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Toyota looks set to overhaul EV strategy as new CEO takes charge




April 6 (Reuters) – After making sweeping changes to its management team, Japan’s Toyota Motor Corp ( 7203.T ) is eyeing an overhaul of the factory floor as it plans a move to a new dedicated platform for battery electric vehicles, four people familiar with the matter said the case said.

Koji Sato may confirm that new EV architecture is in the works at his first briefing as CEO on Friday, one of the people said.

However, it was not immediately clear on Thursday evening whether the plan had been formally approved.

The world’s biggest carmaker is increasingly recognizing that it must match Tesla Inc’s ( TSLA.O ) design and manufacturing innovations if it is to lower manufacturing costs and turn its all-electric business into a higher-margin one like its Silicon Valley rival, another person said.

It continues to study the issue, that person said.

A new EV platform, if implemented, would be the result of a far-reaching review of Toyota’s electric car strategy undertaken last year.

Slow to push hard into battery electrics, such a move by Toyota would bring the automaker in line with other global rivals. Its current production architecture, the e-TNGA system, was launched in 2019 and produces electric vehicles on the same assembly line as petrol cars and hybrids.

However, E-TNGA cannot provide the cost savings Tesla has managed with its massive Giga Press molding machines and other manufacturing innovations.

The sources declined to be identified because the information was confidential. Asked for comment, Toyota said questions can be asked at Friday’s briefing.

Sato, Toyoda’s handpicked successor, recently attended an internal presentation that focused on the need for a dedicated battery-electric platform, a more competitive system for managing heat generated by the battery, as well as other innovations influenced by Tesla’s playbook, according to a third person .

The briefing was given by the former competition chief tasked with the EV strategy review, Shigeki Terashi, according to the person.

Several projects that were supposed to benefit from the e-TNGA platform are now being delayed or cancelled, a separate person said.

LONG TO COME

A shift for Toyota is long overdue, say critics.

Under former CEO Akio Toyoda, the founder’s grandson who became chairman on April 1 when Sato took the top job, Toyota saw global demand for battery electric equipment beat modest projections.

“Some of the statements that came out of Toyota when Akio Toyoda was CEO made it sound like hybrids are going to be around forever. No, that’s your standby, that’s your hedge. EVs have to be first, ” said CLSA analyst Christopher Richter.

Environmentalists and investors have also been increasingly vocal about the need for Toyota to move faster.

Tesla achieved nearly eight times the profit per vehicle of Toyota in the third quarter, due in part to its ability to simplify production and reduce costs.

Globally, electric vehicles are now expected to represent more than half of total vehicle production by 2030. Meeting this demand will be crucial for Toyota. So far, it has fallen short – its first battery EV, the bZ4X, was recalled early and has seen only limited sales.

In the US, where the growth of electric cars is outpacing the growth of the overall market, Toyota’s lack of battery electric models appears to be hurting sales. Toyota reported U.S. sales fell nearly 9% during the first quarter, while General Motors Co ( GM.N ) saw an 18% increase, helped by greater demand for electric vehicles from fleet and commercial customers.

GM sold more than 20,000 electric vehicles during the first quarter, while Toyota and its luxury brand Lexus sold about 1,880 electric batteries. And while Toyota/Lexus sales of electrified vehicles — mostly hybrids with a dash of battery electric and hydrogen vehicles — came in at just under 119,000, that represented a 10.7% drop.

U.S. consumers switching to electric vehicles are largely doing so from Toyota and Honda Motor Co ( 7267.T ), data from S&P Global Mobility showed in November.

If Toyota doesn’t pursue electric vehicles under Sato, the company will be “leaving money on the table,” said Katherine Garcia, director of the Clean Transportation for All Campaign at the Sierra Club, pointing to the growth of EVs in US states.

In his briefing on Friday, Sato is also expected to lay out a strategy that emphasizes “diverse drive lines,” one of the people said. In doing so, he will emphasize that gasoline hybrids will remain key to the business even as it ramps up EVs.

Some of Toyota’s suppliers have also privately expressed concern about the slow adoption of electric cars.

According to an executive at a Toyota supplier who declined to be identified, some have looked to increase business with other manufacturers to hedge the risk when it comes to electric cars.

But that could change depending on the automaker’s strategy, the executive added.

Reporting by Norihiko Shirouzu in Austin, Texas, Joseph White in Detroit, Maki Shiraki and Daniel Leussink in Tokyo; Editing by David Dolan and Edwina Gibbs

Our standards: Thomson Reuters Trust Principles.

Joseph White

Thomson Reuters

Joe White is a global automotive correspondent for Reuters, based in Detroit. Joe covers a wide range of topics in the automotive and transportation industry, writes The Auto File, a tri-weekly newsletter about the global automotive industry. Joe joined Reuters in January 2015 as transport editor leading coverage of planes, trains and cars, and later became global auto editor. Previously, he served as global automotive editor for the Wall Street Journal, where he oversaw coverage of the auto industry and ran the Detroit bureau. Joe is the co-author (with Paul Ingrassia) of Comeback: The Fall and Rise of the American Automobile Industry, and he and Paul shared the 1993 Pulitzer Prize for beat reporting.



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