The global leader in terms of vehicle sales, Toyota Motor Corp recently announced that it would ramp up its electric vehicle (EV) focus. As it seeks to play catch up with rival automakers like Tesla and Volkswagen in a booming market – global EV sales surpassed the 10.5 million mark in 2022 and are expected to comprise more than 50% of new vehicle production by 2030 – the Japanese automaker announced that it would target annual sales of 1.5 million EVs a year by 2026. Crucial to this will be the launch of 10 new battery EVs (BEVs) and the setting up of a division dedicated to EVs. This strategy acknowledges that while Toyota’s championing of hybrids led by its Prius will continue to be a vital element of its overall electrification plans, BEV development will receive strong impetus.
To learn more, please access our reports, Global Electric Vehicles Outlook, Voice of the Customer: Electric Vehicle & Powertrain Services and Features, 2022 and Global Electric Vehicle Battery Manufacturer Profiles and Growth Opportunities, or contact [email protected] for information on a private briefing.
Our Perspective
The EV segment was the bright spark in a relatively dull global automotive market in 2022. After a solid performance in 2021, total car sales fell to around 75 million, rattled by inflationary pressures and parts shortages. Barring China, passenger vehicle sales in key markets like the US and EU showed downward trends.
Within the passenger vehicle market, EVs demonstrated another strong showing spurred by rising fuel prices and policy stimulus. The International Energy Agency (IEA) estimated that one in every seven passenger cars sold last year was an EV.
The EV market is currently dominated by BEVs. Improvements in battery technologies are further spurring uptake, with BEVs accounting for over 70% of sales in 2022, with plug-in hybrid EVs (PHEVs) and fuel cell EVs (FCEVs) accounting for the remainder.
Toyota has been bullish on hydrogen technology to power its fuel cell EVs (FCEVs). Hydrogen has long been considered a promising, green alternative to traditional fossil fuel energy sources. In vehicles, it offers the attributes of rapid refueling and high energy storage density. The latest iteration of the Toyota Mirai sedan, for instance, uses a second-generation, hydrogen-powered fuel cell system.
However, commercialization – whether in terms of production or infrastructure – still remains in the nascent phase. There are also looming question marks over availability and production. The latter is particularly prickly since hydrogen production is associated with massive energy consumption.
Meanwhile, rapid progress in battery technology has meant that range anxiety and lengthy charging times are no longer an issue for most consumers. In addition, expanded charging networks and efforts to harmonize charging standards are facilitating BEV adoption.
In the US market, Toyota has been struggling with falling sales as consumers shift to EVs. In 2022, one in every ten cars purchased in the US was an EV. To tap into this surging demand, the Japanese automaker has focused on capacity expansion, upping its already sizeable investments in its North Carolina battery plant. The plant is slated to manufacture batteries both for full EVs and for hybrids like the Prius. Beginning with conventional lithium-ion batteries, the plant is expected to expand its focus over time to include solid-state battery technology.
Toyota’s BEV aspirations were hit by the global recall in June 2022 of its first mass-produced full EV – the bZ4X electric SUV from its highly touted ‘beyond Zero’ (bZ) brand. Production of the bZ4X, pitched as a competitor to the Tesla Model Y and the Volkswgen ID4, resumed in October 2022, once safety issues were addressed.
Today, the company has over 18 hybrid models and only three BEVs. In the domestic Japanese market, HEVs like the Prius continue to dominate. While Toyota has stated that it plans to continue offering a wide model portfolio with varied powertrain technologies to cater to different markets and customer groups, what is clear is that it will need to step up the pace on BEVs.
If it is any indication of the seriousness of its intent, Toyota’s luxury brand Lexus aims to be 100% battery electric by 2030 in western Europe, North America and China, and globally by 2035. The automaker has already declared plans to have a 30 BEV model lineup in its portfolio and realize annual sales of about 3.5 million BEVs, globally, by 2030.
