Koji Sato needs to make urgent decisions on EV strategy on the day he takes over.

ssun30

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It's only a week away from Sato-san officially taking over as CEO of TMC. What presents in front him is the horror show of BZ4X sales figure in its biggest market China:

BZ4X sales figure in ChDM, Nov 22 to Feb 23
FAW: 499, 660, 287, 1049
GAC: 137, 1487, 767, 500

Officially the FAW-Toyota BZ4X is at 30% discount and the GAC version at 15% discount over MSRP but at dealers the discount can be up to 50% for the top trim AWD model. They built two factories each capable of producing 100k BZ4Xs a year, selling them at 50% discount and still can't get more than 4-digit sales figure for a factory utilization rate of less than 9%. If BZ4X is losing them money priced at $43k in the U.S. I can't imagine how much money they lose selling at $21k. BZ4X is now a contender for the biggest flop of the decade.

The recent Munrolive teardown video is very hard to swallow because I was expecting much much more from the engineering team. The BZ4X is no different from a compliance EV from 2018. It's not just the specs, but down to all the minor details and mindset of how a BEV should be made and what consumers demand, Toyota got something right but most wrong.

If I were Sato-san I would pause all HEV/ICEV programs with due date after 2025 to focus all resources on fixing the BZ4X to be at least on par with other EVs from 2020, and demand results by the end of the year. Either the production cost needs to be 15% lower or the car needs 15% more range, each year, whatever it takes because otherwise every BZ4X sold would incur a greater loss than the full price of a Corolla. Investors would be fuming when they see the financial results so Sato-san needs to be decisive and layout a concrete plan on the first day of his job. There is no chance to wait for the new platform in 2026 and pray competitors stand still. They needs to start catching up today.

Secondly, Sato-san needs to address the PHEV supply problem ASAP. The RAV4 Prime was a hit especially in NA seeing how ridiculously overpriced they are in the used market ($55k for a RAV4 can you believe it?). The NA market definitely prefers a car that uses electricity for daily commute and still use petrol for long trips and PHEV has a very good fighting chance here. But Toyota dragged their feet on expanding PHEV battery production for two years. They only had 2 GWh capacity (enough for 110k vehicles) in 2022. That number needs to be at least 4x higher so all the Primes they planned to introduce this year (Prius, Harrier, RX, TX) could actually reach customer. And not only that they need to think about range-extension with newer battery cells ready in at most 2 years. We are seeing more competitors moving to 20+kWh battery packs with 50 mi+ EV range to attract people with longer commutes. They cannot afford to use the same battery spec for 6 years without upgrades like they did with the original Prius Prime.

This is not about whether EVs are going to replace ICEVs. Last year BEVs reached a monumental 15% global automobile market share with over 10 million sold. BYD and Tesla are selling more Song Plus and Model Y in a day than Toyota sells BZ4X in a month and making money hand over fist. BEVs are profitable now. It's a foregone conclusion. Toyota has already committed to the all-electric Lexus strategy so there's no room for them to turn back. I still believe 30% global market share by 2030 is optimistic because eventually growth will plateau, but 30% is 21 million cars. You don't simply scoff at 21 million cars and call that a bad business case.
 
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LS500-18

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You are brainwashed, there is no rush. Gas and diesel will be around for decades to come from now. A Prius Prime is better than most BEVs if you actually look at things from a practical point of view.
 

ssun30

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Please read before comment. I said at the end it's optimistic to expect more than 30% BEV market share before 2030. But 30% of Toyota is 3 million cars. They are at 20 thousand today. They need to grow that number by 150 times in 7 years which equals 103% growth year-over-year.

And I said the PHEVs have a very good fighting chance in North America and many other markets. But they still mismanaged the situation with very limited PHEV battery production. Prius, RAV4 Prime, NX450h+ are unicorns and almost every one already sold before reaching the shore.

So overall my point is Toyota needs to make very drastic decisions now even for their already very conservative EV goals.
 

