W37150 PDF Eng

W37150
TOYOTA’S FUTURE: HYDROGEN- AND BATTERY-POWERED VEHICLES
Yuri Taira wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or
ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to
protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveypublishing.ca. Our goal is to publish
materials of the highest quality; submit any errata to [email protected].
Copyright © 2024, Ivey Business School Foundation Version: 2024-06-14
Koji Sato became president of the Toyota Motor Corporation (“Toyota”) in April 2023.1 Prior to the
official announcement of his appointment, he stated in an interview with Automotive News that “We want
to ensure that hydrogen fuel cell electric vehicles (HFCEVs) stay a viable option” (March 2023).2 Despite
the fact that most countries throughout the world did not produce hydrogen or have the infrastructure or
supply chain to transport it, Toyota strongly believed that no other single technology could help reduce—
and ultimately eliminate—carbon emissions from modern life to the same extent.3 Due to the limited
number of hydrogen fuelling stations, fewer than 15,000 HFCEVs were to be found in the United States
—and all of them were in California.4 Meanwhile, 809,700 battery electric vehicles (BEVs) were sold in
the United States in 2022, and
64.5 per cent of those sales were of Tesla, Inc. (“Tesla”) models.5 In Europe, about 1.58 million BEVs
were newly registered in 2022, expanding their market share from 10 to 14 per cent.6 In Japan (Toyota’s
domestic market), the Chinese automaker BYD Auto (a subsidiary of BYD Co. Ltd.) began selling its
ATTO 3 electric sport utility vehicle (SUV) in January 2023, with a plan to establish more than one
hundred dealers across the country by the end of 2025.7 The momentum of the BEV boom in China helped
BYD surpass Tesla in terms of BEV units sold globally in 2022 (see Exhibits 1 and 2). In 2022, Toyota
enjoyed growing sales of both hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs);
however, sales growth for other electrified vehicles (EVs), especially BEVs, was slower, with only 24,466
units sold in 2022 (see Exhibit 3). Betting on HFCEVs had placed Toyota significantly behind in the BEV
market.
In 2022, Toyota declared that it would increase its BEV lineup to 10 new models by 2026 and that it
aimed to sell 3.5 million BEVs annually by 2030.8 Would 2026 be soon enough for Toyota to catch up in
the already hyper-competitive BEV market? The difference in production and development between
internal combustion engine (ICE) vehicles and BEVs was purportedly akin to that between flip phones
and smart phones. Just as the iPhone quickly displaced Nokia and BlackBerry, it was possible that Tesla
and BYD Auto could dominate the car market by 2026—and that Toyota might struggle to catch up with
them. Toyota planned to launch its BEV Factory, an organization dedicated solely to BEVs, in May
2023.9 Would Toyota, a strong leader in hybrid vehicles, be able to extend its empire to the BEV market?
Would Toyota’s cultivated technology for ICE vehicle production and the horizontal supply chains it had
built over decades work for the BEV value chain? The enormous differences between ICE vehicles and
BEVs regarding the drivetrain and other components required Toyota to establish a solid new foundation.
Sato acknowledged that Toyota faced a huge challenge; however, he maintained that “unlike with
smartphones, we’ve still got time.”10
This document is authorized for use only in Jurgita Sarkovaite's Innovation Impact Lab_ at Universidad Del Pacifico from Oct
2024 to Apr 2025.
Page 2 W37150
HISTORY OF TOYOTA
Kiichiro Toyoda, the son of the company’s founder, established the Automotive Production Division on
September 1, 1933, and began preparing to build prototype vehicles.11 Toyota was established as a
separate independent company in August 1937. 12 In the 1930s, the Japanese automotive market was
dominated by Ford and GM. Toyota’s first prototype passenger car, the “A1,” was developed by reverse
engineering GM and Ford products.13 From 1956 onward, Toyota started steadily producing 10,000
vehicles per month. The Toyota Model St10 Corona, launched in July 1957, led the company into the US
market, followed by the European market in 1963.14 Japanese automobiles were aggressively exported to
overseas markets in the late 1960s, with the US market playing a key role for Toyota.15 In 1966, the
Corona gained huge popularity in the US as a family second car, and the Corolla subsequently increased
its US market share in 1968. By 1971, the number of vehicles Toyota exported to the US annually
reached 404,000.16
Rapid Growth in the United States: The 1970s to the 1980s
Toyota underwent a major change in the 1970s. In the middle of the oil crisis, the US Congress passed the
first major Clean Air Act, which required a 90 per cent reduction in emissions from new vehicles by
1975.17 This shifted the market preference from big cars with large engines to small highly fuel-efficient
Japanese cars. With Japanese carmakers dominating roughly 50 per cent of the US automobile import
market, Toyota replaced Volkswagen as the top foreign carmaker in the US in 1975.18 With economic
globalization and the emergence of a borderless economy, Toyota had established overseas manufacturing
