Is electric vehicles a crisis or an opportunity? Where are established car companies such as Toyota?

BEIJING, April 25, 2024 /PRNewswire/ -- The following is a report from China.com: In the context of deepening global understanding of the climate crisis and increasing efforts to achieve carbon peaking and carbon neutrality policies, countries have successively promulgated policies to ban the sale of fuel vehicles, and new energy vehicle manufacturing forces are booming, and the automotive industry is being involved in the wave of electrification. According to data released by CleanTechnica, global electric vehicle sales will reach 13.689 million units in 2023, accounting for 16% of the total global car sales, with rapid growth.

However, the European Union has suddenly withdrawn the ban on the sale of fuel vehicles in 2035, Mercedes-Benz announced that it would abandon its plan to sell 100% electric vehicles in 2030, and Apple has disbanded the car R&D team that has invested for 10 years. These seemingly "abandoned" electric vehicle paths have sparked heated discussions at home and abroad.

In particular, Toyota, the world's largest car company, has an eye-catching attitude towards the development of electric vehicles, and as the leader of the group, Akio Toyoda has repeatedly spoken out about electric vehicles. In January this year, Akio Toyoda said: "In the future, pure electric vehicles will only occupy a maximum of 30% of the global market share, and the remaining 70% of the market share will be occupied by hybrid vehicles, hydrogen fuel cell vehicles and fuel vehicles." In this regard, Tesla CEO Elon Musk responded on X (Twitter) and expressed disagreement.

In 2023, Toyota's global sales of vehicles will be 11.233 million units, ranking first in the world for four consecutive years, while Toyota's pure electric model sales in the same year will only be 104,000 units, accounting for less than 1% of the overall sales, significantly lagging behind the pace of the electric vehicle era.

1. Electric vehicles have triggered drastic changes in the global automotive industry

China, Europe, and the United States are the top three markets for EVs that dominate the world. In 2023, China will account for 63.5% of global EV sales, Europe will account for 21% of global sales, and North America will account for 10%. As a major car producer, Japan accounts for only 1% of global electric vehicle sales, far behind other countries.

Among the top 20 global EV sales in 2023, BYD ranks first and Tesla ranks second, with the combined sales of these two automakers accounting for 34.2% of the total global EV sales. Among the top 20 car companies in the world in terms of electric vehicle sales, Chinese car companies account for 10, accounting for 42% of the world's total sales. Thanks to the boom in electric vehicles, China's car exports surpassed Japan's last year and jumped to the world's first. Toyota, as a representative of Japanese car companies, has ranked among the top 20 in the world in terms of electric vehicle sales for the first time, but its global share is only 1.1%.

From the perspective of the market value of global car companies, Tesla and BYD, two electric vehicle companies, are also particularly eye-catching.

As the global leader in electric vehicles, Tesla is not as good as Toyota in car sales, but it has far surpassed Toyota in terms of stock price, ranking first among global automakers. In October 2023, the total market capitalization of the 62 major automakers listed on the main board of the world was US$2.213 trillion, and Tesla's market capitalization was as high as US$782.5 billion, 3.3 times the market value of the second-ranked Toyota. The combined market value of Tesla and BYD, which ranks third, accounts for 41.4% of the total market value of these 62 large car companies, showing that the capital market favors new electric vehicle forces.

2. Hydrogen fuel cell vehicles or electric vehicles? Toyota's new energy transformation dilemma

According to the financial report for fiscal year 2022 (April 1, 2022 to March 31, 2023), Toyota's global sales reached a record 37.15 trillion yen and operating profit reached 2.73 trillion yen. However, the Japanese market, which accounts for only 23.5% of Toyota's sales, contributed nearly 70% of operating profit. In other words, although Toyota's sales in the international market are huge, its profits are not high, and it is the local market that supports this giant elephant.

In the Japanese market, gasoline vehicles are still the mainstream. In 2023, 89,000 electric vehicles will be sold in Japan, accounting for only 2.2% of new vehicle sales. Toyota, the hegemon of fuel vehicles, is trying its best to sing the praises of electric vehicles, and even hinder the Japanese government's implementation of electric vehicle policies, in fact, in order to maintain the domestic market. At a press conference of the Japan Association of Automobile Manufacturers in September 2021, Akio Toyoda said, "If the Japanese government starts to implement a carbon neutrality plan mainly for electric vehicles, Japan will lose 5.5 million jobs and 8 million new car production capacity by 2030." "The reason why the penetration of electric vehicles in Japan is so slow is not unrelated to Toyota's hijacking.

In fact, among traditional car manufacturers, Toyota is the first group of car companies to develop new energy technology, but Toyota is betting on hydrogen fuel cell vehicles, not pure electric vehicles.

