Oct 24 (Portal) – Toyota (7203.T) is considering restarting its electric car strategy to better compete in a booming market it has been slow to enter and has halted some work on existing EV projects, four Those with knowledge of the plans, which are still evolving, said.
The scrutinized proposals, if passed, would mark a dramatic shift for Toyota, rewriting the $38 billion electric vehicle rollout plan the Japanese automaker announced last year to better align with companies like Tesla (TSLA.O ) to be able to compete.
A working group within Toyota has been tasked with outlining plans for improvements to the existing EV platform or for a new architecture by early next year, the four people said.
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Meanwhile, Toyota has suspended work on some of the 30 EV projects announced in December, which include the Toyota compact cruiser crossover and the battery-electric Crown, according to the sources and a document verified by Portal.
Toyota said it is 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 are doing with a range of partners and suppliers – is essential,” the company said in response to questions from Portal.
The four sources did not want to be identified as the plans were not made public.
The envisaged revision could slow the adoption of EVs, which are already on the drawing board. But it would also give Toyota a chance to compete with a more efficient manufacturing process, as industry-wide EV sales beat Toyota’s earlier forecasts.
Additionally, it would counteract criticism from green investors and environmental groups who argue that Toyota, once a darling of environmentalists, has been too slow to embrace electric vehicles.
As part of the review, Toyota is considering a successor to its EV-enabling technology unveiled in 2019 called e-TNGA. That would allow Toyota to cut costs, the people said.
The first e-TNGA-based electric vehicle – 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.
TESLA AS A BENCHMARK
The review was prompted in part by the realization by some Toyota engineers and executives that Toyota was losing the EV factory cost war to Tesla, the sources said.
Toyota’s planning assumed that demand for electric vehicles would not increase for several decades, the four people said.
Toyota developed e-TNGA so that electric cars can be produced on the same assembly line as gasoline cars and hybrid cars. That makes sense given that Toyota would need to sell about 3.5 million electric vehicles per year by 2030 — about a third of its current global volume — to remain competitive, the sources said.
Toyota cars are seen during a briefing on the company’s battery EV strategies in Tokyo, Japan, December 14, 2021. Portal/Kim Kyung-Hoon/File Photo
But electric vehicle sales are growing faster. Automakers worldwide are now forecasting plans that electric vehicles will account for more than half of all vehicle production by 2030, part of a wave of industry-wide investments that now total $1.2 trillion.
The person leading Toyota’s EV review is Shigeki Terashi, a former chief competitive officer, 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 referred to as the “BR” or “Business Revolution” group within Toyota, a term used two decades ago for major changes including an overhaul of its development and production processes.
“What is driving Mr. Terashi’s efforts is the faster-than-expected EV launch and rapid adoption of cutting-edge innovations from Tesla and others,” one of the people said.
All six people declined to be identified because of the confidentiality of the plans.
Terashi’s team is considering an option to extend e-TNGA’s usefulness by pairing it with emerging technologies, three of the sources said.
Terashi might also suggest phasing out e-TNGA faster and opting for an 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 reduce costs, like Tesla’s Giga Press, a massive casting machine that has streamlined work at Tesla plants.
One area currently under consideration is a more comprehensive approach to EV thermal management — combining, for example, passenger air conditioning and electric powertrain temperature control — that Tesla has already mobilized, the sources said.
This could allow Toyota to reduce the size and weight of an EV battery pack and cut costs by thousands of dollars per vehicle, making it a “top priority” for Toyota suppliers Denso and Aisin, one of the officials said sources familiar with the matter. Denso (6902.T) and Aisin (7259.T) had no immediate comment.
The realization within Toyota, the world’s largest automaker, that Tesla has set a new benchmark for the cost of manufacturing electric vehicles marks a major shift.
When Toyota acquired a stake in Tesla a decade ago and the two worked together to produce a battery-electric version of the RAV4, many Toyota engineers believed Tesla’s technology posed no threat, two of the sources said.
“They concluded at the time that there wasn’t much to learn,” one of the sources said.
In 2014, Toyota discontinued the electric RAV4 and sold its stake in Tesla in 2017.
When Toyota finally set up its own zero-emissions division in 2018 and started building an e-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
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