Oct 24 (Reuters) – Toyota ( 7203.T ) is considering its electric-car strategy to better compete in a growing market it has been slow to penetrate, and has halted some work on existing EV projects, four people familiar with the plan still developing said.
The proposals under review, if accepted, would amount to a dramatic turnaround for Toyota and would rewrite the $38-billion EV rollout plan the Japanese automaker announced last year to better compete with the likes of Tesla ( TSLA.O ).
A working group within Toyota has been charged with outlining plans for improvements to its existing EV platform or a new architecture as early as next year, four of the people said.
Meanwhile, Toyota has suspended work on some of the 30 EV projects it 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 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 Reuters.
The four sources declined to be identified because the plans have not been disclosed.
The restructuring under consideration could slow the rollout of EVs already on the drawing board. But it will give Toyota a chance to compete with a more efficient manufacturing process, as industry-wide EV sales exceed Toyota’s earlier projections.
Also, 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 EVs.
As part of the review, Toyota is considering a successor to its EV-underpinning technology called e-TNGA, which was unveiled in 2019. That would 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 suspend production from June. Production resumed earlier this month.
Tesla as the benchmark
The review was triggered by a realization by some Toyota engineers and executives that Toyota was losing the factory cost war to Tesla on EVs, the sources said.
Toyota’s plan assumed demand for EVs wouldn’t stop for decades, the four said.
Toyota designed the e-TNGA so that EVs can be built on the same assembly line as gasoline cars and hybrids. Toyota will need to sell about 3.5 million EVs a year to stay competitive by 2030 — about one-third of its current global volume — based on projections it realized, the sources said.
But EV sales are growing rapidly. Automakers worldwide now forecast plans for EVs to 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 man leading Toyota’s EV review is Shigeki Terashi, the former chief competition officer, according to six people with knowledge of the job, including two people close to Toyota. Tershi did not respond to requests for comment.
Terashi’s team has been designated a “BR” or “business revolution” group within Toyota, a term used for major changes two decades ago, including restructuring of its development and production processes.
“What’s driving Mr. Terashi’s efforts is the expected takeoff of EVs and the rapid-fire adoption of cutting-edge innovations by Tesla and others,” one of the people said.
All six spoke on condition of anonymity because of the confidentiality of the plans.
Terashi’s team is considering an option to prolong the e-TNGA’s usefulness with new technology, three sources said.
Terashi may propose to retire the e-TNGA sooner and opt for an EV-dedicated platform. It could take about five years for the new model, two sources said. “There’s little time to waste,” 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 has streamlined work at Tesla plants.
One area under review is a more comprehensive approach to an EV’s thermal management — for example, combining passenger air conditioning and electric powertrain temperature control — which Tesla has already instituted, sources said.
It could also 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, a source familiar with the matter said. Denso (6902.T) and Aisin (7259.T) had no immediate comment.
The recognition within the world’s largest automaker Toyota that Tesla has set a new benchmark for EV manufacturing costs marks a major reversal.
When Toyota acquired a stake in Tesla a decade ago and the two collaborated to develop a battery-electric version of the RAV4, many Toyota engineers believed Tesla’s technology was not a threat, two sources said.
“They then concluded that there wasn’t much to learn,” a source said.
Toyota discontinued the electric RAV4 in 2014 and sold its stake in Tesla in 2017.
By 2018, when Toyota finally established a dedicated zero-emission division and began developing an e-platform, Tesla already had three models on the road.
Reporting by Norihiko Shirozu, Paul Lienert and Maki Shiraki; Editing by Kevin Krolicki and Edmund Claman
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