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Toyota Chases Tesla and Aims for Supremacy

From the series The world car battle

On September 6th, Toyota, the world's largest car manufacturer, an nounced a revised target of building I million electric vehicles by 2026, lowering its previous goal by 1.5 million, according to Automotive News.

Difficulties of the electric sector

A key driver behind the energy transition, particularly as regards vehicle electrification, is that countries which lack oil and natural gas resources need to reduce their reliance on regions prone to political instability and conflict. China has taken on the challenge of large-scale electrification, even though the electric car was pioneered by US manufacturers like Tesla and the Franco-Japanese Renault-Nissan alliance. Other nations have followed suit out of necessity. By focusing solely on environmental concerns, without factoring in China’s role, it is impossible to understand the impetus behind the global energy transition.

The challenges involved in the transition are enormous, but the intensifying global competition between major powers, particularly with the historically unprecedented rise of a power with the dimensions of China, is driving it forward. This has forced both the EU and the US to change course in their economic policy, with their political powers making dirigiste decisions. In its Electrit Vebicle Outlook 2024 report, BloombergNEF revised its forecasts for battery electric vehicle sales through 2026, with China continu ing to lead in electric car production, battery manufacturing, and the global supply chain for essential raw materi als and components [June 12th]. The challenge from Chinese electrification remains ever-present, and, despite its obstacles, the trend towards electrification is irreversible.

Volkswagen’s current difficulties slot into this broader context, with Ford, General Motors, Stellantis, and other car manufacturers also reassessing their electric vehicle ambitions in recent months. Even Volvo has postponed its goal of ending the production of combustion engine cars by the end of 2030 Automotive News, September 12th). In light of BloombergNEF’s assessments, it is worth examining Toyota’s strategy.

Toyota’s multi-pathway approach

On June 13th, 2023, Toyota Motor Corporation held a “Toyota Technical Workshop” in Toyota City, Japan, with the theme “Let’s Change the Future of Cars”. In the field of electrification, Toyota has adopted a “multi-pathway” strategy to avoid the “pioneer’s trap” [Internationalism, October 2024]. Unlike Volkswagen and Volvo, which have committed to going fully electric, Toyota has opted for a more diversified approach. While battery-only electric vehicles (BEVS) will be introduced, they will not replace internal combustion engine, hybrid, and hydrogen-powered cars. This decision reflects Toyota’s great confidence in its industrial and finan cial resources. A key goal will be to bring the production costs of electric vehicles in line with those of internal combustion engine cars. To achieve this, the company plans to focus not only on reducing battery costs, bur also on improving the manufacturing process of electric vehicles.

Takero Kato, president of the BEV Factory which will produce Toyota’s battery-powered cars, outlined the company’s strategy of combining next-generation vehicles with solid-state batteries, which are expected to give BEVs a range of 1,000 km by 2028, together with the transformation of production processes. Unfortunately, we do not have detailed information on how the production processes are organised within Chinese automobile companies, particularly at BYD.

From books and newspapers, we have more information about Tovo ta, although this should be taken with a grain of salt, as many announcements contain a propagandistic component aimed at influencing inf stock market prices. The study of production processes in the automotive industry brings us in line with Karl Marx’s description in “Machinery and Modern Industry” [Capital, Vol. 1, Chapter 15].

In his analysis of heavy industry, Marx delves into the core of productive operations that generate wealth. It is within the factory that production costs — and ultimately, the final price — are determined. This is where we must begin, even before the end product, to understand where the crux of competition lies between large automobile companies during this phase of vehicle electrification.

Toyota’s new mode of production

In the planned Toyota plant for producing electric cars, the vehicle underbody will be divided into three sections (modules): front, middle, and rear, each with its own parts (see diagram). This approach allows for unprecedented labour efficiency, as workers no longer have to climb inside the vehicles during assembly. Tesla is trying to do the same.

This innovation will allow seats and other components to be fitted before the roof and side panels are fixed, simplifying the entire process and improving the efficiency of robots and equipment. Once the parts are assembled on each module and the three sections are completed and joined together, the car can proceed autonomously to finish the assembly. In this innovative self-propelled production line, the electric vehicles are guided by sensors and operate without a driver.

Toyota will also introduce “gigacasting”, the use of a giant press pioneered by Tesla [Internationalism, December 2023]. Its adoption will lead to a significant reduction in vehicle development costs and capital expenditure. The self-propelled production technology will cut the number of processes and investment costs by half. Vehicle development time will be reduced to 20 months, compared to the current average of 30. In the past, Toyota revolutionised modern production with its lean, just-in-time production system. Since then, its methods have been adopted worldwide, from hospitals to software companies, and have been studied extensively in business schools and boardrooms. However, in the realm of battery-powered electric vehicles, the Japanese manufacturer has been overtaken by Tesla.

Toyota executives not only claim that they will catch up, but also aim to achieve a leading position in the sector with their next generation of electric vehicles, set to debut in 2026. The company plans to sell 3.5 million electric vehicles annually by 2030, which would represent 30% of its total production. In an interview this year with the Japanese newspaper Nikkei, Honda Motor Co. CEO Toshihiro Mibe spoke about the “Tesla shock” affecting the entire automotive industry. Sandy Munro, CEO of Munro & Associates (Michigan), which specialises in vehicle dismantling and consulting on improvements for car manufacturers, stated that many of Toyota’s new production ideas mirror those developed by Tesla.

Toyota’s new approach will be embodied in its factory for producing battery-powered cars: it will not simply be a physical plant, but an integrated organisation that unites all functions, from design and engineering to production and sales. According to Kato, with the BEV Factory, the future of battery electric vehicles will involve a transformation not only of the product itself, but also of the entire production process. For Conrad Layson, senior alternative propulsion analyst at AutoForecast Solutions, the new factory will position Toyota as one of the leading traditional car manufactur ers in the transition to electric vehicles. The Toyota Production System needed an upgrade, and upgrading production methods is precisely the challenge that all car manufacturers will need to face.

Lotta Comunista, October 2024

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