In 1992, Toyota began developing hydrogen fuel cell vehicles. The Japanese government and Toyota regard fuel cell vehicles as the ultimate direction for future vehicle development, and focus on long-term investment. In the field of hydrogen fuel cells, Toyota holds more than 50% of the world's patents and is in a leading position in the world. In 2014, Toyota launched the world's first mass-produced hydrogen fuel cell vehicle, the Mirai, but sales growth has been slow due to high prices and insufficient hydrogen refueling stations. As of July 2023, cumulative sales of fuel cell vehicles in Japan are only 8,283 units.

The serious lag in the popularity of hydrogen fuel cell vehicles and the rapid development of electric vehicles have exceeded Toyota's expectations, and Akio Toyoda's boycott of electric vehicles should be an attempt to buy more time for Toyota, which is experiencing a "Nokia moment" torture.

Toyota has downplayed the development path of electric vehicles, and has announced that it plans to launch 10 pure electric vehicles by 2026, and is focusing on the development of "all-solid-state batteries" as the next generation of on-board batteries, with a view to overtaking in corners. Compared with lithium batteries, all-solid-state batteries have the characteristics of short charging time, light weight, and long range, and Toyota plans to achieve mass production and commercialization of all-solid-state batteries in 2027-2028. Toyota has also received a subsidy of up to 117.8 billion yen from the Japanese government for this R&D program. Japan's most valuable company actually receives astronomical subsidies from the government, and we have to admire Toyota's means and ability to hold the government hostage.

However, in contrast to Toyota's repeated postponement of the mass production schedule of solid-state batteries, in February this year, Taiwan's Huineng announced that the world's first solid-state battery mass production line was put into production, and in April, GAC announced that it would realize the installation of solid-state batteries in 2026, Toyota's efforts in this field are facing severe challenges.

3. The three revolutions of electric vehicles

As early as 2010, Zhou Muzhi, a professor at Tokyo Keizai University, pointed out the resistance to Toyota's development of electric vehicles in a column "Toyota's Real Crisis" in Xinhua News Agency's "Globe" magazine, and predicted Toyota's crisis today. The article argues: first, Toyota has no technical advantage in the battery field at the core of electric vehicles; second, electric vehicles that do not need engines, auto parts are sharply reduced by one-third, which makes Toyota not only lose the strength of the engine, but also the engine-related suppliers and employees will become a heavy burden. On the contrary, most of the new electric vehicle players have no historical baggage, and many have not even produced cars in the past. Toyota is not faced with a purely technical problem, but a structural problem. Professor Zhou Muzhi clearly pointed out in the article: "Toyota, which has rushed to the top in the old industrial environment and production mode, will be impacted by the new electric vehicle forces from Tesla, BYD and other emerging forces."

Recently, Professor Zhou Muzhi further pointed out that electric vehicles have triggered three revolutions in the automobile industry. The first is the energy revolution, in which electric vehicles not only replace internal combustion engines with electric motors, but also enable vehicles to be perfectly matched with renewable energy, which is an important path to achieve carbon neutrality. Today, in the eyes of investors, Tesla's valuation in the field of autonomous driving is even far greater than its electric vehicle production itself; the third is the manufacturing revolution, since Ford invented the assembly line production, the process of automobile production has not undergone major changes, until the electric vehicle has reduced one-third of its parts due to the removal of the engine, and then under the production process change of the new forces of car companies led by Tesla, it has further sharply reduced auto parts. The processes and processes of automobile manufacturing are undergoing a radical revolution.

Fourth, the automobile industry has entered the era driven by Moore's law

In April 2023, the International Energy Agency (IEA) released its Global Electric Vehicle Outlook report, predicting that global electric vehicle sales will exceed 40 million units by 2030, accounting for more than 30% of new vehicle sales.

The rapid development of electric vehicles has not only brought opportunities to the automobile industry, but also brought crises to traditional car companies. While various car companies are rushing to seize the electric vehicle track, there are also some old car companies that are still obsessed with fuel vehicles, and even sing about electric vehicles.

In the field of intelligent driving, Tesla, Huawei, Xiaomi and other new car-making forces, which have a background in technology companies, have more advantages than traditional car companies. At the end of last year, Tesla released the latest version of its Full Self-Driving (FSD) system and announced that it would release a robotaxi in August this year. Huawei, Xiaomi and other science and technology companies, which are strong in the field of communication and AI, will compete in electric vehicles, which will further promote the development of automotive intelligence.

Moore's Law, published in 1965, states that the number of transistors in semiconductors can double every 18 months, and the price of semiconductors can be halved. Since then, human society has evolved at an unprecedented speed under the influence of Moore's Law. Professor Zhou Muzhi defines this stage of development as the "Moore's Law-driven era".

Professor Zhou Muzhi believes that "the electronics industry, as the first Moore's Law-driven industry, has become the fastest growing industry in the world since the 1980s. With the development and penetration of AI, the automotive industry has become a Moore's Law-driven industry today. The logic of enterprise competition in the automotive field has completely changed, and it must be science and technology innovation enterprises that lead this great change.