by We here at CleanTechnica have said for years that Toyota risks a Nokia moment—the day when a once-dominant company wakes up to find itself irrelevant and its business model obsolete. Is it possible that Toyota, which consistently sells more new vehicles each year than any other company, could really go out of business? Is that really possible? Ask anyone who owned Kodak or Lucent stock.
By Reuters, Toyota is considering restarting its electric car strategy and has suspended work on some of its 30 existing electric car projects, according to four people with knowledge of the company’s situation. They claim that the company has created a new task force to decide whether to continue with the current e-TNGA platform or develop an entirely new platform specifically for electric cars.
The problem is that the e-TNGA platform was designed specifically to allow Toyota to build electric cars on the same assembly lines used to build gasoline and hybrid cars. The first model to use the e-TNGA platform was the bZ4X, which was introduced earlier this year. Early reviews put the car at mediocre at best, and that was before Toyota stopped production due to wheels falling off on early examples. It was an inauspicious start to say the least.
The company recently unveiled the new Crown sedan, a plug-in hybrid that would have been the world’s best if it had hit the market in 2016. Toyota — largely because of Akio Toyoda’s stubborn refusal to wake up and smell the EV coffee. — has consistently been a day late and a dollar short in joining the EV revolution. Is it possible that the message is finally starting to get through?
Toyota is left behind
The real problem, however, is that Tesla is teaching legacy automakers a hard lesson about the cost of making cars. Most CleanTechnica Readers will well remember how former Volkswagen Group CEO Herbert Diess kept talking about Tesla building cars for much less money than Volkswagen could and how VW needed to redesign its factories to compete. Now the same message is echoing at Toyota headquarters, and the truth is that the e-TNGA platform just can’t achieve the same production efficiency as Tesla.
Proposals under consideration, Reuters says this would mark a dramatic shift for Toyota and rewrite the $38 billion electric vehicle plan announced last year. In the meantime, the company has suspended work on electric vehicle projects such as the Toyota Compact Cruiser crossover and the battery-electric Crown.
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. They claim the company assumed demand for electric cars would not increase for several decades, four of the people said. Too bad Toyoda-san didn’t require all people to read CleanTechnica. We could have saved him a lot of time and confusion.
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. However, sales of electric cars are growing faster than expected. Automakers worldwide now predict that electric cars will account for more than half of total vehicle production by 2030, part of a wave of industry-wide investment that now totals more than $1.2 trillion.
New team, new ideas
The review of Toyota’s electric vehicles is being led by Shigeki Terashi, the company’s 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. The new team has been dubbed Toyota’s “BR” or “business revolution” group, which is used for major changes, including an overhaul of its development and production processes two decades ago.
“Mr. Terash’s efforts are being driven by 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. 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 subject under review is a more holistic approach to electric car thermal management – combining, for example, passenger air conditioning and electric powertrain temperature control, which Tesla has already achieved.
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.
The recognition by Toyota, the world’s largest automaker, that Tesla has set a new benchmark for the cost of manufacturing electric cars marks a major shift in Toyota’s thinking. 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 making 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 the e-platform, Tesla already had three models on the road.
Takeaway
It is very likely that Toyota has already left it too late. This giant company—once an explosion of innovation and profitability—could simply evaporate, as Kodak and Nokia once did. Tesla started mass production of electric cars ten years ago. Volkswagen did about an about-face in 2016 after its diesel cheating scandal nearly brought it down. This leaves Toyota 5 years behind its closest competitor and 10 years behind the industry leader.
Will it have time to catch up or even take the lead in the new car market as the world moves to electric cars? The answer is a definite maybe, but only if the company’s internal thinking – starting with the indomitable Akio Toyoda – undergoes a radical change. Things at Toyota may not change as long as he remains its CEO, and he shows no desire to step down anytime soon.
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