The future of driving is electric. Everyone in the automotive industry knows this, even if they can’t always admit it openly. But you don’t need to be some engineer or strategy lead or highly-paid consultant to know where the roadblocks are: high battery costs make the cars too expensive, the charging infrastructure isn’t everywhere yet and modern battery chemistries put limits on how far people can drive.
That’s the obvious stuff. The other, less-known part of the equation is how cars are built, including to mitigate some of those roadblocks. And that’s where the company that once hit reset on modern car manufacturing is struggling as much as anyone.
Welcome back to Critical Materials, our morning roundup of auto industry and technology news. Also on deck today: the unclear future of Volvo and Polestar under this supposed U.S. ban on Chinese car technology, and how Porsche’s electrified vehicle sales netted out in 2024. Let’s dig in.
30%: Toyota’s ‘Dilemma’: How To Make EVs
Photo by: InsideEVs
You may recall some stories from as far back as 2023 about how Toyota engineers were stunned when they performed teardowns (literally taking a competitor’s car apart to see how they’re made) of popular models from Tesla and China’s electric automakers. Automakers do that all of the time, but when Toyota’s engineers saw how differently these cars were made, it was the kind of wake-up call that no business wants to get.
But this excellent Bloomberg Businessweek story goes much deeper into detail about how Toyota is trying to catch up to new construction methods in the EV era—and whether it even can. In fact, it’s probably the best story I’ve read on this subject yet. A subscription may be required, but it is worth a read in full.
Here’s one excerpt, highlighting a seemingly anodyne part of any car: the 20-pound steel cross-bar at the front of the vehicle.
Today’s standard cross-car beam is the product of incremental improvements made across decades, and most versions of it have wound up under the hoods of internal combustion cars. This is a testament to the Toyota Production System, which continuously refines even the tiniest details of individual auto parts. Over untold iterations, the beam has been designed to keep the vibrations of an internal combustion engine from making their way to the passengers.
But electric motors don’t vibrate, and steel is heavy. These are among the reasons why Tesla Inc. and BYD Co., the top makers of battery-electric vehicles, manufacture similar beams out of plastic. Theirs weigh only about 14 pounds, according to Caresoft, and they’re cheaper and easier to install, too.
It’s a change that sounds so simple once you hear it, and intuitive, perhaps, if you’ve never dealt with a gas engine. If you’ve spent a lifetime thinking in terms of micro-improvements—the core of kaizen, the philosophy that underpins the Toyota Production System, or TPS—it’s an insight that might well prove elusive. “You cannot kaizen yourself from an ICE vehicle to a BEV,” says Caresoft President Terry Woychowski, a former General Motors Co. executive. “That is the dilemma for Toyota.”
Now apply that lesson to the entire car. You see the problem here?
What Tesla pioneered, and what Chinese automakers have run with, is a clean-sheet, top-to-bottom reset of how a car is built from the ground up—not with decades of carmaking tradition behind it but starting with the idea of a profitable battery-powered vehicle and going from there.
That’s essential because batteries are expensive and they will be for some time. So in order to actually make money on EVs, automakers have to streamline, cut costs and reinvent in other ways. This is part of why so many new EVs in particular just have screens and very few buttons. And so much is now made in-house, which runs counter to decades of outsourcing to countless third-party supplier companies.
As that story notes, a clean-sheet reinvention of everything isn’t how Toyota’s “kaizen,” or continuous improvement of existing systems, is supposed to work. Nor is it how Toyota has trained generations of engineers, product planners and businesspeople around the world. And that’s a system copied by nearly every other automaker out there; it is why Toyota’s being singled out here. It’s the company that taught the world how to make modern cars, and now modern cars are increasingly built in a different way. (This is also why Ford is doing its “skunkworks” EV project, although the status of that is anyone’s guess lately.)
Toyota clearly isn’t taking this lying down. Chairman Akio Toyoda balked at the idea that the Toyota Production System and “kaizen” cannot figure out the future:
When a reporter asked whether the debacle meant Toyota’s production philosophy was butting up against its limits, Toyoda fixed him with a cold stare and replied, “That’s completely wrong.” His team was hard at work, he said, using kaizen principles to resolve whatever problems might be at issue, just as it always had.
[…] “Japan’s automobile industry has been able to become a global leader, but now it’s on the defensive,” says former Nissan CEO Hiroto Saikawa. “It’s not very good at fundamentally rethinking things and learning from that. But no other country has such a deep bench of engineers of such quality. With an open mind to learning, they will still be able to do very well.”
Now, I took issue with some of that story, including an unfair dredging up of Toyota’s recall crisis in the 2010s or saying Toyoda has an “aversion to a fundamental rethink of the family business”; the dude was just out there at CES showing off a city of the future and investing in space travel. Everything I’ve seen indicates Toyota is serious about the future of mobility. It even reports that Toyota engineers are already using “some very un-kaizen workarounds” to make the bZ4X better.
But the point is this: it’s no longer about just competing with Tesla. It’s now about the Chinese auto industry that’s far bigger than any on earth and has a dozen Teslas waiting in the wings to steal Toyota’s market share globally. And the machine that changed the world can’t figure that out, everyone else is cooked too.
60%: What Now, Volvo And Polestar?
Photo by: InsideEVs
Meanwhile, here in the U.S., the Biden administration may have just effectively banned all Chinese cars from our roads. But here’s the fun part: nobody seems to know what the hell is going on. You can get up to speed (such as it is) with the story I just linked to, but we reached out to the two major players probably impacted here—Volvo and Polestar—to ask what’s up.
And they don’t seem to know either. Here’s what a Volvo Cars USA spokesperson told InsideEVs: “We are reviewing the rule from the U.S. Commerce Department. It is too early to speculate about potential consequences.” As for Polestar, it has not returned our requests for comment.
Very few Chinese-made cars are even sold in the U.S. One is the Polestar 2, which is kind of being de-prioritized for the Polestar 3 and Polestar 4 due to tariff issues (among other things), and the Volvo EX30, which barely just went on sale after being delayed due to the same thing. That car just can’t catch a break.
As The Verge noted, it’s basically up to the incoming Trump administration to enforce this. Polestar has an update on its business coming tomorrow morning. We may know more then.
90%: Porsche’s Overall Electrified Sales Up In 2024
Porsche Taycan Efficiency
Meanwhile, we know that Porsche had a not-great year on the EV front in 2024, on the heels of getting the updated Taycan out to customers and declining demand in China. But here’s a silver lining: the sales of electrified cars (EVs, hybrids and plug-in hybrids) still saw a respectable sales increase in 2024. From a Porsche spokesperson: “On a global basis (the numbers for which are released) the share of electrified cars sold increased from 22% to 27%. Almost half of these were purely electric vehicles.”
I’m excited for the new hybrid 911 and I hope the Taycan finds its footing. It’s still one of the best EVs you can buy, full-stop.
100%: The Case For Toyota
Photo by: InsideEVs
What doesn’t get a ton of play in that Bloomberg Businessweek story is how Toyota is actively working on its own ground-up EV platform. It mentions solid-state batteries, which will be a game-changing breakthrough if anyone can nail it down, but Toyota does have more Chinese-style EVs in the works. I’ve seen elements of these prototypes myself in Japan.
The question is, can Toyota get this stuff to market, profitably and in volume, in time to counter the likes of BYD? What do you think about that? Let us know in the comments.
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