Toyota (NYSE:TM) has revealed plans to bolster its electric vehicle (EV) technology development in China, signaling a strategic move to keep up with the intensifying competition in the world’s largest automotive market. The renowned carmaker is taking further strides to transition towards electric vehicles, as evident from its recent announcement outlining an ambitious EV strategy that encompasses a supply chain revamp and long-range battery development.
Once viewed as an avenue for limitless growth by foreign automakers, China’s automotive landscape has evolved, causing concern about dwindling market share due to the rapid rise of local rivals and cut-throat pricing strategies. Toyota’s response involves accelerating powertrain development through collaborations with suppliers Denso and Aisin, along with focusing on designing and developing “smart cockpits” tailored to meet the specific demands of the Chinese market.
Notably, Toyota is not solely betting on battery-powered EVs. Instead, it aims to fortify the development of a comprehensive range of electrified vehicles, including hybrids, plug-in hybrids, and hydrogen fuel-cell cars. The company believes that this “multi-pathway” approach aligns better with markets that may not be entirely prepared for a complete shift to battery-electric vehicles.
To bolster its EV pursuits, Toyota plans to pool engineering resources from its three joint ventures – FAW Group, Guangzhou Automobile Group (GAC), and BYD – at its largest research and development facility in China. Though the specific number of engineers involved was not disclosed, their focus will be on the electrification and intelligence aspects of vehicle development.
In response to a slight decline in China sales, including its luxury brand Lexus, which dipped 2.8% to approximately 879,000 units in the first half of the year, Toyota intends to enhance its competitive edge by significantly reducing manufacturing costs. This will be achieved by developing a local supplier base and streamlining production processes.
As part of its efforts to prioritize EV development, Toyota has already scaled down production at a joint-venture plant responsible for manufacturing its bZ4X EV. Moreover, it took measures to lay off 1,000 contract workers earlier this month.
Toyota’s (NYSE:TM) intensified focus on EV technology comes amidst similar strategic moves by other leading global automakers in China. BMW, the German luxury brand, recently expanded its investment in product development within China, establishing a new R&D hub in Shanghai to create EVs for global distribution. Likewise, Volkswagen entered into a partnership with China’s Xpeng Inc (NYSE:XPEV) to manufacture two new models starting in 2026, featuring Xpeng’s software. Additionally, Volkswagen and its Chinese partner SAIC are set to jointly develop Audi models and a new platform.
By stepping up its EV development endeavors and adopting a versatile electrification strategy, Toyota is determined to solidify its position in China’s competitive automotive market and cater to the evolving preferences of Chinese consumers.
Featured Image: Unsplash @ Christina Telep
Author Faith Yakubu 