plants in 20 countries by the mid-1980s.19 Toyota’s cumulative production volume in Japan reached 50
million vehicles in 1986; this was the first time a Japanese automobile company had achieved this
figure.20 In the midst of the company’s rapid growth, one person cautioned against letting their guard
down and provided guidance on actions to be taken as the company moved toward the twenty-first
century: that person was Eiji Toyoda, the then chairperson of Toyota. His persistent feelings of
apprehension led Toyota to develop the Prius.21
From Hybrid to Hydrogen
In the summer of 1993, when BMWs, Mercedes, and other luxury cars still filled Japan’s streets (right
after the Japanese bubble economy burst), Eiji Toyoda initiated the development of a hybrid system called
the G21 project.22 Released in December 1997, Prius was the first mass-produced HEV combined with an
ICE and electric motor. 23 Toyota continually improved Prius, and the fourth model—with fuel efficiency
exceeding 40 kilometres per litre—was released in 2015.24 In the same year, about half the Toyota
vehicles sold in Japan were Prii (plural term for Prius), while the number of units sold globally reached 8
million.25 European and American automobile manufacturers in the ’90s and 2000s considered hybrids a
“bridging technology” because they were anticipating the next-generation technology, the fuel cell vehicle
(FCV),26 which ran on electricity generated from hydrogen. Toyota developed the first FCV model with a
hydrogen- absorbing alloy storage unit in 1996, followed by a second FCV model in 1997 featuring a
reformer that extracted hydrogen from methanol.27 In 2001, an HFCV (hydrogen fuel cell vehicle) test
model (which was fitted with a secondary battery and adopted control technology built up through
experience with Prius) was successfully developed; however, Toyota was unable to set a retail price for its
HFCV because the significant cumulative investment in research and development precluded an
appropriate retail price.28 Since the adoption of the Kyoto Protocol in 1997, there has been strong demand
for technologies to reduce greenhouse gases, along with high interest in FCVs from governments.29
Toyota decided to lease its first HFCV to the Japanese and US governments instead of launching it in the
market.30
2024 to Apr 2025.
Page 3 W37150
While Toyota was struggling with how to store hydrogen as fuel inside a vehicle, how to distribute
hydrogen to a hydrogen fuelling station (which cost much more than distributing fuel to a gasoline
station), and how to extract hydrogen with a cost comparable to gasoline, one BEV after another was
released to the market.31 Tesla launched the Model S in 2008, followed by Mitsubishi’s i-MiEV and
Nissan’s Leaf in 2010.32
In 2011, Toyota, Honda, Nissan, and 10 energy companies released a joint statement promising the
preliminary construction of one hundred hydrogen refuelling stations in Japan.33 In 2013, Toyota and
BMW formed a partnership in the fuel cell system.34 On November 18, 2014, Toyota launched the Mirai,
the first mass production HFCV,35 and in 2020, the second-generation Mirai was introduced; however,
sales had not been going well. Since 2021, Toyota has participated in 24-hour endurance races with its
HFCEV and made announcements regarding new technology, activities, and partnerships in a paddock. 36
Passing the Baton
In December 2022, Akio Toyoda, the then Toyota CEO, entered the “IDEMITSU 1500 SUPER
ENDURANCE 2022” (a 25-hour Thai endurance race) with the GR Corolla H2 Concept running on
liquid hydrogen and the CNF GR86 Concept running on carbon-neutral fuel. In the circuit, he approached
Sato and asked him casually, “Have a minute? Will you do me a favour?” Sato answered, “Absolutely!”
Akio continued, “Will you be the next president of Toyota Motor Corporation?” 37 Sato answered “yes” to
this momentous question in the racing circuit surrounded with people, but his answer was audible only to
Akio over the roaring race car engines and cheering fans. 38 Sato had joined Toyota in 1992 as an engineer,
became chief engineer of Lexus LC production in 2017, was named President of Lexus International Co.
in 2020, and later that year was also given responsibility for leading the GAZOO Racing Company as
president. The following year, Akio passed the baton of chief branding officer to him.39 Since 2021, Sato
had led the way for the participation of hydrogen-powered racing cars in racing events and had worked to
disseminate information about Toyota’s advanced technology and community-building efforts aimed at
achieving a carbon-neutral society.40 After the official CEO appointment was revealed, Sato received
many media requests for interviews and was often asked about the future of hydrogen investment. Sato
always answered that he believed hydrogen was the way forward for carbon neutrality. 41
TOYOTA’S HYDROGEN FUEL CELL ELECTRIC VEHICLE (HFCEV)
HFCEVs used hydrogen for fuel in an electrochemical process combining hydrogen and oxygen to
produce electrical energy and water and thus emitted no carbon dioxide or other harmful exhaust from
their tailpipes
—just water vapour (H2O).42 Hydrogen (H2) could be produced from natural gas, renewable energy
sources such as wind and solar, and water via electrolysis; 43 that is, it was available in limitless supply.
