Toyota – the world’s biggest car maker and, some would say, the most influential critic of electric vehicles and supportive policies – is reportedly considering a major backflip on its EV plans after being caught by surprise by the pace of change.
Toyota has infamously focused its attention on hybrid and fuel cell-vehicles, and agitated behind the scenes to dilute or slow down the transition to EVs, most notably through its opposition to binding and tough vehicle emissions standards.
Its focus on hybrids has paid off well, at least in terms of short term sales. But there is now a growing fear within Toyota that they will be stuck with the “fax machine” of the car industry, and left behind Tesla and other legacy competitors in the accelerating switch to electric.
In a report published on Tuesday morning, news agency Reuters quoted four un-named sources within Toyota that the company is considering changing its strategy to enable it to better compete in what is now clearly a booming market.
The move is being described as a rewrite and a “re-boot” of the EV rollout plan it announced last year and is being led by the heads of a new division dubbed “business revolution”, as if to underpin the scale and urgency of what is being considered.
The four sources cited by Reuters suggest the revamp is so fundamental that it will likely cause a slow down the already slow rollout of EVs from Toyota, mainly because it has realised that it must improve its manufacturing processes and adapt them to the EV industry.
According to Reuters, the sales of EVs around the world are catching Toyota by surprise, running well ahead of its own internal projections which suggested that EVs would not take off for decades. It is facing criticism from both investors and environmental groups who say that Toyota, once a darling of environmentalists, has been too slow to embrace EVs.
Reuters said that as part of the review, Toyota is considering a successor to its EV-underpinning technology called e-TNGA, unveiled in 2019. That would allow Toyota to bring down costs.
The first EV based on e-TNGA — the bZ4X crossover — hit the market in the US earlier this year although its launch was marred by a recall that forced Toyota to suspend production from June. Production resumed earlier this month, Reuters reports.
Toyota designed the e-TNGA platform so that EVs could be produced on the same assembly line with gasoline cars and hybrids. But that strategy was based around a limited number of EVs.
Reuters says that the person leading Toyota’s EV review is Shigeki Terashi, a former chief competitive officer, whose team has been designated a “BR” or “business revolution” group within Toyota.
“What’s driving Mr Terashi’s effort is the EV’s faster-than-anticipated takeoff and rapid-fire adoptions of cutting-edge innovations by Tesla and others,” said one of the people cited by Reuters.
Terashi could propose to retire e-TNGA Â quickly and opt for an EV-dedicated platform engineered from the ground up. But that could take roughly five years for new models, two of the sources said. “There is little time to waste,” said one.
As per Reuters:
Toyota is working with suppliers and considering factory innovations to bring down costs like Tesla’s Giga Press, a massive casting machine that has streamlined work in Tesla plants.
One area under review is a more comprehensive approach to an EV’s thermal management – combining, for example, passenger air conditioning and electric powertrain temperature control – that Tesla has already mobilised, 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 sources familiar with the matter said. Denso (6902.T) and Aisin (7259.T) had no immediate comment.
The Reuters story quoted two of its sources as saying that Toyota, despite taking a stake in Tesla a decade ago, never believed that Elon Musk’s company would be a threat. It sold its stake in Tesla in 2017, and stopped production of its own electric RAV4 in 2014.
Now it is trying to catch up.
Giles Parkinson is founder and editor of The Driven, and also edits and founded the Renew Economy and One Step Off The Grid web sites. He has been a journalist for nearly 40 years, is a former business and deputy editor of the Australian Financial Review, and owns a Tesla Model 3.