Toyota is looking to overhaul its electric vehicle strategy as a new CEO takes over

April 6 (Reuters) – After making sweeping changes to its leadership team, Japan’s Toyota Motor Corp. (7203.T) is looking at a factory floor overhaul as it plans to move to a new four-person battery-electric vehicle platform. knowledgeable, he said.

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

However, it was not immediately clear as of Thursday evening whether the plan had been officially approved.

The world’s largest automaker is increasingly aware that it needs to match Tesla Inc (TSLA.O) design and manufacturing innovations if it is to cut production costs and shift its all-electric business to higher margin as its Silicon Valley rival has done, another person said.

That person said she is continuing to study the case.

The new EV platform, if implemented, will be the result of a far-reaching review of Toyota’s electric vehicle 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 competitors. The current production engineering, the e-TNGA system, was launched in 2019 and produces electric cars on the same assembly line as petrol and hybrid cars.

However, E-TNGA can’t afford to save on the costs that Tesla has been able to save with its gigantic Giga Press casting machines and other manufacturing innovations.

The sources declined to be identified because the information is confidential. Asked for comment, Toyota said questions may be asked at Friday’s news conference.

Sato, Toyoda’s handpicked successor, recently attended an internal presentation that focused on the need for a dedicated battery electric platform, a more competitive battery heat management system as well as other innovations influenced by Tesla’s brochure, according to Third Person.

The briefing was provided by the competition’s former CEO charged with reviewing electric vehicle strategy, Shigeki Terashi, according to the person.

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

long time coming

Critics say the turnaround for Toyota is long overdue.

Under former CEO Akio Toyoda, the founder’s grandson who became chairman of the board on April 1 when Sato took over the top job, Toyota has seen global demand for electric batteries outpace its modest estimates.

“Some of the statements Toyota came out when Akio Toyoda was CEO kind of made it seem like hybrids were going to be around forever,” said CLSA analyst Christopher Richter.

Environmentalists and investors have also been increasingly talking about Toyota’s need to move faster.

Tesla posted nearly eight times as much car profit as Toyota for the third quarter, in part because it was able to streamline production and lower cost.

Electric vehicles are now expected to account for more than half of all vehicle production globally by 2030. Meeting this demand will be critical for Toyota. So far, it’s been short—its initial battery, EV, bZ4X, suffered an early recall and had only limited sales.

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

General Motors sold more than 20,000 electric cars during the first quarter, while Toyota and its luxury brand, Lexus, sold about 1,880 electric cars. And while Toyota/Lexus sales of electrified vehicles — mostly hybrids with a few battery electric and hydrogen vehicles — were just under 119,000, that’s a drop of 10.7%.

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

If Toyota doesn’t go after electric vehicles under Sato’s leadership, the company will “leave money on the table,” said Kathryn Garcia, campaign manager for Clean Mobility for All at the Sierra Club, noting the growth of electric vehicles across US states.

At his briefing on Friday, Sato is also expected to lay out a strategy focused on “diversified powertrains,” one of the people put it. In doing so, it will ensure that gasoline-powered hybrids will remain key to its business even as electric vehicles increase.

Some Toyota suppliers in particular have also expressed concern about its slow embrace of electric vehicles.

According to an executive at a Toyota supplier who declined to be identified, some were looking to increase business with other manufacturers to hedge their risks when it comes to electric vehicles.

That could change depending on the automaker’s strategy, the official added.

(Reporting by Norihiko Shirozu in Austin, TX, Joseph White in Detroit, Maki Shiraki and Daniel Lusink in Tokyo; Editing by David Dolan and Edwina Gibbs

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