Toyota Wants to Overhaul Factories to Match Tesla’s Playbook: Report

Image: Toyota

Toyota is reportedly considering an overhaul of its factory floor as it moves towards a new platform for battery electric vehicles.

Sources familiar with the matter say that the automaker has been conducting a review of its electric-car strategy for the past year, and may confirm the new EV architecture at a briefing on Friday by new CEO Koji Sato, reports Reuters.

While it is not immediately clear whether the plan has been formally approved, Toyota is said to recognize the need to match Tesla’s design and manufacturing innovations to drive down production costs and turn its all-electric business into a higher-margin one. A new EV platform, if implemented, would bring Toyota in line with other global rivals.

The e-TNGA system, Toyota’s current production architecture, was launched in 2019 and produces electric vehicles on the same assembly line as gasoline cars and hybrids. However, it cannot provide the cost savings that Tesla has achieved with its massive Giga Press casting machines and other manufacturing innovations. A new EV platform would be the result of a far-reaching review of Toyota’s electric-car strategy undertaken last year.

Sato recently attended an internal presentation focused on the need for a dedicated battery-electric platform, according to one of the sources, that said Toyota needed a dedicated battery-electric platform, a better system to manage heat from batteries and also other innovations inspired from Tesla, said the people.

The presentation was given by Shigeki Terashi, former chief competitive officer tasked with the EV strategy review. Several projects that were supposed to take advantage of the e-TNGA platform are now being delayed or cancelled, another source said.

In his briefing on Friday, Sato is also expected to lay out a strategy that emphasizes “diverse powertrains,” with gasoline hybrids remaining key to Toyota’s business even as it ramps up EVs.

Some of Toyota’s suppliers have also privately expressed concern about its slow embrace of EVs, and some have reportedly been looking at increasing business with other manufacturers to hedge their risk. However, this could change depending on Toyota’s strategy, according to an executive at a Toyota supplier who declined to be identified.

Tesla has a giant head start in the EV game and Toyota is only just waking up now. Tesla made nearly eight times the profit per car compared to Toyota in Q3, in part due to the manufacturing innovations from Elon Musk’s team. Toyota’s first all-battery EV, the bZ4X, suffered an early recall over wheels potentially falling off, and so far has seen very limited sales.