Toyota Faces Setbacks on Its EV Quest

On December 6^th, the Japanese giant revealed it is building a $1.3 billion battery plant in the US, more precisely, North Carolina. Toyota Motor Corporation TM is doing its best to make up for lost time, but its newest production stoppages caused by supply chain disruptions are putting it at even greater disadvantage.

Rivals are going full speed ahead

Tesla Inc TSLA might have had a couple of rough days, but its valuation remains above $1 trillion. Over the past 12 months, its sales have skyrocketed 87%. But most importantly, it owns the first-mover's advantage that's tough to beat.  Even Ford Motor F is accelerating faster, surpassed 150,000 orders for its soon-to-be-released F-150 Lightning pickup truck and it's confident it can go at it alone as it cut its ties with Rivian RIVN. Its CEO Jim Farley recently tweeted that Ford's EV output will double by the end of 2023 compared to its original plan, or about 600,000 per year, and that is even before its Blue Oval City and other EV sites come into play. With even electric pickups hitting the road in 2022 equipped with ground-breaking technologies such as TerraVis solar fusion by Worksport Ltd WKSP, the race is bound to get even more intense.

Production halts aren't helping

On Friday, the Japanese giant extended production stoppages at some of its factories in Japan due to a component shortage. The latest setback that is the result of supply chain disruptions in Southeast Asia will result in 9,000 vehicles lost in addition 3,500 announced already on Thursday when the company revealed it will halt production at two factories, impacting the production of Lexus models and its four-wheel-drive Land Cruiser. These halts mean that Toyota cannot return to normal operations in December as it hoped to make up for the production lost due to supply-chain disruptions in Vietnam and Malaysia.

But the world's biggest car producer by volume isn't giving up on its annual production target of 9 million vehicles for the financial year ending on March 31^st.

Regaining the green brand status

The truth of the matter is that Toyota didn't come far since making a revolutionary move with Prius' U.S. debut in 2000 which was the first in line to protect our planet for future generations.  The company that once produced the benchmark in environmentally friendly automobiles ended up meeting its CO2 emission standards in 2020 model year with credits accumulated from past years.

In 2019, it even joined carmakers such as General Motors GM to support the Trump administration's efforts to roll back President Obama's clean car emission requirements. This January, Toyota received the largest civil penalty ever amounting to $180 million for a decade of knowingly breaching federal clean air emission reporting requirements.

In November, Toyota succumbed to pressures of environment, scientific activity that threaten to boycott its dealerships unless it changes course. It abandoned the side of GM and ten other automakers, including Ford, and pledged to phase out fossil fuel vehicles by 2040. But in September, it still lobbied against Biden Administration's proposal which directs billions to development of battery-powered vehicles and their related infrastructure like charging stations.

Toyota's history shows it is capable of delivering big things

By focusing existing hybrid technology, Toyota missed a major opportunity to develop its own new battery-electric vehicle technology. But, if the Japanese giant is capable of anything, it is of pulling off big things. On December 3rd in Brussels, for example, it finally outlined a plan for a 100% carbon dioxide reduction in all new vehicle sales by 2035. But the fact is that this move was largely prompted by European Union policies and regulations as without such changes, Toyota would no longer be able to sell its cars to the world's third largest market. But it does not even have a single zero-emission battery-powered vehicle in its biggest market, which is North America.

Despite its many missteps, Toyota has what it takes to regain its clean energy status. With its recently announced $3.4 billion investment in batteries in the U.S, the world's largest automaker can do for BEVs what it did for hybrids with the Prius. It is also working on next generation batteries with Panasonic and is the only major OEM to have road tested them in their IQ prototype.

The giant remains behind

Toyota's EV plans are ambitious but it has entered the race maybe too late. It won't start producing batteries until 2025. Moreover, we won't get to see its all-electric bZ4X sport-utility vehicle (SUV) it revealed in June nor its future lineup of 15 dedicated BEVs before then either.

With four years before its EV models appear in dealerships near you, excluding the possibility of production delays or other challenges on the way, the Japanese automaker remains well behind its competitors despite all its strengths.

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