Exclusive: Toyota scrambles to restart EVs with eye on Tesla

Exclusive: Toyota scrambles to restart EVs with eye on Tesla

Oct 24 (Reuters) – Toyota (7203.T) plans to restart its electric car strategy to better compete in a booming market it has been slow to break into and has halted some work on existing electric vehicle projects , four people with knowledge of the plans still in development said.

The proposals under consideration, if passed, would represent a sea change for Toyota and rewrite the $38 billion EV rollout plan announced by the Japanese automaker last year to better compete with Tesla (TSLA.O).

A task force within Toyota has been tasked with defining plans by early next year to improve its existing electric vehicle platform or for a new architecture, the four people said.

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Meanwhile, Toyota has suspended work on some of the 30 electric vehicle projects announced in December, which sources and a document reviewed by Reuters say include the Toyota Compact Cruiser crossover and the battery-electric Crown.

Toyota said it was committed to carbon neutrality, but declined to comment on specific initiatives.

“In order to achieve carbon neutrality, Toyota’s own technology – as well as the work we do 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 made public.

The planned overhaul could slow the rollout of electric vehicles already on the drawing board. But it would also give Toyota a chance to compete with a more efficient manufacturing process as industry-wide electric vehicle sales exceed Toyota’s earlier forecasts.

Additionally, it would address criticism from green investors and environmental groups who argue that Toyota, once a darling of environmentalists, has been too slow to embrace electric vehicles.

As part of the review, Toyota is considering a successor to its core electric vehicle technology called e-TNGA, which was unveiled in 2019. This would allow Toyota to cut costs, the people said.

The first e-TNGA-based electric vehicle – 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 A REFERENCE

The review was triggered in part by the realization by some Toyota engineers and executives that Toyota was losing the factory cost war to Tesla over electric vehicles, the sources said.

Toyota’s planning had assumed that demand for electric vehicles would not take off for several decades, the four people said.

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

Toyota cars are seen during a briefing on the company’s battery electric vehicle strategies in Tokyo, Japan December 14, 2021. REUTERS/Kim Kyung-Hoon/File Photo

But sales of electric vehicles are growing faster. Automakers around the world now predict that electric vehicles will 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 dollars.

The person leading Toyota’s electric vehicle review is former competition director Shigeki Terashi, according to six people with knowledge of the work, including two close to Toyota. Terashi did not respond to a request for comment.

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

“What drives Mr. Terashi’s efforts is the faster-than-expected take-off of the electric vehicle and the rapid adoption of cutting-edge innovations by Tesla and others,” one of the people said.

The six people declined to be named due to the confidential nature of the plans.

Terashi’s team is considering an option to extend the usefulness of e-TNGA by coupling it with new technologies, three of the sources said.

Terashi could also offer to retire the e-TNGA sooner and opt for a dedicated EV platform designed from the ground up. It could take around 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 cut costs, like Tesla’s Giga Press, a massive casting machine that has streamlined work at Tesla factories.

One area being explored is a more comprehensive approach to electric vehicle thermal management — combining, for example, passenger air conditioning and electric powertrain temperature control — which Tesla has already mobilized, the experts said. sources.

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

The recognition within Toyota, the world’s largest automaker, that Tesla has set a new benchmark for electric vehicle manufacturing costs marks a major reversal.

A decade ago, when Toyota took a stake in Tesla and the two collaborated to produce a battery-electric version of the RAV4, many Toyota engineers believed Tesla’s technology was not a threat, said two of the sources.

“They concluded at the time that there was not much to learn,” one of the sources said.

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

By 2018, when Toyota finally set up a dedicated zero-emissions division and started building an electronics 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 standards: The Thomson Reuters Trust Principles.

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