Hence, unlike the lithium, cobalt, and nickel relied upon by BEVs, 44 there was no concern about running
out of hydrogen. A hydrogen fuel cell could store more energy than batteries, giving HFCEVs a longer
driving range than BEVs45; furthermore, it took only 3 to 5 minutes to refuel them for another 300 to 400
miles. In contrast, charging BEV batteries could take anywhere from 30 minutes to several hours,
depending on the charging station and battery capacity. 46 The hydrogen fuel cell had a high energy
density, which allowed HFCEVs to provide a significant amount of power within a small and lightweight
system. Its smaller battery packs were lightweight and enabled greater storage capacity. Given all this,
drivers could maintain the same fuelling behaviour and still have the same spacious vehicle design as
gasoline vehicles.
Toyota, Honda, Mazda, BMW, Hyundai, and Hopium had all developed hydrogen-powered vehicles.
Among them, Toyota, Honda, and Hyundai had offered HFCEVs commercially. Honda discontinued
production of all Clarity models on June 15, 2021.47 Hyundai sold 31,995 units of the Nexo SUV since its
2024 to Apr 2025.
Page 4 W37150
launch in 2018; however, more than 90 per cent of the Nexo’s global sales were made in Hyundai’s
domestic market (South Korea),48 and fewer than 1,500 were sold in the United States.49 Toyota had
started working on FCVs in 1992 when none of its counterparts had even considered the idea.50 Toyota
introduced its first HFCEV, the Mirai, in 201451 and had sold 21,864 units globally by the end of 2022.52
Toyota also started producing hydrogen in Thailand in November 2023 and used biogas as part of its
project with the Thai conglomerate Charoen Pokphand Group to realize a decarbonized transport sector in
Thailand.53
As mentioned above, HFCEVs had significant advantages over BEVs; however, they also had critical
disadvantages. First, the total capital costs for a hydrogen fuelling station were US$1.9–4.2 million54 in
the US55 and US$5 million in Japan. 56 Meanwhile, for an EV charging station in the US, a 150–350
kilowatts direct current fast charging (DCFC) unit could cost anywhere from US$45,000 to over
US$100,000.57 Not only were the infrastructure costs associated with HFCEVs much higher than those
associated with BEVs, but hydrogen production was not yet commercially viable on a large scale, and as
such costs were significantly higher.58 These disadvantages led to a small or null number of hydrogen
fuelling stations in a country or region, allowing BEVs to dominate the nongasoline car market (see
Exhibit 4).
TOYOTA BATTERY ELECTRIC VEHICLE (BEV) DEVELOPMENT
While not giving up on hydrogen technology, Toyota started developing a dedicated platform for BEVs,
the “BEV Factory,” and hoped to start mass production in 2026. The company aimed to provide 1.5
million BEVs (mainly in the United States and China) in 202659 and forecast that by 2030, 1.7 million
units out of
3.5 million units of 30 BEV models in all would be provided by BEV Factory. 60 Toyota planned to invest
JPY 4 trillion61 in R&D for BEV and JPY 2 trillion for batteries.
Since launching the Prius, the world’s first mass-produced HEV, in 1997, Toyota had been a pioneer in
electrified vehicle development with a focus on HEVs. However, it took Toyota 15 years to launch its
BEV, the RAV4 EV, via a partnership with Tesla,62 and only 208 units (mainly in the US) were sold in
2012.63 On June 6, 2019, Toyota and the Subaru Corporation agreed to jointly develop a platform
dedicated to BEVs for midsize and large passenger vehicles.64 The platform was called e-TNGA and
allowed them to offer various types and sizes of vehicles, with different battery capacities and options for
front-wheel drive, rear-wheel drive, or dual motor all-wheel drive. 65 Toyota and BYD Co. Ltd. signed an
agreement to establish a joint company dedicated to research and development for BEVs on November 7,
2019. 66 Through these collaborations, Toyota launched the bZ4X electric SUV in 2020, and its BEV sales
rose from zero units in 2019 to 3,346 in 2020, 14,407 in 2021, and 24,466 in 2022 (see Exhibit 3).
China generated 20.3 per cent of Toyota’s sales by unit in 2022 (see Exhibit 5); however, the surge in EV
adoption (along with the growing strength of local brands) led to an EV price war in the market. The bZ3
electric sedan co-developed for the Chinese market by Toyota, BYD Auto, and FAW Toyota (a joint
venture between FAW Group and Toyota) through BYD Toyota EV Technology (BTET) was available
for presale in China in March 2023, with a starting price range of CN¥169,80067 (under US$25,000) to
better compete in the market.68 Toyota built the bZ3 BEV on the e-TNGA platform (divided into front and
rear modules), which was used for its bZ4X; however, its lithium-ion LFP 69 battery, motor, and electric
control system were manufactured by BYD. Thus, Toyota had to rely on BYD’s technology.
Koji Sato designated Takero Kato, the president of BTET, as president of BEV Factory in April 2023. 70
Under the direction of Kato, BEV Factory aimed to produce vehicles with all aspects optimized for BEVs,
from batteries and platforms to production methods.71 Toyota’s next-generation BEVs (launching in 2026)
would not be built on the e-TNGA platform. Instead, they planned to build them on a new modular
2024 to Apr 2025.
Page 5 W37150
structure
2024 to Apr 2025.
