Toyota Wants To Be 'Competitive' In China By Committing To R&D For Its Local EVs

On Monday, Toyota announced that it will further strengthen its local development of intelligent and electrification technologies to provide Chinese customers with satisfactory and competitive electrified products.

 

Toyota revealed its largest research and development base in China, "Toyota Motor Engineering & Manufacturing (China) Co., Ltd.," will be officially renamed "Toyota Intelligent Electric Mobility R&D Center by Toyota (China)Co., Ltd.", starting from August 1st, and a series of changes will revolve around "IEM by TOYOTA".

 

Besides changing the name, the IEM will also include the participation of engineers from Toyota's three joint ventures in China: FAW Toyota, GAC Toyota, and BYD Toyota Electric Vehicle Technology Co., Ltd., a joint venture between Toyota and BYD. These engineers will jointly research and develop projects led by IEM by TOYOTA.

 

In addition, Toyota's core component suppliers, DENSO Corporation, and Aisin Seiki Co., Ltd., will also be involved in IEM by TOYOTA's research activities to accelerate the development of electrified powertrains.

 

Along with research and development, Toyota stated it will reshape itself from research and development to the supply chain to make breakthroughs in the Chinese new energy market, as the Japanese automaker will also focus on "expanding local suppliers," "improving the component design," and "reforming production technology and manufacturing processes" to achieve significant cost reductions in manufacturing.

 

In the first half of this year, Toyota's global sales increased by 5.1% year on year, reaching approximately 4.9376 million vehicles. The U.S. market accounted for over one million units, and the Japanese market achieved a 33.2% year-on-year growth, totaling 878,200 vehicles.

 

However, Toyota experienced a sales decline in the Chinese market. In the first half of the year, it sold approximately 879,400 vehicles in China, a decrease of 2.8% compared to the previous year. The sales of its most crucial joint venture in China, GAC Toyota, also dropped by 9.48% to about 452,800 units. This has intensified Toyota's sense of crisis and compelled the company to undertake further transformative measures.

 

Toyota's strength lies in its conventional fuel and hybrid vehicles. As of June, the majority of its global sales came from conventional fuel vehicles, with approximately 376,000 units being hybrid vehicles. Pure electric vehicles, including the Lexus brand, accounted for only 10,191 units globally in June, with about half of them sold in the Chinese market.

 

Most people believe it is exactly Toyota's overreliance on conventional fuel and hybrid vehicles in the past that has hindered its decisive transition to electrification and resulted in its current struggles in competing with E.V. makers like Tesla.

 

However, right now, Toyota finally realized its past mistakes and the company’s President Akio Toyoda acknowledged the need to change the past preference for engine-driven models, especially in the Chinese new energy market.

 

Tetsuro Ueda, President of Toyota China, also admitted that the Chinese automotive market is growing at an unprecedented rate, and Toyota is fully committed to the Chinese market. "Toyota will work together as a group to reform how we work & think to survive in China," said Ueda.