Toyota Adapts to Tesla’s Lead in EV Production with New Strategy

Now, Toyota takes action: Tesla’s innovations Drive EV Overhaul. Let me tell you about the influence of Tesla’s production innovations on Toyota’s electric vehicle (EV) strategy. It has been reported that Toyota conducted a teardown of Tesla’s best-selling car, the Model Y, and was left in awe of its disruptive manufacturing processes and technology. Toyota now recognizes the need to match Tesla’s design and manufacturing innovations if it wants to drive down production costs and develop a high-margin electric vehicle business.

According to Reuters, Toyota is planning a factory overhaul as part of its efforts to develop a new, dedicated platform for EVs. The new EV platform would be the result of a comprehensive review of the company’s electric vehicle strategy that was undertaken last year. Koji Sato, Toyota’s new CEO, may confirm the development of a new EV architecture at his first briefing as the company’s chief executive on Friday.

Toyota has been criticized for its slow adoption of battery electric cars, with the company’s current production architecture, the e-TNGA system that was launched in 2019, producing EVs alongside gasoline cars and hybrids on the same assembly line. However, Toyota has seen the global demand for electric cars outpace its modest estimates, with sales of its battery-electric crossover, the bZ4X, limited and facing an early recall over loose wheels.

In contrast, Tesla’s constant innovations have been implemented with the Model Y, making it a tour-de-force of technology and disruptive manufacturing processes. Thanks to these innovations and cost optimizations, Tesla is estimated to have made nearly 8x the profit per car as Toyota for the third quarter.

Toyota’s lack of EVs seems to be affecting the company’s sales already. In the first quarter of 2023, Toyota’s US sales fell by nearly 9%, while General Motors experienced an 18% boost, partly driven by higher demand for EVs from fleet and commercial customers. Data from S&P Global Mobility also suggest that Toyota and Honda have seen many customers switch to electric vehicles.

Christopher Richter, an analyst at CLSA, highlighted that Toyota needs to prioritize EVs over hybrids in its future production. “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,” Richter said.

Katherine Garcia, director of the Clean Transportation for All Campaign at the Sierra Club, emphasized that if Toyota doesn’t focus more on EVs under CEO Koji Sato, the company risks “leaving money on the table” as electric vehicles become more prominent.

The influence of Tesla’s production innovations on Toyota’s EV strategy highlights the importance of disruptive innovation in the auto industry. Tesla’s focus on innovation and cost optimization has enabled the company to lead the market in EV sales and profits, leaving traditional automakers struggling to keep up. Toyota’s recognition of the need to match Tesla’s innovations is a positive step towards the development of a more competitive EV market.

As always, we will keep you updated on any further developments. Thank you for tuning in to today’s breaking news.

Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebok, Linkedin and Youtube.

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