Lots and lots of internet ink has been spent here explaining the troubles that General Motors, Ford and the European automakers are having in the once-lucrative Chinese market as consumers turn more and more to homegrown car brands. But the rise of China’s auto sector hasn’t exactly been a walk in the park for Toyota, either. The world’s largest automaker has faced headwinds of its own in China, and now it’s preparing a counteroffensive.
That kicks off this edition of Critical Materials, our morning roundup of tech and mobility industry news. Also on deck today: another weekend of Tesla-related protests and stock price drops raise questions about the company’s future, and Nissan’s CEO is almost certainly on the way out. Let’s dig in.
30%: Toyota Leans On Lexus EVs For A Future In China
Photo by: Lexus
Toyota’s problem with Chinese automakers is a twofold one. On one front, it has to develop better EVs with newer and more experimental production techniques to keep up with the rise of companies like BYD, Xpeng, Nio and others. On the other front, its sales in China have been sliding for years. That’s not really any different from the world’s other automakers, but it shows that even Toyota isn’t invincible as far as China is concerned.
A story in Nikkei Asia outlines Toyota’s plans for a comeback, or at least a proper counteroffensive: winning approval for a Lexus EV and battery plant in Shanghai, except independently owned as Tesla has done for years. From that story:
The new subsidiary, Lexus (Shanghai) New Energy, will develop and build EVs as well as produce batteries. The plant will open as early as 2027 with an initial annual capacity of 100,000 vehicles.
Foreign automakers are struggling in the Chinese market. Toyota, whose sales volume there shrank 7% in 2024, is faring better than Japanese and Western rivals. The Lexus brand sold roughly 180,000 units in China, up slightly from 2023. But it is widely believed that more Lexus vehicles are being sold at a discount in the face of competition from Chinese EV makers.
While other foreign automakers are cutting capacity in China or leaving, Toyota has chosen to go on the offensive.
“We’ll engage with the Chinese EV market more seriously than before,” a Toyota executive said. “That resolve was confirmed by the board of directors that made the decision” to launch the Shanghai Lexus plant, the executive said.
The “independent” part is a big deal because it means Lexus won’t be tied to, or beholden to, local Chinese joint-venture partners, which was a requirement to operate in China for many years:
Toyota has apparently been exploring opportunities to fly solo in China since Tesla moved into Shanghai. But Toyota already has joint ventures with state-owned automakers FAW Group and Guangzhou Automobile Group.
“The local joint ventures were reluctant to allow Toyota to go independent,” a source close to Toyota said.
Lexus was key to finding a middle ground with the joint-venture partners. Lexus sales were already being handled by a wholly owned Toyota subsidiary. What were mostly imports would simply transition to onshore production and development, and the Lexuses will not compete directly with the joint ventures.
The plan will develop Lexus vehicles (and batteries) exclusively for China. The company is tapping executives who previously worked alongside BYD in China to lead the effort. With any luck, this will give the automaker the speed, local production and expertise to not completely lose out on such an important market. But will Chinese buyers get on board? Perhaps, if the cars are developed explicitly to meet their needs.
Expect a lot more Toyota EV news from us later this week.
60%: How Much Longer Can Tesla Keep This Up?
Photo by: YouTube
The Tesla protests aren’t slowing down.
This weekend marked demonstrations in multiple cities around the world, including Boston, New York (where six people were arrested), Lisbon, Portland, Tucson and more. As we’ve reportedly previously, people are increasingly furious at CEO Elon Musk’s efforts to slash the federal government—which President Donald Trump may now be reigning in somewhat—and his involvement in far-right politics in Europe.
Amid all of this, the Tesla stock price continues to sink, now reaching its lowest levels since early November and wiping out any gains it had after Trump was elected. Wall Street bet big on Musk’s relationship with the president to supercharge Tesla’s self-driving car efforts, but now the opposite seems to be happening.
Here’s why that matters, via Reuters:
Tesla continues to fetch a valuation far above those of the world’s biggest automotive and technology firms, judging by standard financial metrics. That’s because most investors and analysts have bought Musk’s pitch that the world’s most valuable automaker isn’t really a car company at all, but rather an artificial-intelligence pioneer that will soon unleash a revolution in robotaxis and humanoid robots.
Tesla’s electric-vehicle business accounts for almost all of its revenue but less than a quarter of its stock-market value, according to a Reuters review of more than a dozen analyses by banks and investment firms. The bulk of its worth rests on hopes for autonomous vehicles Tesla hasn’t yet delivered, despite Musk’s promises in every year since 2016 that driverless Teslas would arrive no later than the following year.
The $TSLA bulls say the company will lead a self-driving revolution that could cause people to abandon driving their personal cars by the end of this decade. The bears, however, have claws out like never before:
“There’s absolutely nothing stopping him from releasing this self-driving technology right now,” said Gordon Johnson, chief executive of investment-advisory firm GLJ Research, which recommends shorting Tesla’s stock. The tech isn’t road-ready, Johnson argues: “If he released it tomorrow, the jig would be up. These things would be wrecking across America.”
[…] And China’s BYD said last month it would offer—for free, as a standard feature—a driver-assistance technology similar to the Full Self-Driving system that Tesla sells in China for more than $8,000. “BYD is telling you there’s no value in self-driving,” said Johnson. “In fact, it’s so valueless that we’ll give it away.”
So in 2025, Tesla is dealing with declining EV sales, a very uncertain path to delivering the autonomous future its CEO has long promised, and he himself has become so unpopular that it’s unclear whether anyone will want those new products even if Tesla can deliver—all of which remains a big if.
90%: Nissan’s CEO Is Likely Toast, Could Be Replaced By Internal Candidate
Photo by: Nissan
In my experience, you don’t see news stories about a CEO tentatively being replaced unless that is about to happen. Thus, Nissan boss Makoto Uchida is likely on the way out soon. Sales have been hit-and-miss, and profits have been slumping for years. The company may only have a limited runway until it faces bankruptcy proceedings, and the collapse of merger talks with Honda a few weeks ago only added to concerns about Uchida’s leadership.
Here’s what could happen next, via Automotive News:
“The management must change because it has lost trust in implementing the turnaround,” said one person familiar with the plans. “We need a fresh start and the benefit of the doubt.”
The lead contenders to succeed Uchida are CFO Jeremie Papin and Chief Performance Officer Guillaume Cartier, said one person with insight to the nominating committee’s decisions.
Papin, the former head of Nissan’s troubled North American division, became CFO Jan. 1 as part of an emergency shuffle Uchida hoped will help rekindle growth and restore profitability. Cartier, the head of the Africa, Middle East and Europe regions for Nissan, was handed additional responsibility as chief performance officer in November to focus on recovery.
In any scenario, Nissan is not expected to focus this week’s round of restructuring on reviving merger talks with Honda Motor Co. or announce a new partnership with Taiwanese electronics giant Foxconn, one person said. Nissan’s board wants to focus on its own turnaround first.
Could new Nissan leadership lure Honda back to the table? And is that really the best option for the company?
100%: You Have Been Appointed Nissan’s New CEO. What Do You Do?
Photo by: Nissan
Congratulations! The ghost of Yutaka Katayama has appeared in your dreams and gifted you the power to become the new CEO of Nissan. Perhaps this is something you didn’t even want; too bad. You are now in charge of one of the world’s largest automakers and are directly responsible for its turnaround plan.
What do you do to keep Nissan alive and thriving in the future? Let us know in the comments.
Contact the author: [email protected]
