Toyota Finally Seems to Be Getting It
Toyota’s electric vehicle plan is taking shape, Tesla investors want an adult in the room, and General Motors just had to recall its self-driving taxis to make them better at recognizing San Francisco’s bendy buses. All that and more in this Friday edition of The Morning Shift for April 7, 2023.
1st Gear: 10 New EVs in Four Years
Every three weeks or so since former Toyota CEO Akio Toyoda’s departure in late January, it feels like we’re hearing a new version of the same story: that new boss Koji Sato is more invested in EVs than his predecessor, perhaps more for business than philosophical reasons.
Sato doesn’t want to leave hybrids nor hydrogen fuel-cell vehicles in the lurch, but he also recognizes Toyota needs a dedicated battery-electric platform to keep up with the state of play in the industry. Little by little, pieces of Sato’s strategy are coming into view. The latest is that the automaker plans to have 10 new electric models on the market and sell 1.5 million globally by 2026. From Bloomberg:
In developed markets, Toyota’s plan is to enhance the performance of its bZ series of EVs and in North America, have a locally produced battery SUV by 2025 as well as increase battery plant production. In China, it plans to add two locally developed electric models by 2024. In Asia more broadly, Toyota will also focus on battery pick-up trucks and compact electric cars.
Building a dedicated EV production platform from scratch while navigating lingering pandemic measures, supply chain snags and semiconductor shortages is top priority for Toyota as Sato looks to shepherd the Japanese carmaker, which expects to produce as many as 10.6 million cars this year, into a new age of electrification and intelligent vehicles.
“I thought they would talk about Toyota’s values, manufacturing and kaizen in a general way, but it was nice to know the company’s stance on electrification, intelligence and diversification,” Bloomberg Intelligence analyst Tatsuo Yoshida said, [kaizen] referring to the Japanese philosophy of continuous improvement. “They surprisingly talked about things that they might have been planning and thinking, but never really revealed.”
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Toyota will always be Toyota: pragmatic, cautious, and tethered to reliable methods. That’s fine, but the brand really has nothing to lose and everything to gain by coming out slightly more motivated by EVs. It seems the top brass is finally realizing that in 2023.
2nd Gear: The Battle Between Tesla and Shareholders
JB Straubel, one of Tesla’s founding members and previously its chief technology officer before leaving in 2019 to start a battery recycling company, may wind up back at Tesla as an independent board member. That all depends on if shareholders elect him to replace Hiromichi Mizuno, who will not seek reelection. What makes this amusing is that Tesla itself seems opposed to the idea for … questionable reasons. From Bloomberg:
The proposal to elect Straubel is one of five issues the company has asked investors to consider at its May 16 annual meeting. The proxy contains just one shareholder proposal, in contrast to the eight that investors voted on last year.
That sole shareholder resolution comes from Karen Róbertsdóttir, an investor in Reykjavik, Iceland, who wants Tesla’s board of directors to prepare and publicly disclose a report on Tesla’s key-person risk. Tesla has regularly said in filings that it is “highly dependent on the services of Elon Musk,” the company’s longtime chief executive officer, but has never disclosed plans to protect shareholders in the event he was to leave the role.
Tesla urged investors to vote against the proposal, arguing it’s unnecessary and would make the company less competitive by highlighting top personnel who competitors might want to poach. The Austin, Texas-based electric-vehicle maker has just four named executives, including Zhu: Musk, Chief Financial Officer Zachary Kirkhorn and Drew Baglino, Tesla’s senior vice president of powertrain and energy engineering.
The excuse that Tesla can’t have too many good, smart people at the top because other automakers might want to hire them certainly seems like the business strategy of a normal, healthy company. The alternative, of course, is continuing to throw all of its eggs into the fast-moving, likely-to-combust-at-any-time-with-zero-notice basket that is Elon Musk. TechCrunch adds that Straubel is likely to win election, citing his history as a stabilizing influence within Tesla.