LateToLexus

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SSUN30 is an expert. Generally has great analysis and insight that frankly I'm not privy to or capable of. I'm simply a consumer with small-fair amount of means and access to various new/used vehicles from TMC and non-TMC companies.

The whole QDR of TMC seems to be slowly dying. If contest this, cannot contest that there is regression towards the mean. I truly hate saying this, but the Toyota/Lexus reliability factor is slowly fading.

IMHO, what SSUN30 is saying is just the tip of the iceberg. The BZ4X, Tundra, Sequoia, LX, RZ.....TMC/Lexus used to offer vehicles at such an in-your-face incredible value that no matter your biases, on some primitive level, your lizard brain knew TMC/Lexus clearly offered the best choice for many vehicle segments. No more.

We currently own three TMC/Lexus vehicles with oldest being 2016 Sienna. Looking to replace all of them and/or go to 2 vehicles. Seriously looking at non-TMC vehicles for first time and frankly seeing equal quality and reliability.....

As a Lexus enthusiast, I hope/wish I'm wrong. But I don't think I am. Couple this with the fact that at least In the US, car ownership length seems to be constantly shrinking...

.02 of a definite non-expert.
 

ssun30

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I would not call myself an expert since I've been out of the EV supplying business for four years. A lot has happened since then. But seeing the BZ4X being so similar to something I would expect from back then is quite disappointing.
 

Gecko

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Toyota's commitment to BEVs has stopped and started so many times over the last decade that it is unclear if any real progress has actually been made. Outside of press release headlines, does Toyota even have a viable BEV strategy right now? eTNGA is a modified version of TNGA-K, if my memory serves me correctly, whereas the most successful BEVs ride on dedicated platforms because the best EV engineering is simply not a rework of an ICE-optimized platform.

Toyota dumped billions of dollars into TNGA and more efficient manufacturing processes... for ICE vehicles at a time when demand for EVs is soaring, especially for luxury vehicles. It is another instance of Toyota's ignorance and reluctance to embrace change pushing them to action at the 11th hour and ultimately delivering uncompetitive products many years too late.
See also: performance CUVs, forced induction, RWD platforms, performance vehicles.

Whether you like BEVs or not, my primary concern is Lexus making good on their promise to be fully BEV by 2030. Looking at the state of things presently and how many generations of batteries they would need to advance through to produce a competitive product in a few years, I have real doubts. Perhaps worse is what a "stopgap" generation of Lexus products would look like because I think it's fair to say we already had a decade of those and the results weren't particularly inspiring.
 

ssun30

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What I would like to see is constant yearly updates to the BZ4X to show they actually follow their own Kaizen philosophy. e-TNGA may be a hopelessly inefficient platform to begin with but they still need to Kaizen to learn the BEV designing/building process. As an example:
CY 2023, fix all exterior and interior quality issues. Narrower panel gaps, tighter interior fittings etc.
CY 2024, remove unnecessary parts and structural elements carried over from TNGA, saves weight and cost. Re-gear the eAxles for better economy at slight cost of acceleration. Swap out 6.6kW AC charging unit for standard 11kW AC charging unit within the ESU. Recalibrate DC charging curve for better average charging speed (targeting 300mph/500kph minimum).
CY 2025, battery upgrade including updated capacity (205Ah -> 220Ah, finally matching competition in CY 2022), utilize the empty space between current battery pack and rear motor for 1/8 more capacity. Total capacity upgrade of 21%. Removal of unnecessary battery pack casing for better thermal management. Add lower capacity LFP SR model for lower entry cost.
CY 2026, powertrain and cooling system upgrade including next-gen eAxles by Aisin and integrated cooling system.

If they could follow this pretty standard kaizen roadmap like Tesla/Ford/Hyundai would do, they will eventually have a 2022 Model Y/Ioniq 5 competitor in 2026!
 

internalaudit

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Why not sell most of these in North America or EU, instead of cut throat China?

