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A common public refrain among Tesla fans and shareholders is that “dinosaur legacy automakers’ are intentionally slowing down the development of electric vehicles, most likely because they are in cahoots with “big oil.” In the privacy of their detached 2-garage homes, the song turns into an evening prayer for that the OEMs will keep on sleeping, such as not to trample on the nascent demand for electric cars. The prayers have not been heard. Today, Toyota, the world’s (currently) largest automaker, declared its full support for battery-electric vehicles, and this after the other two of the top three automakers, Volkswagen and the Renault-Nissan-Mitsubishi Alliance, have long thrown their considerable industrial might behind electric cars.
The big story of today is not just that Toyota, a company widely suspected of harboring anti-battery tendencies, is going full-bore BEV. The much bigger story is that Toyota is bringing three additional automakers to the electric party: Subaru, Suzuki, and Mazda (the latter not yet officially, but I have it on – see below – excellent authority that Mazda will be next on board.) Convinced by Toyota to join a coalition that shares common platforms, technologies, batteries and not to forget goals, Subaru, Suzuki, and Mazda add the production and sales power of roundabout six million vehicles produced and sold annually and globally to Toyota’s ten million, making it by far the largest block of companies to join the electric fray.
Before we go into details, here are the bullets I took for you during (and after) a press conference today in Toyota’s Megaweb in Tokyo:
- In addition to a BEV-cooperation with Subaru announced yesterday, Toyota did let slip today that its minivehicle-car arm Daihatsu will develop compact EVs together with kei-car giant Suzuki.
- After the meeting, I asked Toyota’s President of Advanced Technologies Development, the affable Shigeki Terashi, what happened to Mazda after a technology-partnership with Toyota was announced in 2015, and doesn’t a company deeply committed to extending the life of the ICE need electric assistance the most? A grinning Terashi replied: “Along with other topics, we have discussed EVs with Mazda for a few years already. Today, I did not reveal all the projects we are working on right now, and Mazda is one of them.”
- Toyota and its partners will make and sell the whole battery-powered spectrum, from electric scooters to full-sized BEV SUVs. Some of them will be available as early as next year.
- Most EVs will be based on a newly developed BEV-platform, called “e-TNGA,” an electric cousin of the modular “Toyota New Generation Architecture” underpinning Toyota’s latest and future models.
- First BEVs will be launched onto the Chinese market in 2020, and then onto the world.
- The U.S. market will likely get an electric Lexus, and/or a Toyota-branded electric sports car.
- The Japanese market will, in 2020, get an “ultra-compact 2seater” dubbed iRide.
- Also in 2020, Toyota will finally sell in Japan its leaning 3-wheeler, called i-Road, and test-driven by yours truly four long years ago.
- Also, there will be an iWalk, something that looks like the product of a fling between a Segway and a Bird scooter.
- As the obligatory nod to Japan’s ageing population, there will be a BEV wheelchair.
- Toyota hopes to announce and show its long-awaited solid-state battery next year, coinciding with the Tokyo Olympics. The revolutionary power cell that promises to shorten charge times and lengthen range will be produced in a big joint-venture with Panasonic.
- Toyota and its partners will need so many batteries that they signed a total of four additional battery suppliers: China’s CATL, China’s BYD, together with Japanese GS Yuasa and Toshiba. Together with Toyota’s existing Primearth EV battery venture and the new JV with Panasonic, this reflects the world’s biggest block of battery suppliers of tera-sized proportions (a tera is roughly a thousand giga.)
- Reflecting “BEV sales much higher than our original expectations” (Terashi) Toyota cut five years from its 2017 master plan that wanted to achieve annual global sales of 5.5 million electric and electrified vehicles by 2030. Toyota now wants to to get to this goal five years earlier by 2025.
Tesla-fans, analysts, investors, and influencers, take careful note: The 5.5 million vehicles consist of 4.5 million hybrid and plug-in hybrid vehicles, along with 1 million of the battery-electric and fuel-cell variety. By 2025, Toyota’s most ardent hydrogen-devotees won’t expect anything approaching volume. For all intents and purposes, Toyota now thinks that after the herculean act of lining up the world’s most powerful army of battery-makers, and after launching six or more BEV models of different sizes, it might be able to sell a million BEVs by 2025.
Isn’t that a tad pessimistic, you may say? After all, didn’t Elon Musk originally promise to sell a million Teslas by next year, a plan recently modified to putting a million Tesla robotaxis on the road by 2020?
No, Toyota simply is realistic. Toyota never is a friend of outsized projections. When it sets a goal, it usually reaches it. This time however, the goal comes with qualifications.
