For the past several years, Toyota has been the only major automaker that has made few investments in battery electric vehicles (BEVs). Several other established automakers have long announced their intent to electrify their lineups, with companies such as Ford and Mercedes Benz already developing and releasing BEVs into the market.
Toyota, on the other hand, has made barely any inroads into the electric vehicle sector, choosing instead to focus on hydrogen fuel cell vehicles as their flagship alternative-energy cars. The Japanese automaker has now announced that after years of sparse investment in EVs, Toyota is now fighting to remain competitive in China’s electric vehicle market.
China’s EV market is the largest in the world, attracting several automakers that have threatened Toyota’s supremacy in the region. While the automaker could previously attract ecofriendly drivers through its lineup of plug-in hybrids, it is now facing immense competition from car makers such as BYD and even Tesla in China.
BYD, for instance, has accelerated its rate of electrification to such a degree that it is now outselling Tesla, the largest EV maker on the globe, in the Chinese market. BYD electric vehicle sales increased by nearly 69% in Q1 2023, increasing the automaker’s share of the overall car market to 11% and beating out major companies such as Toyota and Volkswagen.
For Toyota to remain competitive against local automakers such as BYD which sell both gas-powered cars and electric vehicles, it will have to develop a lineup of EVs for the Chinese market. Tatsuro Ueda, Toyota’s chief executive officer for the China region, said that China’s electric vehicle market is expanding at an “unprecedented pace.”
Consumers in this market are especially drawn to electric vehicles that are designed to meet consumer needs, such as small lightweight EVs with leasing and battery-swapping capabilities. Companies that specifically address these needs such as Wuling Motors will likely have an easier time attracting and retaining consumers to their brands.
Toyota has pledged to invest in building up its electric vehicle production capacity in China over the next decade. This includes rebranding its largest Chinese research and development facility and transferring engineers from other research facilities to the one in China to spearhead the company’s electrification efforts. The Japanese company will also focus on strengthening the local development of all its alternative energy vehicles to ensure carbon neutrality at every stage of production. In the meantime, Toyota will continue developing both hydrogen fuel cells and hybrid cars.
While China is a desirable market to dominate, not all manufacturers will be able to attain that feat. This could be why smaller startups such as Fisker Inc. (NYSE: FSR) may be focusing on issues closer to home before spreading their wings further afield as they grow.
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