting for a dedicated EV platform built from the ground up. That could take about five years for new models, two of the sources said. “There is little time to lose,” said one.

Toyota is working with suppliers and considering factory innovations to cut costs, such as Tesla’s Giga Press, a giant casting machine that makes work easier at Tesla plants.

One area under consideration, the sources said, is a more comprehensive approach to EV thermal management — for example, combining passenger air conditioning and electric powertrain temperature control, which Tesla has already deployed.

That could allow Toyota to reduce the size and weight of its EV battery pack and cut costs per vehicle by thousands of dollars, making it a “top priority” for Toyota suppliers Denso and Aisin, one of the sources familiar with the matter said. Denso (6902.T) and Aisin (7259.T) did not immediately comment.

At Toyota, the world’s largest automaker, the recognition that Tesla has set a new benchmark for EV production costs signals a major shift.

When Toyota bought Tesla a decade ago and the two partnered to produce a battery-electric version of the RAV4, many Toyota engineers believed Tesla’s technology was not a threat, two of the sources said.

One of the sources said: “They decided at that point there wasn’t much to learn.

Toyota discontinued the electric RAV4 in 2014 and sold its stake in Tesla in 2017.

By 2018, when Toyota finally built a dedicated zero-emissions division and began building an electronic platform, Tesla already had three models on the road.

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Reporting by Norihiko Shirouzu, Paul Lienert and Maki Shiraki; Edited by Kevin Krolicki and Edmund Klamann

Our standards: Thomson Reuters Trust Principles.



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