The surprise leadership shuffle on Thursday at Toyota Motor Corp, renewed urgency at Renault and Nissan Motor Co to restructure their alliance and Elon Musk’s declaration that Tesla Inc will be the world’s No. 1 automaker by a wide margin have one thing in common: What once defined the global auto industry’s center is no longer holding.
The announcement that Akio Toyoda will step down as chief executive of the world’s top-selling automaker on April 1 came just hours after Musk used a quarterly earnings call to declare that Tesla was now the auto industry’s leader in profitability and manufacturing efficiency - the crown Toyota held for three decades.
Toyota’s incoming CEO, Koji Sato, faces a daunting task. He must accelerate the Japanese automaker’s efforts to develop more competitive electric vehicles. But he will get little breathing room from Tesla or the Chinese EV manufacturers who are using their leads in EV technology and production costs to slash prices.
There is nothing in the article to suggest Sato shares the EV vision of the author. And I’ve read nothing to suggest Toyota will jump into BEVs with a vengeance now that Sato is the executive running the company. (Note: Akio Toyoda will be Chairman of Toyota… how much change will he allow?).
And that’s FINE by me. I’m a TSLA shareholder.
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
Even if Toyota goes whole hog, how long to catch up to Tesla? Except for Toyota and Japan being EV averse, Toyota is one of the best car makers around and it should be an interesting race.
The Captain’s
last three cars were Toyotas, 1985 to 2019
Toyota is way ahead of Tesla on everything that goes into a car that is not the power train.
And remember, Toyota has been making ICE/electric hybrids for a long time now. Close to 30 years. A hybrid car has all the issues of batteries and electric motors and regenerative braking and controls that a pure BEV does. Plus an ICE to deal with range issues. Most current hybrids now have a battery only mode for short trips, and can be plugged in to recharge the batteries. All of that engineering has been done, except for larger batteries and electric motors so that the ICE can be ditched.
Plus Toyota has a brand name known for reliability and modest costs. And they’ve already got production capacity. They don’t need to build new factories from scratch, they can tweak existing production lines to handle new all electric models.
Their issues are likely to be sourcing of sufficient batteries and electric motors. Tesla struggles with that to some extent, but has chosen to manufacture their own batteries rather than outsource them. So they are more directly connected to the raw material supply than a company that outsources their batteries. Ultimately, the same issue, just different places in the production process.
My point here is that Toyota (and probably Honda) won’t need a whole lot of time to start producing BEVs once they choose to do so. Particularly so if they produce a BEV version of something in their existing lineup, like a Camry or Accord.
Being “kicked upstairs” is a great downfall in Japanese culture. He may remain on the Board but he will mostly be without portfolio, I suspect. The fact that Toyota belated made this move against the grandson of the company founder is telling. Even more so, the new President of Toyota is considered to be the father of the Prius, so we know well what his history and inclinations might be.
I don’t know how long it will take them to pivot, but given their history with one of the truly successful hybrids all over the world, I would guess there will be a crash program (pardon the inapt pun) to get into the EV race.
That’s being a bit optimistic I think. For one thing, converting existing ICE plants to make EVs means reducing sales of their biggest profit makers in favor of vehicles with lower margins and uncertain market appeal. That’s a tough sell (pardon the pun) and I can understand the desire to hold off making that transition while your gas powered Camrys and Rav4s are racking up sales. Problem is those dedicated EV makers like Tesla and BYD are going all out to grab marketshare and build an EV brand. The risk of being the next Kodak is a real one.
Also worth noting that VW, a legacy company similar to Toyota, is spending many, many billions making the conversion to electric and has found it necessary to learn how to make their own EV batteries and design their own computer chips and software. That’s a lot of new infrastructure and expertise that needs to be developed.
Toyota and Honda might be able to develop and mass produce EVs in a short time, but it won’t be easy and it will be very expensive. And I think it will be a long time before Toyota will be as profitable making EVs as they currently are with gas cars.
Why do entire plants need to be converted? You can get many cars with multiple different ICE engine/transmission options today. To say nothing of all of the other various options - seats, entertainment systems, trim packages, and so on. And those all roll off the same line. Why can’t an EV also come off that line? It’s just one more engine option. At worst, it’s a bit of a diversion to an existing line - taking certain cars off onto a parallel line for the uniquely EV parts, then back to the main line for all of the stuff in common with the ICE versions.
