NAGOYA, Japan -- Toyota Motor has taken a step toward creating a broad coalition of automakers and autoparts makers to supercharge the development of electric vehicle technologies and make up for its slow start in the field.
Toyota, Mazda Motor and autoparts leader Denso have jointly established EV C.A Spirit to promote the development of electric vehicles, the companies announced Thursday. Toyota has taken a 90% stake with Mazda and Denso splitting the rest. The venture is starting out with nearly 40 engineers charged with creating design methods that will become the foundation for electric vehicle development.
Denso was brought into the fold from an early stage for its technologies and expertise. How to deal with heat, for example, is a crucial factor in electric vehicles' battery and overall performance, since air conditioning greatly diminishes the vehicles' range. On this front, Denso is likely to be of help, with its technologies accumulated through the development of air conditioners and other products.
Toyota's research and development expenses have topped 1 trillion yen ($8.8 billion) for four straight years. Investment in fuel cell vehicles, an area where the automaker is betting heavily, have ballooned, forcing the company to abandon its loner ways when it comes to electric car development.
"A battle in uncharted territory is beginning with new rivals like Google and Tesla," said President Akio Toyoda. But that is not Toyota's only concern.
"We need to compete with models that sell 50,000 to 100,000 units a year," explained one Toyota director, lamenting the small size of the electric vehicle market. "Low-volume models are our weakness."
Toyota's bread and butter has been mass-produced models such as the Corolla sedan, which sells over 1.2 million units annually. The electric vehicle market is still relatively small, on the other hand, meaning that Toyota can only sell models produced in small quantities.
Mazda's expertise in efficient car development is seen as one reason why Toyota entered into a capital tie-up with the carmaker in August. Mazda engineers make up nearly half of EV C.A Spirit's development team. "We want to create the core technologies together and beat American and German automakers," said a Mazda executive.
Race is on
Competition to develop technology for the budding electric car market is heating up around the world.
The Franco-Japanese alliance of Renault, Nissan Motor and Mitsubishi Motors is working toward developing a common chassis for electric vehicles by 2020 and launching 12 electric car models by 2022. Germany's Volkswagen is aiming for electric vehicles to make up 25% of global sales by 2025. Companies such as America's Tesla and China's BYD are aggressively cultivating the market, while U.K. appliance maker Dyson and other players are just entering the field.
Nissan will begin sales of its second-generation electric vehicle, the Leaf, next month. Tesla began shipments of its mass-produced Model 3 in July and has already received about 500,000 orders.
The question is whether Toyota can maintain its position in the green-car market, which it built with hybrid vehicles, amid dramatic changes in the competitive environment. It will be essential for Toyota to avoid getting trapped in previous successes and flat-footed decision-making.