Page 6 W37150
with three sections: front, centre, and rear, but only the centre section would house batteries. This left the
front and rear sections unaffected by batteries and allowed them to be rapidly incorporated into vehicles.72
This approach sought to reduce both cost and weight compared to conventional models, as well as to
boost productivity. At BEV Factory, the company planned to increase energy density and improve vehicle
efficiency through aerodynamics and other factors in order to double the cruising range of conventional
batteries to 1,000 kilometres.73 Toyota also developed all-solid-state batteries and planned to mass
produce them in 2027 to 2028. 74 The all-solid-state batteries were meant to improve the cruising range to
1,500 kilometres and reduce the charging time to less than 10 minutes. 75
THE GLOBAL BEV ENVIRONMENT
On March 28, 2023, the European Union (EU) approved a landmark law to end the sale of new CO2-
emitting cars by 2035.76 The EU took serious measures to meet the challenge of climate change, and the
demand for sustainable cars (including hybrids and electric vehicles) was high.77 New registrations for
BEVs surged by a massive 58 per cent to reach 151,573 units in March 2023, which boosted BEVs’ share
of the overall European auto market to 13.9 per cent—up from 11.4 per cent in March 2022. 78
The US targeted making 50 per cent of all new vehicles sold in 2030 zero emissions vehicles, including
BEVs, HFCEVs, and PHEVs.79 The country had seen steady growth in the BEV market share since 2018,
including a 7.3 per cent increase in the first quarter (January to March) of 2023 (5.3 per cent in Q1
2022).80 By the end of 2022, the US had approximately 140,000 EV charging units, and 28,000 of those
were DCFC units. The Biden administration aimed to deploy 500,000 public EV charging units in the US
by 2030.81
The adoption of BEVs in Asia was slow and accounted for only 3 per cent of total car sales in the region
in 2020. 82 The main reason for this delay was the very limited government support. However, overall
automobile market growth of over 30 per cent was expected by 2030. Toyota planned to increase its sales
in Asia and emerging countries and looked to HEVs to strengthen its revenue foundation (see Exhibit 6).
The Asian market share of HEVs and BEVs in 2030 was expected to be 21 per cent and 5 per cent,
respectively (see Exhibit 7).
Among Asian countries, China was the exception. China was clearly committed to BEVs in terms of both
production and consumption (see Exhibit 8). In September 2014, the Chinese government exempted new-energy
vehicles, including BEVs, PHEVs, and HFCEVs, from the 10 per cent vehicle purchase tax.83 This tax
break was initially set to expire in 2023, but was extended to 2027.84 BEVs accounted for 24 per cent of
all vehicle sales in March 2023.85 EV production in China accounted for 40 per cent of the world market
in 2020, and China’s market share of battery components increased from 43 per cent in 2014 to 60 per cent
in 2020—mainly due to the country’s tight control of the supply of raw materials, including lithium,
cobalt, and nickel.86 BYD Auto, Nio, Wuling, Xpeng, and Zeekr were some of the major Chinese EV
producers at home and abroad; BYD Auto in particular was a rising star and began dominating nearly all
aspects of the BEV value chain.
BYD AUTO
Due to a combination of the COVID-19 pandemic and surging gasoline prices, BYD Auto started soaring
in 2022.87 The company sold 1.85 million BEV units (more than triple the number of units sold the
previous year88), surpassing the number of BEV units sold by Tesla that year (see Exhibit 2). BYD, which
stood for “Build Your Dream,” did not originally start out as a carmaker. It began by manufacturing
rechargeable batteries in 1995 and became Motorola’s and Nokia’s first lithium battery supplier in China
the following year.89 In 2002, BYD was the largest producer of rechargeable batteries in China and was
2024 to Apr 2025.
Page 7 W37150
listed on the
2024 to Apr 2025.
Page 8 W37150
Hong Kong stock exchange the same year.90 Riding the wave of success, Wang Chuanfu, BYD’s founder,
decided to extend the business to car manufacturing and acquired a small carmaker (Qinchuan
Automobile) in 2002.91 Wang launched the BYD Auto subsidiary in 2003 and had the engineers take apart
all kinds of cars, including his own Mercedes-Benz S-Class, to learn how to build and assemble them92—
just as Toyota had done when it reverse engineered GM and Ford products in the 1930s.