Shipping cost is probably inconsequential compared to the discount from MSRP as long as the vessels don't sink.
 

ssun30

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Why not sell most of these in North America or EU, instead of cut throat China?

Shipping cost is probably inconsequential compared to the discount from MSRP as long as the vessels don't sink.
They will likely sell significantly below MSRP in these markets as well.
 

internalaudit

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They will likely sell significantly below MSRP in these markets as well.
Limited supply on these BEVs here in Canada. Even the RZ only for sale in two provinces.

With higher than American gasoline prices, especially on premium fuel, these BEVs will sell well here, if priced competitively.

Very few super commuters in Canada where most higher paying jobs are within 60 miles of major and mid city centers .


I will wait this EV evolution out. May buy used 6 to 7 year old ones if 50 to 60% off and only with foreseeable battery replacement support.

Still buying one with torque vectoring though. :)
 

mikeavelli

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The first thing I did when I grabbed the RZ was open the hood. It looks like an engine is there. That let me know immediately typical thinking was used.

I think what we are hearing is Lexus needs to and will approach hybrids with a completely different approach going forward.

I’ve always said that a BEV Lexus makes a ton of sense since it will be quieter and smoother than ICE. which are Lexus hallmarks. Direct 4 adds the new sportiness.

Excited to see future products but I assume maybe there is a delay if they rethink their entire BEV processes.
 

internalaudit

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2035 deadline in EU for ICEVs not going to happen. Even in Canada, the government has wisened up and will allow PHEVs with 100 km electric driving range after 2035.

Hoping Toyota's solid state battery R&D is getting to the point of commercialization. 2025 is just around the corner and we will see them in hybrids first.

Battery is really the constraint for BEVs. Handling is usually worst than ICEV counterparts. Battery longevity likely shorter than reliable ICE (engines). Priced as if buyers are really saving the environment.

I still want a BEV for next car and awaiting the advancements.


 
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spwolf

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Why not sell most of these in North America or EU, instead of cut throat China?

Shipping cost is probably inconsequential compared to the discount from MSRP as long as the vessels don't sink.

They are selling them in EU and NA as well, they just dont think they can sell as much.
Generally, they sell vehicles based on market demand, not what they would like to do.

So they estimated they would be able to sell a lot more in China than in NA, and thus Chinese plants.

Problem is that product is not competitive.
 

spwolf

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2035 deadline in EU for ICEVs not going to happen. Even in Canada, the government has wisened up and will allow PHEVs with 100 km electric driving range after 2035.

Why "even in Canada"? EU has been pushing EV sales heavily.

By 2035, there will be no deadline needed.

Germany has healthy demand for EVs, despite dropped incentives. I dont think in reality, PHEVs will survive at all.

16% market share and raising is pretty good for BEVs, together with plugins, it is 22%.
 

Sulu

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They are selling them in EU and NA as well, they just dont think they can sell as much.
Generally, they sell vehicles based on market demand, not what they would like to do.

So they estimated they would be able to sell a lot more in China than in NA, and thus Chinese plants.

Problem is that product is not competitive.
Enthusiasts may consider the bZ4X uncompetitive but it is still too early to know if it is uncompetitive where it really counts, the consumer market, where real, everyday drivers and buyers vote.

Yes, it got off to a slow start, with that long, drawn-out stop-sale and recall. That may kill it more than the problems with its short range and battery charging issues.

The Toyota and Lexus lineups are full of vehicles that enthusiasts claim are uncompetitive, yet still sell (the ES is a good example).
 

Levi

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Problem is that product is not competitive.
Maybe not competitive, but competitors are underwhelming too, compared to ICEV in terms of usability.

By 2035, there will be no deadline needed.
I recall them saying on Electrek in 2018 that by 2025 the will be no deadline needed. I see the date got pushed back by 10 years. Reminds me of HFCV being "just around the corner".