As Japanese automakers fall behind in the surging Chinese EV market, Toyota looks to turn things around. Toyota announced Monday it will boost local development of tech and software in China to produce “electrified vehicles that are competitive” where EVs are taking over the market.
Toyota boosts local EV development in China
A market once dominated by foreign automakers like Toyota and Volkswagen, China is now seeing an unprecedented surge in domestically built EVs.
On top of this, price cuts from the nation’s top EV makers, like BYD and Tesla, continue putting more pressure on other automakers.
To catch up, Toyota’s new plans call for accelerating local design and development of smart cockpits to enhance the driving experience with modern interior designs and built-in AI, something buyers in China are gravitating toward.
Toyota is also working with its top suppliers, Denso and Aisin, to speed up electric powertrain development.
The move comes after a report from Reuters claimed Toyota’s joint venture in the region with China’s GAC was laying off workers last week.
Toyota also plans to significantly reduce manufacturing costs through three initiatives. These include developing a local supplier base, reviewing parts designs, and reforming production and manufacturing to regain competitiveness.
CEO of Toyota China, Tatsuro Ueda, commented on the situation, saying:
The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China. By promoting local development with IEM by TOYOTA at its core, we will attempt to develop and provide competitive products that can satisfy Chinese customers at a fast pace.
Meanwhile, the automaker is sticking to its “multi-pathway” approach, which includes EVs, PHEVs, HEV, and FCEVs.
Electric vehicle urgency reaches Japan
Newly elected CEO Koji Sato stated during an interview after taking over in April, “We need to increase our speed and efforts to firmly meet the customer expectations in the Chinese market.”
Toyota already slashed prices on its first electric SUV in the region, the bZ4X, earlier this year. On top of this, the automaker issued a recall (over 12K units) for its first electric sedan, the BYD-powered bZ3, over defective door handles.
The automaker has already revealed plans to advance new EV technologies, including Giga casting to reduce manufacturing complexity, self-propelled production lines, hypersonic rocket tech to enhance efficiency, and next-gen batteries that will boost range while cutting costs.
Toyota plans to have engineers from its three joint ventures in China, BYD, FAW, and GAC, work on a “Toyota-led development project.”
Electrek’s Take
Japanese automakers, who have been slow to adopt purely electric vehicles, are falling behind in the world’s largest EV market, and it’s starting to take its toll.
Mitsubishi was the first Japanese EV maker to fall in China, announcing plans to suspend operations in the region indefinitely earlier this month. A company memo stated, “In the past few months, management and shareholders have tried to the best of our ability, but due to market conditions and with great reluctance and regret, we must seize the opportunity to transition to new energy vehicles.”
Mitsubishi, like Toyota, cited China’s transition from ICE to electric as reasoning. Mitsubishi’s sales have fallen from a peak of 134,500 in 2019 to only 34,500 this past year.
Other Japanese automakers are also seeing sales fall in the region, including Honda, Nissan, and Mazda.
Toyota’s sales in China fell 2.8% in the first half of the year, including a 12.8% drop in June. And it’s not only happening to automakers in Japan. They are just seeing some of the most drastic impacts. Other foreign automakers are also feeling the heat in China’s booming EV market.
Volkswagen has accelerated its EV efforts in the region, partnering with Xpeng Motors (through Audi) to use its tech platform, ADAs, and connectivity software to develop two new models.
Meanwhile, China’s EV market continues to get bigger, and domestic automakers like BYD, NIO, XPeng, Li Auto, and others are gaining their share.