The BYD cars were equipped with Mitsubishi engines in 2002; however, BYD Auto was able to power
all of its vehicles with its own engines within a few years.93 In 2005, BYD Auto released the F3, which
looked almost identical to Toyota’s Corolla but cost much less.94 BYD Auto was able to produce a car
that was cheaper than foreign models but much better quality than its Chinese competitors.95 As BYD
Auto emerged as a key player in the Chinese car market in 2008, US billionaire investor Warren Buffet
purchased HK$1.8 billion96 of BYD shares (about a 10 per cent stake) and cited BYD as “one day
becoming the largest player in a global automobile market that was inevitably going electric.” 97
At the time, Chinese automakers’ engines and gearbox technologies were far behind those of their
international peers, and Wang saw EV as a way to leapfrog. As he commented, “For an electric vehicle, a
single wire and four motors are enough to achieve four-wheel drive and seamless variable speed. No
engine or gearbox is needed.”98 In 2010, China still did not have enough charging stations; thus, BYD Auto
provided electric buses in Shenzhen and Changsha, which ran repeatedly along scheduled routes within
limited city areas, as well as electric taxis in Shenzhen—both short-distance driving businesses were
suitable for BEVs.99 Until 2013, BYD Auto was re-engineering successful vehicles and branding them as
BYD products. However, in 2016, the company appointed Wolfgang Egger (ex-Alfa Romeo and SET
designer) as its lead design director and initiated independent vehicle designs with more distinctive
styling.100
Among them, the Han (released in 2020) was a mid-to-large luxury sedan with a BEV or PHEV
powertrain. The Han incorporated the Blade Battery, which could withstand extreme test conditions such
as being crushed, bent, heated in a furnace to 300 degrees, or overcharged by 260 per cent—none of
which would result in a fire or explosion.101 The Blade Battery also contributed to reducing the overall
volume and weight of BYD’s cars by 10 per cent. In May 2023, BYD’s direct competitor, Tesla, started
using BYD’s Blade Battery for the Model Y electric crossovers produced at the Berlin Gigafactory
because BYD’s new battery packs charged at a faster speed for the entire duration of the charge than
those available from Tesla’s main battery supplier, CATL’s Kirin battery. 102 In 2022, CATL dominated
more than one-third of the BEV battery market, and BYD Auto was ranked third, with a market share of
12 per cent (see Exhibit 9).
BYD Auto’s Business Model
BYD did not rely on capital-intensive machines but instead stripped back its manufacturing process and
relied on cheap manual labour. The company manufactured most of its products in-house, including the
battery, which alone accounted for about 30 per cent of a vehicle’s total cost.103 BYD’s rapid growth was
supported by vertical integration, as well as by its vehicle design, manufacturing components, and
overseas distribution.104 It was said that BYD would remain competitive because its high vertical
integration model could not be easily duplicated by other Chinese automakers.105 BYD had a huge
advantage in self-producing most of its vehicle components, which lowered costs and boosted the speed at
which new models could be developed. 106 An employee from a Japanese automaker’s product planning
division commented in an interview with Nikkei, “Chinese makers, including BYD, are putting out new
cars at a fast pace, and we can’t catch up.” 107 In April 2022, BYD Auto announced that it would no longer
produce gasoline-powered vehicles.108 This full shift to EVs was followed by BYD’s entrance into the
Japanese market in January 2023.
2024 to Apr 2025.
Page 9 W37150
BYD Auto’s Market Entry in Japan
Even though BYD Auto was globally renowned as a BEV battery manufacturer, its vehicle sales
remained largely dependent on the domestic market (2022 revenue: 78.4 per cent from China, including
Hong Kong, Macau, and Taiwan / 21.57 per cent from overseas).109 As part of BYD Auto’s global
strategy, the company entered Japan in January 2023 with the Atto 3, a medium-sized SUV priced at JPY
4.4 million (US$33,800), which was cheaper than Tesla’s Model 3. 110 BYD Auto entered Japan with a key
cost advantage over its rivals as a battery manufacturer.111 Due to the lack of charging stations, only 3 per
cent of passenger cars sold in Japan in 2022 were BEVs.112 However, Atsuki Tofukuji, president of BYD
Auto Japan, confidently remarked, “The Japanese EV market overall is getting bigger, and this is a good
time to be entering.”113 BYD Auto already dominated the market with a 70 per cent share of Japan’s
commercial electric buses in 2023. 114 It seemed that the company was implementing the same strategy it
had adopted in China. With plans to open one hundred dealers by the end of 2025, BYD Auto was going
to stretch its distribution network from northernmost Hokkaido to southernmost Okinawa in Japan. 115 The
number of employees at BYD was 570,060 as of June 2023,116 which already exceeded Toyota’s 375,235
as of March 31, 2023.117 Japan generated 13.5 per cent of Toyota’s total sales (by units) in 2022 and was
one of the top three markets for the company (see Exhibit 5).
TESLA
While Toyota faced this threat from BYD Auto in its home market, another BEV manufacturer posed a
threat to one of the company’s main markets. The United States generated 22 per cent of Toyota’s total
sales (by unit) in 2022, more than Japan or China (see Exhibit 5). On July 1, 2020, Tesla surpassed
Toyota in market value for the first time; the market capitalization of Tesla, which sold only 370,000
vehicles annually, stood at nearly US$208 billion, whereas the market capitalization of Toyota, which
sold 100,000,000 vehicles annually, was US$202.74 billion. 118 Due to Tesla’s poor performance in China
and Tesla CEO Elon Musk’s controversial acquisition of Twitter on April 20, 2023, the market
capitalization of Tesla fell to US$55 billion; however, at its peak on October 25, 2021, it exceeded US$1
trillion in market value. This was about four times higher than Toyota (US$284.11 billion) and eclipsed
the top five auto makers (Toyota, Volkswagen, Daimler, Ford, and GM) combined. 119 Toyota surpassed
the total market value of European and US automakers in 2000. The stock market had predicted one small
Japanese car maker’s future in 2008, before it actually became the world’s largest-selling automaker ;120
investors were now expecting Tesla to grow exponentially, and soon.