You don’t need to build a completely different car for an EV. An electric drive train could just be one more option on an existing car model.
Except that VW hasn’t been making hybrids for 30 years. Toyota has. As I already noted, there is a lot of learning from hybrids that can be transferred to pure EV.
It will take years. How many? Unknown. The current Honda Odyssey cannot be made into an EV (in any form). There is a design problem that would require a total redesign to enable it to be a hybrid or EV.
Toyota simply does not want to make larger EVs because it would likely cannibalize their ICE and maybe other hybrid vehicle sales.
Plus, with the rapid developments in battery technology, it may make sense to delay a new EV vehicle until much better batteries are available.
It’s not a simple thing unless the factory was initially set up to do that. It’s far more complicated than the casual observer would think.
An assembly plant could be converted from ICE to BEV but a lot of changes would be required all the way from the initial body welding (because the bodys would have significant differences) … with many changes going to the end because a lot of ICE stuff would be gone and a lot of new BEV stuff has to go in.
How much? Probably a couple hundred million dollars minimum at the assembly plant. The retooling expenses UPSTREAM from that would be a lot more. Most ICE cars would have to be completely redesigned to accommodate the preferred skateboard concept. Major expense.
Note: 17 years at Ford Motor as a vehicle architect… solving problems like this
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
Sure. There would likely be some different mounting points for major items like the battery pack and electric motor. Or maybe not.
Yes, EVs can take advantage of the flexible shape of battery packs to put them low in the body for better weight balance and stability. But we handle ICEs with their big lumps of metal under the hood and get adequate weight and stability out of that. Why not put the battery where the ICE motor currently sits? Heck, put it in a carrier that matches up to the existing mounting points for the ICE motor. The electric motor could mount in the same place as the current transaxle in FWD vehicles, or the differential in RWD vehicles. Use two motors for all wheel drive. There’s still a bunch of room left where the ICE engine was for batteries.
But that’s a concept unique to EVs. Yes, it offers benefits not available to ICEs. But there are benefits to producing both EVs and ICE versions of the same model on the same line. More throughput for the great many things that would not be different, allowing those parts of the line to have better efficiency.
So you’d be the right guy to ask. Why can’t you design a vehicle to have an ICE and an electric motor as options? We already design cars and trucks to have a variety of different ICEs. Why can’t an electric drive train be tossed into the mix? Yes, it might be hard to adapt an existing design to accept electric bits. But most vehicles go through a redesign/refresh every few years. That would be the perfect time to design in the ability to come in an electric version.
Yes, I know the F-150 lightning got its own plant. But the F-150 is produced in enough volume to need multiple plants anyway. And it does share a number of parts with it’s gasoline siblings.
I also read a bit about the skateboard design. It was pointed out that body on frame construction (as contrasted to unibody) is the original skateboard. All the bits that make the car go and stop are on the frame/skateboard. All of the bits that the driver and passengers (and load for a truck) interact with are on the body. Marry the two somewhere well down the assembly line.
Let me add an article I found about the Lightning that talks a little about the commonalities between it and the standard F150.
I think one of the key points is at the end of the article:
Anyway, I mention all of this because engineering is literally the art of compromising. And when I look at the Ford F-150 Lightning, all I can see is brilliant engineering from a company that can’t seem to miss right now. The few compromises I just mentioned were clearly, without question, the right ones to make in order to share enough components to allow Ford to build the first mainstream full-size electric truck in U.S. history quickly, in a price range that appeals to consumers, and in a way that should maximize quality (since many of the components have already been vetted) — and also to execute it all well. And Ford has. This truck is quick, it rides great, its EPA-rated range is solid, it’s unbelievably quiet, and above all — it’s familiar.
I think Ford has answered your question about why legacy car makers don’t just make ICE cars and EV models on the same assembly line. Look at all the features they (wisely) put into the F150 Lightning that make it significantly different than the ICE F150. Look where they put the battery. Look at all the nice frunk features. That’s why they can’t just put the battery/motor where the gas engine used to go.
Sticking a typical BEV battery in the place of an ICE powertrain would result in a big problem with weight distribution. BEV batteries weigh a lot more than ICE powertrains.
