What´s Toyota´s strategy?
Jan 15, 2011
The recent Toyota´s sales decline in the U.S. has prompted a number of conjectures about its future. Here I intend to portray what seems most likely to be the long-term strategy of the company.
After knowing that in the U.S., one needs to wonder whether the Japanese motor giant has indeed an ace under its sleeve to overcome the most profound crisis it has ever faced.
In a published in 2009, I had argued that “to retain its largest share in the automobile market of the world, Toyota will As of August 2010, I contended in that Toyota appeared to have made some progress in this regard. It had already launched its first 500 plug-in hybrid electric vehicles (PHEV) with Li-ion batteries for testing in Japan, North America and Europe and announced that as part of its new partnership with Tesla it will mass-produce a new version of the all-electric RAV4 also with such advanced battery technology. Lastly, in a third published in November last year, I thought Toyota was almost ready “to unveil the electric RAV4, co-developed with Tesla Motors Inc”, at the Los Angeles auto show. So I concluded that Toyota (and Honda) will likely become more aggressive in terms of using Li-ion batteries in their next different car models.
In retrospect, I must confess I was a bit too sanguine about Toyota´s genuine interest in moving towards some sort of lithium-based business strategy in the near future. In fact, as I have long argued, the largest car maker on earth has a great deal to lose with the advent of plug-in electric cars in the world. This transformational event is coming along with lithium-ion batteries, which is seriously threatening NiMH batteries, a technology in which Toyota has heavily invested. But this is not the only source of trouble for Toyota. For one thing, following The Economist, ever since their introduction into the market (more than 10 years ago), the NiMH batteries utilized by Toyota´s Prius have been subject to a tight supply due to licensing restrictions and the way key patents have been imposed by Texaco and Chevron, the succesive owners of the technology. In 2009 this energy storage technology was sold by Chevron to SB LiMotive, a joint venture between Samsung of South Korea and Robert Bosch of Germany which may contribute to augmenting the availability of these batteries, albeit mostly for Korean and German automakers. For another, Toyota has also been facing severe restrictions in supply of rare earths, used not only for the NiMH batteries but also for the electric motor of the Prius, which has been importing from China.
Toyota´s strategy seems then to be focused on the following points: First, prepare for the transition to electric propulsion. In this connection, Toyota has invested in Panasonic which has since last year taken over Sanyo, the largest manufacturer of Li-ion batteries in the world and, of course, it has invested in Tesla, the most innovative electric car producer on earth. On the one hand, its venture with Panasonic is aimed at getting ready for electrification of the global car industry. On the other, investing in Tesla will allow the Japanese carmaker to go beyond permanent magnet electric motors while moving towards induction ones such as those used by Tesla to avoid Toyota´s future dependence on any .
Second, delay as much as possible the up-coming electric vehicle revolution because this will simply kill the Prius, Toyota´s most emblematic product. So in a way by sticking with an obsolete technology, it will try to survive for the time being. How long will Toyota resist? My modest guess is not too long. Nevertheless, Toyota has proven to be a very able company. So do not be surprised if they actually have yet another “brilliant plan behind the curtains" (borrowing words). This takes us to the last point of Toyota´s long-term business strategy,
Third, go beyond lithium-ion batteries. Here Toyota is now talking about a whole new spectrum of options, from batteries or even . What is now clear though is that Toyota needs to convince everyone again that it remains not only the largest but also the best car company in the world. In doing so, Toyota faces the challenge of recovering its previous pioneering innovative character. After all, this is probably the only way it will insure something Toyota no doubt values the most: its reputation.
|<< PREVIOUS||NEXT >>|
blog comments powered by Disqus