For global automakers, the EV wave is everywhere

IFRAME SYNC

Toyota Motor Corp.’s surprise leadership shakeup on Thursday, Renault and Nissan Motor Co.’s sense of urgency to shake up their alliances, and Elon Musk’s announcement that Tesla Inc. would become the world’s No. 1 automaker all have one thing in common: The center that defined the global automotive industry no longer holds.

go through:
Reuters

|
Updated on:
January 27, 2023 at 08:46 am

A file photo of Toyota Motor's outgoing president, Akio Toyoda, shows the keys to a Tesla Roadster electric car offered by Elon Musk.  (Reuters)
A file photo of Toyota Motor’s outgoing president, Akio Toyoda, shows the keys to a Tesla Roadster electric car offered by Elon Musk. (Reuters)

Hours before the news that Akio Toyoda would step down as CEO of the world’s best-selling automaker on April 1, Musk announced on a quarterly earnings call that Tesla is now the auto industry’s most profitable company. And the leader in manufacturing efficiency – the crown Toyota has held for three decades.

Toyota’s incoming CEO, Koji Sato, faces a daunting task. He must accelerate the Japanese automaker’s efforts to develop more competitive electric vehicles. But he has little respite for Tesla or Chinese electric carmakers to take advantage of their leadership in electric vehicle technology and production costs to slash prices.

Tesla’s revenue per vehicle is roughly seven times that of Toyota. Its pretax profit margin of 17% is roughly double the industry average. After a rough 2022 for the company’s stock, the stock has risen 28% to open 2023.

Musk hinted again on Wednesday that Tesla is working on a new sub-$30,000 car that would compete head-to-head with mass-market models from Toyota, Volkswagen, Ford Motor Co and General Motors Co.

Musk has teased in the past products that took much longer to deliver than he initially promised, such as the long-delayed Cybertruck.

But the Tesla CEO’s ambition is clear: to rearrange the auto industry hierarchy that has held Toyota at the top for decades.

“I don’t think you can see a second place with a telescope, at least we can’t,” Musk said when asked what the auto industry would look like in five years.

changing environment

Global automakers have experienced a period of feast and famine of about seven to ten years. Things are different now.

The shock of the pandemic, two years of supply chain disruption and the prospect of a recession this year are colliding with a once-in-a-century shift in the industry’s underlying technology.

Many of the on-the-job advantages Toyota enjoyed are fading as combustion-engine cars give way to electric vehicles equipped with high-performance computer chips.

The shift to electric, computerized and software-driven vehicles has opened the door for Tesla and other startups, especially in China, to rewrite the ground rules of competition. Tesla’s price war may just be the beginning.

“We question whether competitors can keep up with the EV race,” Morgan Stanley auto analyst Adam Jonas wrote in a note this week.

Incumbent automakers can no longer count on improving proven vehicle technologies to remain competitive. Established automakers are investing heavily in electric vehicles — some faster and more successfully than others.

South Korea’s Hyundai Motor Co reported better-than-expected results on Thursday, in part due to strong sales of its new range of electric vehicles. Hyundai is predicting that its electric vehicle sales will grow 54% this year — faster than Tesla’s forecast.

Patrick Kohler, chief executive of auto supplier Forvia, said earlier this month that Chinese manufacturers bringing electric cars to Europe have a cost advantage of up to 10,000 euros ($10,600).

The growing rivalry has put pressure on Renault and Nissan to resolve talks to restructure their alliance. The two companies now aim to announce a deal, including Nissan’s investment in Renault’s electric car unit, by Feb. 6, sources told Reuters.

Renault and Nissan have argued that their alliance gives them significant economies of scale advantages. That potential is still there. But first, they will have to struggle to maintain their current size as Tesla and Chinese manufacturers try to deprive them of sales.

“Even though the market is shrinking, we’re still growing, with electric vehicles almost doubling year-over-year,” Tesla Vice President Lars Moravey told analysts on Wednesday. “We always look at it as something we own. How much of the total vehicle space, and we’re going to continue to grow in that space. We’ve got 95% space.”

First published date: Jan 27, 2023 at 08:46 AM CST

https://auto.hindustantimes.com/auto/electric-vehicles/for-global-carmakers-ev-surge-is-everything-everywhere-all-at-once-41674788953462.html

Leave a Comment