March 22, 2023

Exclusive: Toyota eyes Tesla for electric car reboot

Oct 24 (Reuters) – Toyota ( 7203.T ) is considering restarting its electric car strategy to better compete in a growing market with slow penetration and has suspended some existing electric vehicle projects, four people familiar with the matter said. of plans still under development said.

The proposals under consideration, if approved, would mark a dramatic shift for Toyota and would rewrite the $38 billion electric vehicle deployment plan the Japanese automaker announced last year to better compete with the likes of Tesla ( TSLA.O ).

Toyota’s working group has been tasked with outlining plans for improvements to the current electric car platform or a new architecture by the beginning of next year, the four people said.

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In the meantime, 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 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 various partners and suppliers – is essential,” the company said in response to questions from Reuters.

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

The reform under consideration may slow down the introduction of electric cars that are already on the planning table. But it would also allow Toyota to compete with a more efficient manufacturing process as industry-wide EV sales exceed Toyota’s previous projections.

It would also address criticism from green investors and environmental groups that Toyota, once an environmentalist darling, has been too slow to adopt electric cars.

As part of the evaluation, Toyota is considering a successor to e-TNGA, a technology based on electric cars announced in 2019. That would allow Toyota to cut costs, the people said.

The first e-TNGA-based electric car – the bZ4X crossover – hit the market earlier this year, although its launch was hampered by a recall that forced Toyota to suspend production from June. Production resumed earlier this month.


Sources said the review was triggered in part by the realization among some Toyota engineers and executives that Toyota was losing the EV factory cost war to Tesla.

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

Toyota designed the e-TNGA so that electric cars could be produced on the same assembly line as gasoline cars and hybrids. That made sense, assuming Toyota would need to sell about 3.5 million electric cars a year — about a third of its current global volume — by 2030 to stay competitive, the sources said.

Toyota cars are seen at a press conference to discuss the company’s battery electric vehicle strategies in Tokyo, Japan, December 14, 2021. REUTERS/Kim Kyung-Hoon/File Photo

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

The evaluation of Toyota’s electric cars is being led by Shigeki Terashi, a former head of competition, according to six people familiar with the work, including two people close to Toyota. Terashi did not respond to a request for comment.

Terashi’s team has been dubbed Toyota’s “BR” or “business revolution” group, used for major changes, including an overhaul of its development and production processes two decades ago.

“What’s driving Mr. Terash’s efforts is the faster-than-expected rise of the electric car and the rapid adoption of Tesla and other cutting-edge innovations,” one of the people said.

All six people declined to be named because the plans are confidential.

Terash’s team is considering an option to extend the useful life of the e-TNGA by combining it with new technologies, three of the sources said.

Terashi could also suggest ending the e-TNGA sooner and opt for a platform designed for electric cars from the ground up. That could take about five years for new models, two of the sources said. “There is little time to waste,” said one.

Toyota is working with suppliers and considering factory innovations to lower costs, such as Tesla’s Giga Press, a massive casting machine that has streamlined work at Tesla factories.

One area under review is a more comprehensive approach to electric vehicle thermal management — combining things like passenger air conditioning and electric powertrain temperature control — which Tesla has already adopted, the sources said.

That could allow Toyota to reduce battery size and weight for electric vehicles and cut costs by thousands of dollars per vehicle, making it a “top priority” for Toyota suppliers Denso and Aisin, said one of the sources familiar with the matter. Denso (6902.T) and Aisin (7259.T) had no immediate comment.

The recognition by Toyota, the world’s largest automaker, that Tesla has set a new benchmark for the cost of manufacturing electric vehicles marks a major turnaround.

Ten years ago, when Toyota took a stake in Tesla and the two teamed up 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.

“They decided then that there wasn’t much to learn,” one of the sources said.

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

By 2018, when Toyota finally established its own zero-emissions division and began building an electric platform, Tesla already had three models on the road.

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

Our standard: Thomson Reuters Trust Principles.

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