Toyota, the world’s top-selling carmaker, has announced its plans to intensify the development of electric vehicle (EV) technology in China to stay competitive in the largest auto market globally. The move comes as foreign automakers face mounting challenges in China due to the rapid rise of local competitors and aggressive pricing strategies.
In response to the evolving market dynamics, Toyota has been actively pivoting towards electric vehicles, recently unveiling an ambitious EV strategy that involves revamping its supply chain and focusing on long-range batteries. The company now aims to strengthen powertrain development in collaboration with suppliers Denso and Aisin. Additionally, Toyota will focus on designing and developing smart cockpits tailored to meet the specific needs of Chinese consumers.
Toyota’s electrification approach includes the development of hybrid and plug-in hybrid vehicles. The company believes that these different types of electrified cars are better suited for markets that may not be fully prepared for an exclusive transition to battery electrics. Furthermore, Toyota continues to invest in the development of hydrogen fuel-cell cars, presenting a “multi-pathway” strategy to cater to diverse market demands.
To ensure successful implementation, Toyota will leverage its joint ventures in China, collaborating with FAW Group, Guangzhou Automobile Group (GAC), and BYD. Engineers from these partnerships will work together at Toyota’s major research and development facility in China, focusing on electrification and intelligence projects.
As part of its efforts to boost competitiveness, Toyota aims to significantly reduce manufacturing costs, including the development of a local supplier base. The automaker acknowledges the challenges it has faced in China, with sales, including its luxury brand Lexus, slipping by 2.8 percent in the first half of the year. To optimize its EV production, Toyota has already taken measures such as slowing production at a joint-venture plant that manufactures its bZ4X EV and reducing the workforce by laying off 1,000 contract workers.
This intensified push towards electric technology development in China is part of a broader trend among global automakers. Rivals such as BMW have recently increased investment in product development in China, with a new research and development hub in Shanghai dedicated to EV development for the global market. Similarly, Volkswagen has unveiled partnerships with Chinese companies to co-develop new models and software tailored for the Chinese market.
With the competitive landscape rapidly evolving, Toyota’s strategic focus on electric vehicle technology development in China aims to position the company as a major player in the burgeoning electric vehicle market while catering to the diverse preferences and demands of Chinese consumers.