Toyota, a Hybrid Pioneer, Struggles to Master Electric Vehicles
Toyota’s Dominance Threatened by Rise of Electric Vehicles The New York Times
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The Slow Transition of Toyota to Electric Vehicles
The world’s largest carmaker dominates the sales of hybrid cars but has been slow to sell all-electric vehicles, alienating some customers and hurting sales.
Rachel Culin considered herself a Toyota loyalist, one of millions of people who appreciated the company’s reliable and fuel-efficient hybrids. But she recently bought an electric Chevrolet Bolt to replace her Toyota Prius because the Japanese automaker had been too slow when it came to selling electric vehicles.
“Where are the options for those people who love Toyota?” Ms. Culin, a resident of Mesa, Ariz., said. “It’s really sad.”
Once the leading brand for environmentally conscious car owners, Toyota has failed to keep up with changing consumer preferences and a push by governments around the world to greatly reduce the burning of fossil fuels, the main cause of climate change.
The company and the Japanese auto industry are facing the biggest business challenge they have confronted since becoming global giants in the 1980s. How they respond could determine whether they remain at the top of the auto industry or become afterthoughts.
Toyota, the world’s largest automaker, is the nucleus of power for the country’s large auto industry. It has alliances with smaller automakers like Subaru and Mazda and wields enormous influence over government officials and industry groups. The company is also a major employer in the United States, with nearly 30,000 workers in Kentucky, Indiana, Texas and other states.
Its business decisions can have far-reaching economic and environmental implications. Toyota arguably did more to improve fuel efficiency and cut emissions than any other established automaker by pioneering hybrid cars that augment a gasoline engine with a battery and an electric motor. But having staked so much on hybrids, it has moved slowly to cars that produce no tailpipe emissions.
That has opened room for Tesla and BYD, a Chinese automaker, to challenge Toyota’s dominance by offering appealing and affordable battery electric cars. Toyota has lost market share in the United States, and its sales in China have fallen.
Japanese carmakers have been here before. But last time they were the insurgents.
In the 1970s, with fuel prices soaring, Americans began replacing gas-guzzling cars with small, fuel-efficient Japanese models, challenging the dominance of General Motors, Ford Motor and Chrysler.
Today, Toyota is the one learning from rivals. The company is adopting techniques from Tesla. In China, it has teamed up with BYD in the hope of absorbing its electric motor and battery technology.
“The stage of the battle has changed,” said Sanshiro Fukao, a senior research fellow at the Itochu Research Institute, and “the Japanese auto industry in particular has been very slow to act.”
Toyota may no longer be able to take its time.
During the pandemic, the global automotive market passed a milestone that caught the world’s major automakers flat-footed. In 2022, sales of electric vehicles surged nearly 70 percent to 7.7 million, surpassing those of hybrid-electric vehicles for the first time as demand skyrocketed in China, according to IDTechEx, a market research consultancy.
Toyota remains highly profitable, earning $8.9 billion in the quarter that ended on June 30. Last year, it sold 10.5 million vehicles, eight times as many as Tesla. But fewer than 1 percent of the cars it sold were fully electric vehicles.
The absence of electric vehicles has been especially costly in China, the world’s largest car market. In July, Toyota’s sales in China were down over 15 percent from a year earlier.
In the United States, Toyota’s sales have increased, but less than other automakers. From June to August, the company’s share of the passenger car market slipped to 13.8 percent from 15.1 percent a year earlier, according to the market research firm Cox Automotive.
The story is much the same for other Japanese automakers like Honda, Mazda and Subaru. Even Nissan, which began selling the Leaf electric car in 2010, has fallen behind, failing to produce a car that could rival Tesla’s Model 3 in range, performance or design. Nissan accounted for less than 2 percent of the electric car market in the United States in the first half of the year. In China, it expects sales could drop by almost a quarter in the current fiscal year.
In May the International Council on Clean Transportation, a nonprofit organization, rated the 20 largest automakers on their progress toward zero emissions. Five of the six companies with the lowest scores were Japanese: Toyota, Honda, Nissan, Mazda and Suzuki.
Foreign automakers in China produced electric models designed to placate regulators rather than appeal to consumers, said Christopher Richter, senior research analyst at CLSA, an investment firm.
Toyota has tacitly acknowledged that it has fallen far behind Tesla and BYD. The decision in January by the Toyota scion Akio Toyoda to step down as chief executive was widely seen as a recognition that the company needed new leadership to navigate the transformation of the auto industry.
The sense of urgency was compounded by the Shanghai auto show in April, said Tatsuya Otani, a journalist who has spent decades reporting on the Japanese auto industry.
Chinese vehicles at the show featured onboard controls and entertainment options that made them look more like iPhones on wheels than traditional cars. Japanese executives were stunned to see how much progress their Chinese rivals had made, Mr. Otani said.
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Source: nytimes.com
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Toyota’s Lagging Electric Vehicle Sales
The Influence of Toyota in the Auto Industry
Toyota’s Response to the Electric Vehicle Market
The Cost of Toyota’s Absence in the Electric Vehicle Market
The Urgency for Toyota to Catch Up
SDGs, Targets, and Indicators
1. Which SDGs are addressed or connected to the issues highlighted in the article?
2. What specific targets under those SDGs can be identified based on the article’s content?
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
SDGs, Targets, and Indicators Table
SDGs
Targets
Indicators
SDG 7: Affordable and Clean Energy
7.2: Increase substantially the share of renewable energy in the global energy mix.
Percentage of electric vehicles in total vehicle sales.
SDG 9: Industry, Innovation, and Infrastructure
9.4: Upgrade infrastructure and retrofit industries to make them sustainable.
Investment in research and development for electric vehicle technology.
SDG 11: Sustainable Cities and Communities
11.6: Reduce the adverse per capita environmental impact of cities.
Reduction in greenhouse gas emissions from transportation sector.
SDG 13: Climate Action
13.2: Integrate climate change measures into national policies, strategies, and planning.
Integration of climate change considerations in automotive industry policies and practices.
SDG 17: Partnerships for the Goals
17.17: Encourage and promote effective public, public-private, and civil society partnerships.
Number of partnerships between automakers, governments, and other stakeholders to promote sustainable transportation.
