Toyota Has A Plan To Future-Proof Itself

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And it doesn't bode well for Elon Musk.

It was always kind of strange that Toyota, the car company arguably responsible for normalizing green cars when it put the Prius on the market almost two decades ago, has never built a mass-market EV. The Prius, and Toyota’s vast hybrid lineup in general, are proof that the automaker already has mastery over electric drivetrains and battery technology. But it’s sat seemingly idle, working on hydrogen fuel-cell powertrains that have yet to become practical, while competitors like Nissan cater to EV buyers with the Leaf.

But no more. Toyota now fully acknowledges that electric is the way of the future, which is one of the reasons why it recently announced a partnership with Subaru to work on EV platforms. And thanks to what Toyota’s Executive Vice President Shigeki Terashi told attendees at a recent briefing, we now know that the partnership is only the start of something bigger.

That briefing was the venue Terashi used to tell the world that Toyota is planning to net half of its global sales from electrified vehicles by 2025, which is five years ahead of the automaker’s original plan. But of course, the company faces two big hurdles when it comes to meeting that goal. The first is finding a battery supply.

"We consider ourselves as a maker of electric vehicle batteries, going back to when we developed the battery for the Prius,” said Terashi. "But there may be a gap between the amount of batteries we can produce, and the amount of batteries we may need.” In order to close that gap, Toyota will turn to two battery suppliers, China’s Contemporary Amperex Technology Co (CATL) as well as the EV company BYD. Toyota’s EV ventures are in good hands since CATL already supplies Honda, Nissan, and Volvo with batteries.

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Even with supply sorted out, however, Toyota still has to find a way to spur EV demand in order to reach its target. In order to help, Toyota could pair its future EVs with mobility technologies, like on-demand ride-hailing services, to increase electric car sales if it can't get enough customers on board during the early stages.

But the keyword in Toyota’s goal for 2025 is "electrified,” not "electric.” That means the automaker's hybrid and plug-in hybrid powertrains count towards its lofty target, with Terashi estimating that EV volume will still be less than 1 million units by 2025. It’s also why Terashi said that EVs are still not Toyota’s sole focus. "We haven’t changed our policy towards battery EVs. We are not shifting our focus to prioritize battery EVs, nor are we abandoning our FCV strategy,” said Terashi.

But Toyota is definitely trying to put itself in the game by working on electric cars (perhaps because it could be axing the Prius), and it even has a small two-seat EV designed for short trips (meaning not for America) in development. In either case, we’re just happy to see that Toyota is future-proofing itself because sooner or later it was going to have to catch up to Volkswagen, Nissan, and even Tesla in order to maintain its hold on the market during the coming years.

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