Toyota cuts 2023 EV sales forecast by nearly 40% in latest questionable strategy shift

Although Toyota expects record growth this fiscal year, it’s cutting its EV sales forecast by nearly 40%. In Toyota’s latest questionable strategy shift, the company will lean into hybrids to “avoid the price competition” in the EV market.

Toyota released its Q2 2024 fiscal results Wednesday, showing growth across the board. Through the first half of the fiscal year, Toyota (and Lexus) sales reached 4.7 million, up 114% from last year.

The automaker recorded sales growth across all regions. Electrified vehicle sales accounted for 35.3% of total sales. However, HEVs carried the load with 1.7 million sold compared to only 59,000 battery electric vehicles.

Despite issuing new guidance, Toyota expects a lower share of EV sales. The company still expects to sell 9.6 million vehicles this fiscal year but with a significantly lower share of electric cars.

Toyota cut its EV sales forecast from an expected 202,000 to only 123,000. That’s almost a 40% difference.

The company said the lower forecast is “reflecting the decline in the Chinese market.” Toyota’s CFO Yoichi Miyazaki mentioned on the company’s earnings call that the adjustment was due to the intensifying EV price war in China (via Automotive News).

Toyota bZ3 electric sedan in China (Source: FAW-Toyota)

Toyota raises HEV, lowers EV sales forecast

Instead, the Japanese automaker will lean into its heritage of HEVs. Miyazaki said this is “one of the ways we can avoid the price competition” that’s intensifying in China.

Toyota has already cut prices in the region as it looks to compete with market leaders like BYD and Tesla. The company also laid off workers through its joint venture with China’s Guangzhou Automobile Group (GAC).

Toyota bZ4X electric SUV (Source: Toyota)

Hybrids already account for around 28% of Toyota’s global sales. Despite lowering its EV sales forecast, Toyota said it expects to sell about 3.6 million HEVs, up from 3.5 million.

It also raised its PHEV target to 141,000 from 137,000. Toyota expects electrified sales to account for 37.2% of total sales, up from 35.5% currently.

Toyota vehicle sales forecast (Source: Toyota)

The Japanese automaker also raised key financial guidance. Toyota expects operating income to reach $30 billion (4.5 trillion yen), representing a nearly $10 billion increase (1.5 trillion yen) from its previous guidance. Meanwhile, operating margins are expected to be around 10.5% from 7.9% previously.

Electrek’s Take

Toyota cutting its EV sales forecast comes after US automaker Ford and GM made similar moves.

Ford said it would delay around $12 billion in EV manufacturing investments last week. It’s also putting off its 600,000 EV production goal for another year.

Meanwhile, GM is pushing back production of the Equinox EV, Chevy Silverdo RST EV, and GMC Sierra EV Denalli to “protect pricing.” Honda also revealed it’s scrapping plans to build affordable EVs with GM.

As I’ve argued before, these moves are short-sighted. The EV market will go through swings, but adoptions rates will continue climbing year-over-year.

Those investing now, will reap the benefits as electric vehicles continue gaining market share.

If Toyota is lowering its EV forecast now because of the “intensiftying price war” in China, how does it plan to keep up when other major auto markets like Europe and the US see EV sales accelerate.

China is the world’s largest EV market, giving us a preview of what will likely happen globally. Buyers are looking for the latest tech and software, not outdated gas-powered hybrid models.

The move comes despite Toyota investing an additional $8 billion into its North Carolina EV battery plant. Toyota will add an additional eight BEV and PHEV battery production lines for 10 total.

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