Tesla sold its vehicles via direct distribution in lieu of a dealership network. Tesla moved most of its sales
online and maintained physical stores for display and test-driving purposes. Besides sales and
distribution, Tesla also vertically integrated its value chain, from battery production, manufacturing, and
vehicle assembly to power electronics, solar power generation, and the supercharger network. Tesla
achieved 80 per cent vertical integration and planned to pursue even higher rates of vertical integration in
the future.121
Tesla did not have a legacy of ICE technology because it had started out as a BEV manufacturer.122 Tesla
had no affiliations with dealer networks because it sold vehicles directly online; this allowed for
significantly lower distribution costs and high sales efficiency.123 Finally, Tesla did not have a legacy of
Tier 1 suppliers such as Bosch or Denso Corporation—unlike Toyota, which had horizontally outsourced
its development for decades. Thus, Tesla could be innovative in a timely manner without any delays
emerging from Tier 1, 2, or 3 supply chains.124 On the one hand, free of those legacies, Tesla had
intensively integrated its value chain vertically and possessed flexible in-house development capabilities.
On the other hand, based on those three legacies, traditional automakers (including Toyota) had grown
successfully in the past.
2024 to Apr 2025.
Page 10 W37150
THE TOYOTA PRODUCTION SYSTEM (TPS)
Toyota’s vehicle production system was called the Toyota Production System (TPS) and was studied
worldwide.125 The TPS was established based on many years of continuous improvement and involved the
two concepts of jidoka and Just-in-Time (JIT).126 Jidoka meant automation with a human touch and a
machine that came to a safe stop whenever an abnormality occurred.127 Building and improving systems
by hand until they were reliable and safe was required to achieve jidoka. 128 The JIT concept was that each
process produced only what was needed for the next process in a continuous flow; this improved Toyota’s
productivity because the company made only what was needed, when it was needed, and in the amount
needed. 129 Under the JIT system, Toyota produced quality products efficiently through the complete
elimination of waste, inconsistencies, and unreasonable requirements on the production line.130
With mass production (economies of scales), Toyota’s costs per unit declined, and the inventory quickly
responded to customer demand. However, maintaining an inventory that exceeded customer demand was
a waste of both production and inventory. The TPS minimized inventory and eliminated production and
inventory waste; thus, Toyota’s operating margin ratio, operating income, and revenue were ranked first
in the automotive industry. Toyota’s operating income was JPY 2.72 trillion in FY2023 (JPY 2.99 trillion
in FY2022),131 but the results for the other Japanese carmakers (i.e., Honda and Nissan) in FY2022 were
JPY 0.83 trillion132 and JPY 0.15 trillion,133 respectively.
During the supply chain disruption triggered by the COVID-19 pandemic, Toyota, the originator of lean
production methods, fared better than most of its competitors and surpassed General Motors and
Volkswagen to become the top seller in North America in 2021. 134 The TPS was supported by Toyota’s
suppliers, especially its JIT manufacturing.135 At the assembly facility in Georgetown, Kentucky, as
vehicle bodies emerged from the paint shop, an order was transmitted to Toyota’s seat supplier—which
was less than an hour away. The supplier then built the correct colour and model seats and delivered them
in the correct sequence to the assembly line a few hours later.136 At the San Antonio plant, the seat
supplier was located 10 yards away from the final assembly line, as the lead time was just 20 minutes .137
Toyota built long-term supplier partnerships that were not merely transactional in nature. 138 When a
supplier had an issue, Toyota offered to help them address it, and the suppliers were willing to accept that
help.139 The TPS was central to Toyota’s culture and core philosophy: to motivate and develop people
who identified and solved problems quickly, within a culture of continuous improvement.140
THE TOYOTA DEALER NETWORK
At the company’s financial results meeting in 2019, the previous CEO of Toyota, Akio Toyoda, cited
Toyota’s competitive advantages.141 First was the power of manufacturing based on the TPS, and second
was the power of its worldwide network.142 The power of its network reflected Toyota’s history, tradition,
and corporate culture.143 The cohesive relationship between Toyota and its dealers began with the founder
of Toyota, Kiichiro Toyoda. Kiichiro often said, “Selling cars is much harder than manufacturing
them.”144 He aways respected dealers and instructed his engineers to heed their feedback as much as
possible.145 Akio also took considerable care of dealers, saying, “The number one is users, the number two
is dealers, and the number three is makers. We should not change this order.”146 As of 2019, Toyota had
approximately 5,000 dealers in Japan (see Exhibits 10 and 11).147 Nissan and Honda each had only 2,000
dealers in Japan.148 Toyota sold approximately 1.5 million units per year in Japan, which accounted for
more than a quarter of all car sales in Japan.149 Many of Toyota’s current dealers went back three
generations, and a solid foundation of trust had been established from generation to generation. 150
2024 to Apr 2025.