The plan rests on the assumption that half of the million BEVs will be sold in China, and the other half mostly in Europe and the U.S. In the spirit of proportional representation, half of the journos in the room were flown-in Chinese. Half a million BEVs in China is easier said than done. Last year, Toyota sold roughly 1.5 million units in China. One third of that would be BEVs, would total China sales stay the same.
The plan also banks on regulations getting tougher. “Without new regulations, we will not meet the one million units,” Terashi said. “It will be fewer than a million.”
If it’s less than a million, then not because Toyota is unable or unwilling to produce the BEVs. “We will have all sorts of vehicles ready that can satisfy various regulations,” Terashi promised. “However, the final decision will be up to the customer. If the customer is willing to buy more vehicles, we will make them. If not, we won’t.”
To everybody’s surprise, Toyota even gave a peek at the future models, and lined them up in the back of the room. “Normally, clay models made for internal studies are not made public, but we’d like you to know the progress we’ve made,” said Terashi. Toyota even made its Chief Designer Simon Humphries available, who expressed his love for EVs, because they offer a much longer wheelbase and the big tires designers adore. He also expressed his designer-disdain for “the autonomous stuff they are putting on cars around the worlds, those big radar and lidar things, that’s got to go.”
Tesla-fans, analysts, investors, and influencers, further take note that Toyota isn’t fully convinced that the electric cars will be making money. In the past, Toyota suppressed its excitement about BEVs, not because of some powertrain ideology, simply because it did not believe that BEVs would be profitable. “Now, there is a bit more visibility,” Terashi said. “Energy density is higher, price per unit has come down. Still, compared to conventional vehicles, it still is tough to achieve a profitable business with BEVs.”
Looking at Tesla’s balance sheet, you get what Terashi is talking about. OEMs are in a better position than Tesla, because they can finance the battery-electric foray from ICE sales. Terashi has a warning for friends of pure BEV plays: “If all you want is building and selling BEVs, you will not assure a viable business.”
Toyota’s BEV-business model is a complex animal, consisting of leases and sales, sales of used vehicles, re-use and recycling of batteries and a whole host of ancillary services. “Even with that, we can’t be totally sure that the business will be viable,” Terashi warned again.
An integral part of the plan is that Toyota wants to be a systems supplier for electric vehicles, something Toyota keeps repeating at every occasion. As an early example for its systems business, Terashi cited the sale of the electric powertrain of Toyota’s short-lived EQ (later rebadged as the Aston Martying Cygnet) to Singulato, a Chinese brand of high-end EVs developed by Chi Che-hung Technology Co. Reuters wrote that as part of the deal, “Toyota will have preferential rights to purchase green-car credits that Singulato will generate under China’s new quota system for all-electric and plug-in hybrid vehicles.” It’s complicated.
Cooperation with other business partners may even morph from system sales, or buying batteries, to going into business together, Toyota’s battery business boss Keiji Kaita told me after the press conference, cautioning that “at this juncture, equity investments remain limited to the agreement with Panasonic.”
Tesla-fans, analysts, investors, and influencers, one more time take note that the battery-electric 18-wheeler, if it ever comes, may not deliver the big profits. Toyota’s heavy truck and bus division Hino makes “hardly any profit,” Terashi told me. He explained that Hino’s money is made not by selling trucks and buses, but by supplying its customers with its “Total Support” package after the sale. Toyota hopes to apply the same model to its BEVs, to enhance the currently somewhat shaky profitability of the segment.
Further in the discussion, Terashi more and more distanced himself from the million unit target, claiming it was inventend by The Nikkei. When a Nikkei asked for more detail on the million BEV plan, he got upbraided for “asking questions to support a story that was written the night before,” and when another reporter asked Terashi how confident he would be to reach the goal, the Toyota board member recommended to “ask the Nikkei.”
Terashi’s confidence was at an all-time high again when we asked him about the solid state battery. Originally, the revolutionary battery wasn’t believed to escape the lab and into production before the mid-2020’s, if ever. Throughout the day, Terashi needled his battery-boss to accelerate the project. Finally, Keiji Keita surrendered, saying that “if possible by the time of the Olympics next year, we would like to make sure that solid state batteries can be unveiled to the public.”
His boss still wouldn’t let him off the hook. Asked whether Toyota will supply its future solid state batteries to other companies, Terashi answered that “if Kaita-san is willing to expeditiously produce the solid state battery, then that would be no problem for us.” It wouldn’t be fair, said Terashi, if Toyota keeps the solid-state battery all to itself. However, he warned that the lithium-ion battery keeps improving, and that initial batches of the solid state battery “may not be cheaper that lithium-ion,” but hopefully, it will find customers willing to pay extra for the performance and convenience brought by the longer-lasting and quicker-charging solid-state variety.
“Pioneering products rarely come cheap,” Terashi said.
