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Toyota Seeks To Change Its EV Strategy With New CEO At The Helm Of Affairs

Toyota Seeks To Change Its EV Strategy With New CEO At The Helm Of Affairs
Toyota Motor Corp. of Japan is considering a factory floor makeover as it plans a transition to a new, specialized platform for battery electric vehicles, according to four individuals familiar with the topic.
According to one of the sources, Koji Sato may disclose the existence of a new EV architecture during his first briefing as CEO on Friday.
However, it remained unclear whether the idea had been properly accepted.
Another source added that the world's largest automaker is more aware that it must match Tesla Inc's design and manufacturing advances if it wants to drive down production costs and turn its all-electric business into a better margin one, as its Silicon Valley rival has done.
That person stated that the company is still investigating the matter.
If implemented, a new EV platform would be the product of a thorough evaluation of Toyota's electric-car strategy conducted last year.
Toyota has been slow to push hard into battery electrics, but such a step would bring the automaker in line with other worldwide competitors. The e-TNGA system, its current manufacturing architecture, was introduced in 2019 and produces electric vehicles on the same assembly line as gasoline cars and hybrids.
However, E-TNGA is unable to match the cost savings achieved by Tesla through its enormous Giga Press casting machines and other manufacturing advancements.
Due to the confidentiality of the material, the sources declined to be named. When questioned, Toyota responded that comments may be made at the briefing on Friday.
According to a third person, Sato, Toyoda's hand-picked successor, recently attended an internal presentation that concentrated on the necessity of a specific battery-electric platform, a more competitive system to manage heat generated by the battery, as well as other innovations influenced by Tesla's playbook.
According to the source, Shigeki Terashi, the former chief competitive officer in charge of the EV strategy assessment, provided the briefing.
According to a different source, a number of initiatives that were going to use the e-TNGA platform are now being postponed or canceled.
Critics believe that Toyota needs to make a change now.
When Sato took over as CEO on April 1, Akio Toyoda, the founder's grandson, was still serving as CEO. Under his leadership, Toyota witnessed global demand for battery electric vehicles surpass its conservative projections.
"Some of the statements that came out of Toyota when Akio Toyoda was CEO sort of made it sound kind of like hybrids are going to be there forever. No, it’s your standby, it’s your hedge. EVs have to be first,” said CLSA analyst Christopher Richter.
Investors and environmentalists have also become more outspoken about the necessity for Toyota to move more quickly.
For the third quarter, Tesla outperformed Toyota in terms of profit per vehicle by roughly eight times, in part due to its capacity to streamline manufacturing and cut costs.
By 2030, it is anticipated that EV production would account for more than half of all vehicle production globally. For Toyota, meeting that demand will be crucial. It has so far fallen short; its first battery-powered EV, the bZ4X, had early recall issues and had only modest sales.
Toyota's absence of battery electric cars seems to be harming sales in the US, where EV growth is surpassing that of the total industry.
While General Motors Co. witnessed an 18% increase in sales during the first quarter, Toyota recorded a roughly 9% decline in sales. This was mostly due to increased demand for EVs from fleet and commercial clients.
While Toyota and its luxury brand Lexus sold roughly 1,880 battery electric cars during the first quarter, GM sold more than 20,000 electric vehicles. Even though Toyota/Lexus sold just under 119,000 electrified vehicles in total—mostly hybrids with a few battery electric and hydrogen vehicles—that represented a decline of 10.7%.
According to data from S&P Global Mobility released in November, the majority of electric car purchases made by American consumers are made by Toyota and Honda Motor Co.
Given the expansion of EVs throughout U.S. states, Katherine Garcia, head of the Clean Transportation for All Campaign at the Sierra Club, asserted that if Toyota doesn't pursue electric vehicles under Sato, the business "will be leaving money on the table."
One of the sources added that Sato is also anticipated to outline a strategy that emphasizes "diverse powertrains" at his briefing on Friday. He will emphasize that while EV production is increasing, gasoline hybrids will still be essential to the company's operations.
The delayed adoption of EVs by Toyota has also raised some private concerns among some of its suppliers.
One executive at a Toyota supplier who wished to remain anonymous said that some have been considering expanding their business with other producers in order to reduce their risk when it comes to EVs.
However, depending on the automaker's strategy, that might alter, the executive continued.

Christopher J. Mitchell

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