Page 11 W37150
THE FUTURE PATH: HYDROGEN- AND BATTERY-POWERED VEHICLES
Toyota successfully transferred its ICE technology to the hybrid engine and sold 2.69 million hybrid
vehicles (including HEVs, MHEVs, and PHEVs) in 2022 alone. This undisputed king of hybrid car
technology was transferred to HFCEV’s engine as well. However, the engine and transmission were
replaced by the battery and motor for BEVs; ICE technology thus became superfluous in this regard.
The TPS (based on Toyota’s established supplier network and dealers) had contributed significantly to
sales growth for decades. However, the current top two BEV manufacturers, BYD Auto and Tesla, had
successfully achieved a high degree of vertical integration, from vehicle design to manufacturing
components and distribution.151 Tesla achieved about 80 per cent vertical integration in its manufacturing
supply chain and sold directly to consumers, with literally no suppliers or dealers.152 BYD remained
competitive in the BEV market because its high vertical integration model was not easily duplicated by its
peers. Toyota’s top three markets (the US, China, and Japan) were now threatened by Tesla and BYD,
respectively.
Toyota planned to launch BEV Factory in May 2023, but the scheduled mass production volume by 2030
was only 1.7 million BEVs a year. This was less than 18 per cent of the total Toyota sales units in 2022
(see Exhibit 5) and less than BYD’s sales units in 2022. The Volkswagen Group planned to produce eight
million BEVs in 2030, while Ford aimed for two million by 2026.153 Although the market was skeptical of
hydrogen, Toyota planned to establish the Hydrogen Factory in July 2023.154 Was this the right strategy
for the company? Would the company be able to leverage its brand reputation, robust distribution
network, and efficient production capabilities in the BEV market? Sato’s journey as CEO of the world’s
top-selling automaker (in 2020, 2021, and 2022) 155 had just begun in April 2023, and he fully
acknowledged the enormous challenges faced by the company in both the HFCEV and BEV markets.
2024 to Apr 2025.
Page 12 W37150
EXHIBIT 1: THE NUMBER OF BEVS SOLD IN 2022 BY COUNTRY/REGION
649,65
0
978,596
2,761,887 6,073,602
China EU USA Others
Source: Anthony Sassine, “Electric Vehicles Rebounding as Sales Surge,” Krane Shares, July 24, 2023,
https://krane shares.com/electric-vehicles-rebounding-as-sales-surge.
EXHIBIT 2: NUMBER OF BEVS SOLD BY TOP CARMAKERS IN 2022
2,000,000
1,850,000
1,800,000
1,600,000
1,400,000 1,310,00
0
1,200,000
Unit
1,000,000
t
800,000
600,000
400,000
200,000 133,246 122,486

120,757 24,466 4,46
- 9
BYD Tesla Li Auti NIO XPENG Toyota Rivian LUCID
Source: Anthony Sassine, “Electric Vehicles Rebounding as Sales Surge,” Krane Shares, July 24, 2023,
https://krane shares.com/electric-vehicles-rebounding-as-sales-surge.
2024 to Apr 2025.
Page 13 W37150
EXHIBIT 3: TOYOTA’S ELECTRIFIED VEHICLE SALES
3,000,000
2,500,000
2,000,000
Volume
1,500,000
(Unit)
1,000,000
500,000
-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
HEV MHEV PHEV HFCEV BEV
Note: HEV = hybrid electric vehicle; MHEV = mild hybrid electric vehicle; PHEV = plug-in hybrid electric
vehicle; HFCEV = hydrogen fuel cell vehicle; BEV = battery electric vehicle.
95,000
90,000
85,000
80,000
75,000
70,000
65,000
60,000
55,000
50,000
Volume
45,000
(Unit)
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
MHEV PHEV HFCEV BEV
Note: MHEV = mild hybrid electric vehicle; PHEV = plug-in hybrid electric vehicle; HFCEV = hydrogen fuel cell
vehicle; BEV
= battery electric vehicle.
Source: “Sales, Production, and Export Results for August 2023,” Toyota Motor Corporation, September
28, 2023, https://global.toyota/en/company/profile/production-sales-figures/202308.html.
2024 to Apr 2025.
Page 14 W37150
EXHIBIT 4: HFCEV VERSUS EV
ADVANTAGES DISADVANTAGES
 Versatility of use  High production costs

 Zero tailpipe emissions due to expensive
 Fast refuelling time hydrogen fuel cell
 Longer driving range  commercial technology
HFCEV
usage such as bus and heavy-duty  High cost of building
truck hydrogen fuelling stations
 Lighter weight due to smaller  Limited number of hydrogen
battery packs fuel stations
 Similar refuelling method to gasoline  Complex storage and
transportation
 Zero tailpipe emissions  Longer charging time

 Lower operating costs due to  Limited driving range
EV fewer moving parts and lower compared to HFCV
energy costs  Heavy batteries can affect
 Quieter operation vehicle performance
 Widespread charging infrastructure
Note: HFCEV = hydrogen fuel cell vehicle; EV = electric
vehicle. Source: Created by the case author based on case
information.
