Toyota Motor Corp. shares jumped this week after the world’s largest automaker outlined an ambitious plan for a new generation of electric vehicles that could challenge Tesla and BYD’s dominance.
The new strategy is the output of a year-long review during which senior executives came to grips with the fact that Tesla, not Toyota, is now setting the pace for vehicle and manufacturing technology.
Toyota’s bet hinges on what the company said are breakthroughs in solid-state EV battery technology. Solid-state batteries hold the promise of longer driving range and less risk of fire. But experts have said solid-state batteries were difficult to manufacture at auto industry scale.
Toyota now says it has achieved breakthroughs that should allow it to launch vehicles with solid-state batteries by 2027 or 2028.
The company that invented lean production also said it is rethinking its way of building cars – a response to the challenge from Tesla which has zoomed past Toyota in EV manufacturing efficiency. Toyota will join the ranks of automakers following Tesla’s lead in using large “giga-castings” to build one-piece chunks of vehicles.
Toyota CEO Koji Sato unveiled the new strategy one day before the automaker’s annual shareholder meeting, where investors were expected to pummel him and Chairman Akio Toyoda for dragging their heels on EVs.
Chalk up one victory for the new approach: Investors endorsed the new plan, and voted down a proposal to require more disclosure of the company’s lobbying on climate regulation.
Now, Sato and Toyota executives have to deliver, and fight not to lose too much more ground in the three years it will take for the first vehicles born of this new strategy to arrive in showrooms.
Inflation villains: Used cars and auto insurance
Used cars and vehicle insurance rates are among the pricey goods and services propping up the U.S. economy’s stubbornly sticky “core” inflation rate, according to the Labor Department and Reuters colleague Lucia Mutikani.
Used car prices bounced up 4.4 percent in May compared with April, the U.S. Labor Department reported. New car prices, however, declined 0.1 percent during the same time. New vehicle inventories are growing as supply chain bottlenecks unclench. But affordable used vehicles are in comparatively short supply – reflecting the production cuts over the past 2-3 years.
The Labor Department called out used cars in a list of goods or services propelling the “core” inflation rate – which excludes gasoline and food.
(Cox Automotive’s Manheim Used Vehicle Value index which measures wholesale used car prices showed a 2.7 percent decline for May vs. April, which may mean relief for retail prices is on the way.)
Auto insurance – up 2 percent – was another culprit keeping the core inflation rate high.
Any U.S. motorist who’s renewed auto insurance can attest that rates are going up – and a new study by market researchers at J.D. Power confirms the trend, finding that auto coverage rates have risen an average of 15.5 percent.
One reason for the surge is that auto insurers have suffered 12 cents in losses for every dollar of premium revenue – the worst loss ratio on policies in 20 years, said J.D. Power’s Mark Garrett.
Power found that more motorists are trying to cut premiums by opting in to “user based insurance” plans to use a monitor to transmit markers of driver behavior to the insurance company.
Joe White is the global auto industry correspondent for Reuters.