You can. Ford built the Focus as a BEV after already producing it as an ICE. It was a disaster because of the compromises they made. I made suggestions how to do it better, but the program didn’t want to spend the money. Sales were abysmal, performance just as bad as the sales. There are all sorts of things that CAN be done… doesn’t mean they make sense. Like these hybrid airplanes/cars or boat/cars. They do neither thing well.
Is it POSSIBLE to do a good job designing a vehicle as both either ICE or BEV? Depends on the compromises you are willing to make. Hybrids are designed like that, but have just a token EV range. I can envision a way to design a hybrid with long EV range… but I’m not sure anybody would want to do that. I’m not a big fan of hybrids… it adds a LOT of complexity.
That’s actually a pretty good example of a design that works for both ICE and BEV. The body on frame approach is similar to the skateboard design and can accommodate a BEV approach with relatively minor effort. Most other vehicles on the road use a unibody design that would require massive redesign to accommodate a large battery pack.
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
Toyota certainly can build an EV the way you describe. Problem is that it probably wouldn’t be cost or performance competitive with Tesla. Tesla designed an EV from the ground up and also designed a manufacturing process optimized for that EV. Both are bound to be better than an EV based on a modified ICE system.
There are rumors that Toyota is thinking about a dedicated EV design, which is estimated would take five years.
> Toyota is working with suppliers and considering factory innovations to bring down costs like Tesla’s Giga Press, a massive casting machine that has streamlined work in Tesla plants…One area under review is a more comprehensive approach to an EV’s thermal management…that Tesla has already mobilised…This could allow Toyota to reduce the size and weight of an EV battery pack and cut costs by thousands of dollars per vehicle,…The recognition within Toyota, the world’s biggest automaker, that Tesla has set a new benchmark for EV manufacturing costs marks a major reversal.
So just to clarify, I think it will take substantial time and cost for Toyota to mass produce an EV that is performance and cost competitive with Tesla. Tesla is doing to Toyota with EVs what Toyota did to GM with compacts back in the 1980s.
Tesla is in the luxury/performance end of the market. It wouldn’t make sense to go head to head with Tesla there. Makes more sense to look down market, something more like a Corolla or Camry. Less power, allowing a smaller battery, both of which save costs.
I’ve already responded to this once, but now comes confirmation:
“When it comes to digitalization, electrifica-tion and connectivity, I personally feel that I belong to the older generation,” said Mr. Toyoda, 66 years old, in announcing that 53-year-old engineer Koji Sato would take over as president and CEO in April, while Mr. Toyoda would become chairman. “For me to take a step back is important.”
It’s a good story detailing his go-slow thinking, and why he now realizes it’s time to step up, and quickly. It also goes into the mechanics of developing a new platform for EVs so they can share costs and keep a lid on pricing.
Even before Toyota’s first change at the top in 13 years, it was weighing some changes to its EV strategy behind the scenes. The company has been studying rivals including Tesla Inc., according to people at Toyota, and considering bigger upfront invest-ment in its EV technology and manufacturing capa-bilities.
I don’t subscribe to the WSJ, but I’ll take your word for it. It’ll be interesting to see what happens. I saw somewhere else at the Fool that Toyota plans that new platform to be introduced in 2027/2028. That sounds like they’re moving super slow, but in actuality it isn’t easy or quick to come out with a new vehicle. Nevertheless, it seems like they’re going to continue to be pretty far behind for quite a while.
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
Indeed. But it’s also worth noting that they’ve done so pretty successfully. Despite their delay in investing those billions, they’re now only about 20 months or so behind Tesla (in BEV’s, that is - VW group sold about 20% more BEV cars through November 2022 than Tesla had through November 2020, to say nothing of several hundred thousand hybrids).
It will take Toyota (and Honda) a lot of investment to catch up to the rest of the world. Fortunately for Toyota, they’ve got a ton of cash on hand (and many billions of earnings) - so they’ve got the resources to do so, if they choose.
BTW, Toyota (and Honda) are excellent cautionary examples of the potential downsides of governmental industrial policy. Japan has been a strong proponent of hydrogen as the alt-fuel of the future, rather than electrons. That’s a major reason why its domestic automakers have been sluggish on EV’s (and why Japan has such a minimal EV market for any automaker, Tesla included) - the government just backed a different “horse” in the alt-fuel race.