3rd Gear: The Ram REV’s Home
Stellantis likely has some idea where it will build the Ram 1500 REV, but it’s yet to share that plan with anyone. That’s fueled speculation, because the company certainly has options, between an idled Jeep facility in Belvidere, Illinois that previously made the Cherokee and another facility in Sterling Heights, Michigan. From Automotive News, citing a Crain’s Chicago Business report:
A Detroit paper said today’s Stellantis news meant “speculation immediately turned” to the company’s plant in Sterling Heights, Mich. But Illinois and Belvidere also are competing.
Multiple, independent sources with first-hand knowledge report Illinois has put on a major push for the facility, with talks intensifying and near-daily communication among officials here and in Stellantis.
Illinois’ prospects are said to have been improved by General Assembly approval in January of a major new incentive package for EV producers and part-makers. Included was the creation of a $400 million “deal closing fund” that gives Gov. J.B. Pritzker wide discretion in putting extra cash on the table to lure manufacturers.
Michigan’s recent decision to repeal its right-to-work law also may be a plus, because it equalizes the field between the two states on labor law. And officials in Boone County, where Belvidere is located, have signaled a willingness to consider property tax rebates, sources report.
Either way, you can bet the REV is going to be built somewhere in North America, because Stellantis needs it to be to qualify for federal tax credits. It’s a bit odd that we’ve seen the production-spec version of a model due in late 2024, yet we still don’t know where it’s going to be made.
4th Gear: Cruise Had a Recall
General Motors’ self-driving robotaxi unit quietly recalled 300 vehicles to update software, according to a National Highway Traffic Safety Administration filing, after one of its cars crashed into a bus in San Francisco on March 23. From ABC News:
Cruise says in government documents posted Friday that the robotaxi inaccurately predicted how the bus would move as it pulled out of a bus stop on March 23. The “articulated” two-section bus slowed as it was leaving the stop and was hit by the self-driving vehicle.
Cruise characterized the crash as a fender-bender and said no one was hurt. The company says in documents sent to the National Highway Traffic Safety Administration that it did the software update on March 25.
“Cruise determined that the collision was caused by an issue related to prediction of the unique movements of articulated vehicles in rare circumstances,” the company said in documents.
The company said no other crashes have happened due to the problem and that the same thing won’t happen again after the update. Cruise said it did the recall to be transparent and add to public understanding of the crash.
It sounds like the recall has already been completed, and the Cruise fleet on the city’s streets is now imbued with the logic not to hit buses. I don’t know if this should make anyone more or less comfortable hitching a ride in a Cruise robotaxi.
5th Gear: South Korea’s Battery Industry
The Inflation Reduction Act has prompted economies around the world to offer their own national incentives for EV production in kind. South Korea is the latest. Hyundai and Kia need an EV manufacturing footprint in the U.S. ASAP, and battery suppliers LG, SK and Samsung need to keep up with the juggernaut that is CATL. Their government will try to help them do that with a $5.3 billion package for companies eyeing North American plants. From Bloomberg, one last time:
The support includes lowering lending rates and insurance premiums by up to 20% as well as providing more loans and tax credits for battery and material production complexes, according to an e-mailed statement from Korea’s trade ministry Friday.
“To effectively cope with situations changing rapidly after the Inflation Reduction Act, both the government and businessmen should cooperate to find solutions together,” South Korea’s Trade Minister Lee Chang-yang said.
Biden’s Inflation Reduction Act encourages automakers to assemble electric vehicles in North America and reduce reliance on Chinese minerals and components in order to be eligible for a $7,500-a-car subsidy. Korea is a home to three of world’s leading battery makers, LG Energy Solution Ltd., Samsung SDI Co. and SK On Co. Together they supply most of the big automakers including General Motors Co., Ford Motor Co. and Tesla Inc.
Shares of Korean battery makers rose this morning in response to the news. However, as Bloomberg notes at the end of its article, these firms are still very reliant on raw materials from China, so they’ll need to replace those with free-trade components if they expect the products they contribute to qualify for the maximum U.S. rebate.
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Neutral: Beyond Zero
The BZ4X feels like an also-ran, a half-hearted attempt by a company that can and should do much better. What could Toyota give you in an EV that will get you on board that nobody else has yet?
