The review was triggered in part by the realisation by some Toyota engineers and executives that Toyota was losing the factory cost war to Tesla Inc. on EVs, the sources said.
Tesla as benchmark?
Toyota’s planning had assumed demand for EVs would not take off for several decades, the four people said.
Toyota designed e-TNGA so that EVs could be produced on the same assembly line with gasoline cars and hybrids. That made sense based on the assumption Toyota would need to sell about 3.5 million EVs a year – roughly one-third of its current global volume – by 2030 to stay competitive, the sources said.
But sales of EVs are growing faster. Automakers globally now forecast plans for EVs to represent more than half of total vehicle production by 2030, part of a wave of industry-wide investment that now totals $1.2 trillion.
The person leading Toyota’s EV review is Shigeki Terashi, former chief competitive officer, according to six people with knowledge of the work, including two people close to Toyota. Terashi did not respond to a request for comment.
Terashi’s team has been designated a “BR” or “business revolution” group within Toyota, a term used for major changes including a revamp of its development and production processes two decades ago.
“What’s driving Mr Terashi’s effort is the EV’s faster-than-anticipated takeoff and rapid-fire adoptions of cutting-edge innovations by Tesla and others,” one of the people said.
All six people declined to be named because of the confidential nature of the plans.
Terashi’s team is considering an option to prolong e-TNGA’s usefulness by coupling it with new tecnnologies, three of the sources said.
Terashi could also propose to retire e-TNGA more quickly and opt for an EV-dedicated platform engineered from the ground up. That could take roughly five years for new models, two of the sources said. “There is little time to waste,” said one.
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 – combining, for example, passenger air conditioning and electric powertrain temperature control – that Tesla has already mobilized, the sources said.
This could allow Toyota to reduce the size and weight of an EV battery pack and cut costs by thousands of dollars per vehicle, making it a “top priority” for Toyota suppliers Denso and Aisin, one of the sources familiar with the matter said. Denso and Aisin had no immediate comment.
The recognition within Toyota, the world’s biggest automaker, that Tesla has set a new benchmark for EV manufacturing costs marks a major reversal.
A decade ago when Toyota took a stake in Tesla and the two collaborated to produce a battery-electric version of the RAV4, many Toyota engineers believed Tesla’s technology was no threat, two of the sources said.
“They concluded back then there wasn’t much to learn,” one of the sources said.
Toyota discontinued the electric RAV4 in 2014 and sold its stake in Tesla in 2017.
By 2018, when Toyota finally set up a dedicated zero-emissions division and began building an e-platform, Tesla already had three models on the road.
