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Toyota shifts EV strategy as new CEO tooks over

After taking over the charge Chief Executive Koji Sato addresses press in Tokyo
PrashantPrashant8-Apr-23 12:47 PM
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Toyota shifts EV strategy as new CEO tooks over


Toyota Motor Corp

is considering a manufacturing floor redesign as it plans a switch to a new, specialised platform for battery electric vehicles, citing four people with knowledge of the situation, Reuters reported. The update came after making significant changes to its leadership team. One of the persons has indicated that Koji Sato may reveal that the new EV design is in the works at his maiden briefing as CEO orated on Friday. 

However, it was unclear as of Thursday night if the idea had received official approval. The largest automaker in the world is coming to the realisation that in order to lower production costs and transform its all-electric business into a better margin one, as its Silicon Valley rival has done, it must match Tesla Inc.'s (TSLA.O) design and manufacturing advances.

It continues to research the problem, the report claimed. If adopted, a new

EV platform

would be the outcome of a thorough analysis of Toyota's electric-car strategy carried out last year.

A slow but determined drive by Toyota into battery electrics would align the company with its international competitors. The e-TNGA system, which was introduced in 2019 and uses the same assembly line as petrol and hybrid vehicles, is the company's current production architecture.

However, E-TNGA is unable to match the cost savings achieved by Tesla through its enormous Giga Press casting machines and other manufacturing advancements.

Due to the confidentiality of the material, the sources declined to be named. When questioned, Toyota responded that comments may be made at the briefing on Friday.

According to a third person, Sato, Toyoda's hand-picked successor, recently attended an internal presentation that concentrated on the necessity of a specific battery-electric platform, a more competitive system to manage heat generated by the battery, as well as other innovations influenced by Tesla's playbook.

According to the report, Shigeki Terashi, the former chief competitive officer in charge of the EV strategy assessment, provided the briefing.

The report further reads a number of initiatives that were going to use the e-TNGA platform are now being postponed or cancelled. 

Critics believe that Toyota needs to make a change now. When Sato took over as CEO on April 1, Akio Toyoda, the founder's grandson, was still serving as CEO. Under his leadership, Toyota witnessed global demand for battery electric vehicles surpass its conservative projections.

When Akio Toyoda was the CEO of Toyota, several of the company's remarks implied that hybrid vehicles will be there forever. No, it's your hedge and your fallback. EVs must come first, according to Christopher Richter, a CLSA analyst. 

Investors and environmentalists have also become more outspoken about the necessity for Toyota to move more quickly.

For the third quarter, Tesla outperformed Toyota in terms of profit per vehicle by roughly eight times, in part due to its capacity to streamline manufacturing and cut costs.

By 2030, it is anticipated that EV production would account for more than half of all vehicle production globally. For Toyota, meeting that demand will be crucial. It has so far fallen short; its first battery-powered EV, the bZ4X, had early recall issues and had only modest sales.

Toyota's absence of battery electric cars seems to be harming sales in the US, where EV growth is surpassing that of the total industry. General Motors Co. (GM.N) recorded an 18% increase in sales during the first quarter, driven by increased demand for EVs from fleet and commercial customers, while Toyota reported a nearly 9% decline.

While Toyota and its luxury brand Lexus sold roughly 1,880 battery electric cars during the first quarter, GM sold more than 20,000 electric vehicles. Even though Toyota/Lexus sold just under 119,000 electrified vehicles in total—primarily hybrids with a few battery electric and hydrogen vehicles—that represented a decline of 10.7%.

According to statistics from S&P Global Mobility released in November, the majority of electric vehicle conversions in the United States are being made by Toyota and Honda Motor Co (7267.T) customers.

Given the expansion of EVs throughout U.S. states, Katherine Garcia, head of the Clean Transportation for All Campaign at the Sierra Club, asserted that if Toyota doesn't pursue electric vehicles under Sato, the business "will be leaving money on the table."

One of the sources added that Sato is also anticipated to outline a strategy that promotes "diverse powertrains" at his briefing on Friday. He will emphasise that while EV production is increasing, petrol hybrids will still be essential to the company's operations.

The delayed adoption of EVs by Toyota has also raised some privacy concerns among some of its suppliers.

One executive at a Toyota supplier who wished to remain anonymous said that some have been considering expanding their business with other producers in order to reduce their risk when it comes to EVs. However, depending on the automaker's strategy, that might alter, the executive continued.

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