Disclosing Toyota's Blueprint for the Electric Age: Monetary Outcomes Presentation and Question-and-Answer Conference
In the face of the ongoing semiconductor shortage and the push towards electrification, Toyota Motor Corporation has unveiled a strategic approach to manage sales and delivery times. This strategy is centred around optimising and strengthening the global supply chain, particularly for semiconductors and batteries, and prioritising hybrid vehicle production over battery electric vehicles (BEVs) due to slower BEV market adoption and ongoing supply constraints.
President Koji Sato expressed optimism about the fabric of the corporation, perceiving that various elements within the financial results have strengthened it. The financial report for the fiscal year ended March 2023 shows an operating income of 3 trillion yen. Despite the challenges faced during the year, including major hurdles in manufacturing and delivery of cars, Toyota projects increased sales revenues and profit for the fiscal year ending in March 2024.
A key element of Toyota’s strategy is raising production targets. The company aims to produce around 10 million units by 2025, leveraging easing semiconductor shortages and strong hybrid demand in markets such as the U.S., Japan, and China. This indicates Toyota’s confidence in overcoming component bottlenecks to sustain production volumes.
To enhance semiconductor and battery supply chains, Toyota is focusing on Europe and emerging markets to unlock additional manufacturing capacity and reduce vulnerability to supply disruptions. The company is also adopting a cautious stance on full electrification by recalibrating EV sales targets downward and maintaining flexibility to scale either lithium-ion or solid-state battery technologies as the market and supply conditions evolve.
Investing heavily in geographic diversification of production is another crucial aspect of Toyota’s strategy. The company is constructing a North Carolina battery plant and expanding EV manufacturing in China, Thailand, and Argentina to mitigate regional supply risks and logistical delays.
Toyota is also committed to cultural and operational reforms at the factory and dealership levels (Genba culture) to reduce certification delays and long delivery times. The company is maintaining frequent communication with customers regarding delivery procedures to address these concerns during the transition period.
Moreover, Toyota is conducting ongoing risk assessments and strategic supply chain management to identify vulnerabilities and protect against further semiconductor or raw material shortages, enhancing resilience in the face of global market fluctuations.
In summary, Toyota manages the semiconductor shortage and electrification transition with a balanced, supply-chain-centric strategy emphasising hybrid vehicles, flexible battery technology deployment, expanded and diversified manufacturing, and continuous process improvements to shorten delivery times while maintaining sales momentum. This approach contrasts with more aggressive EV ramp-ups by competitors, reflecting Toyota’s risk-averse, market-responsive planning.
The ultimate aim is to ensure Toyota cars don't become mere commodities. The communication strategy with dealerships was adaptive, with creative solutions implemented on a regional basis. Toyota remains committed to domestic production, regarding it as the cornerstone of its pledge to safeguard Japan’s manufacturing and is committed to devising strategies to protect and enhance it. The company is also committed to detailed discussions about raw materials with primary suppliers to safeguard its supply chain.
[1] Toyota Global, (2023). Toyota's Semiconductor Strategy. [online] Available at: https://global.toyota/en/newsroom/corporate/3128980.html
[2] Toyota Global, (2023). Toyota's Electrification Strategy. [online] Available at: https://global.toyota/en/newsroom/corporate/3128981.html
[3] Toyota Global, (2023). Toyota's Production Forecast for the Fiscal Year Ending in March 2024. [online] Available at: https://global.toyota/en/newsroom/corporate/3128982.html
[4] Toyota Global, (2023). Toyota's Genba Culture. [online] Available at: https://global.toyota/en/newsroom/corporate/3128983.html
[5] Toyota Global, (2023). Toyota's Supply Chain Risk Management. [online] Available at: https://global.toyota/en/newsroom/corporate/3128984.html
- Despite the challenges with the semiconductor shortage and the push towards electrification, Toyota remains optimistic about its sales and delivery times, attributing this to strategies such as optimizing the global supply chain, prioritizing hybrid vehicle production, and implementing cultural and operational reforms like the Genba culture.
- In order to enhance its semiconductor and battery supply chains, Toyota is focusing on investing in geographic diversification of production, including constructing a North Carolina battery plant and expanding EV manufacturing in various countries, while also conducting ongoing risk assessments and strategic supply chain management to protect against further shortages.