EXHIBIT 5: TOYOTA’S SALES IN 2022 BY MAJOR REGION/COUNTRY
Region / Country Units %

US (incl. Hawaii) 2,108,460 22.0
China (incl. Hong Kong and Macau) 1,940,590 20.3
Japan 1,289,132 13.5
North America (excl. US) 336,888 3.5
Latin America 474,564 5.0
Europe 1,032,159 10.8
Asia (excl. Japan and China) 1,384,145 14.5
Oceania 280,120 2.9
Middle East 495,572 5.2
Africa 225,554 2.4
Worldwide sales 9,567,184 100
Note: Incl. = including; Excl. = excluding.

Source: “Sales, Production, and Export Results for August 2023,” Toyota Motor Corporation, September
2024 to Apr 2025.
Page 15 W37150
EXHIBIT 6: THE ASIAN AND EMERGING COUNTRIES’ LIGHT

VEHICLE MARKET OUTLOOK (EXCL. CHINA)
30
25
20
(million)
15
25
Unit
22
10 19
18
0
2010 2022 2026 2030
Note: Excl. = excluding. A “light vehicle” often referred to a motor vehicle with a maximum gross vehicle
weight under 3,500 kilograms (7,700 pounds), including passenger cars, pickup trucks, and vans.
Source: Yuki Saito, “The EV-Dedicated Organization of Toyota Starts Operating under the Leadership of the
Top Executive Involved in the BYD Joint Venture (トヨタの EV 専任組織、BYD 合弁に携わったトップの下で始動),” ITmedia Inc., May
11, 2023, https://monoist.itmedia.co.jp/mn/articles/2305/11/news106_3.html.
EXHIBIT 7: ASIAN ELECTIFIED VEHICLE MARKET OUTLOOK
25%
21%
20%
Percentage of Total
14
15%
%
10% 8%
Market
5%
5% 3%
1%
0%
0%
2010 2022 2026 2030
HEV BEV
Note: HEV = hybrid electric vehicle; BEV = battery electric vehicle.

Source: Yuki Saito, “The EV-Dedicated Organization of Toyota Starts Operating under the Leadership of the
Top Executive Involved in the BYD Joint Venture (トヨタの EV 専任組織、BYD 合弁に携わったトップの下で始動),” ITmedia Inc., May
11, 2023, https://monoist.itmedia.co.jp/mn/articles/2305/11/news106_3.html.
2024 to Apr 2025.
Page 16 W37150
EXHIBIT 8: ELECTRIC VEHICLE REVENUE BY COUNTRY (IN US$ MILLIONS)
2023
TOP 5 2020 2021 2022
(Estimate)
China 60,700 151,800 284,800 292,100
United States 23,640 41,230 63,320 70,130
Germany 20,860 40,490 49,510 52,790
France 12,130 19,830 21,290 21,790
United Kingdom 8,872 15,970 18,640 19,020
Source: “Electric Vehicles – Global Comparison,” Statista Market Insights, accessed November 11, 2023,
https://www.statista.com/ outlook/mmo/electric-vehicles/united-states#global-comparison.
EXHIBIT 9: THE TOP 10 BEV BATTERY MANUFACTURERS IN 2022
Market
Rank Company Country
Share
1 CATL 34% China
2 LG Energy Solution 14% South Korea
3 BYD Auto 12% China
4 Panasonic 10% Japan
5 SK On 7% South Korea
6 Samsung SDI 5% South Korea
7 CALB 4% China
8 Guoxuan 3% China
9 Sunwoda 2% China
10 SVOLT 1% China
Others 8% ROW
Note: ROW = rest of the world.

Source: Bruno Venditti, “The Top 10 EV Battery Manufacturers in 2022,” Visual Capitalist,
October 5, 2022, https://www.visualcapitalist.com/the-top-10-ev-battery-manufacturers-in-2022.
2024 to Apr 2025.
Page 17 W37150
2024 to Apr 2025.
EXHIBIT 10: DEALERSHIP NETWORK IN JAPAN
TOYOTA
Toyot Toyop Coroll Netz

a et a Dealer
Toyota
Motor
Corporatio
Lexus
LEXUS
Dealer
Parts Rent a
Distributo Lease
Vehicle Dealers: Sell and provide after-sales servicing of vehicles (new and used) and automotive parts and accessories, provide
auto insurance services, and other related and peripheral services.
Parts Distributors: Distribute repair parts for Toyota vehicles and other automotive parts and accessories.
Rent-a-Lease Dealers: Rent and lease Toyota vehicles.
Source: “List of Dealerships in Japan – 75 Years of Toyota,” Toyota Motor Corporation, accessed November 11, 2023,
https://www.toyota-global.com/company/history_of_toyota/
75years/data/automotive_business/sales/dealerships/japan/index.html
Page 18 W37150
2024 to Apr 2025.
EXHIBIT 11: EXPORT ROUTE MANAGEMENT
Japanese
companies or local
companies
Overseas Oversea
TOYOTA Customer
Distributo s
s
Dealers
Franchisor Franchisee
About 170
Toyota distributors in Japanese
Motor 190 companies or
Corporation local companies
Overseas Oversea
LEXUS Customer
Distributo s
rs s
Dealers
Franchisor Franchisee
Source: Hiroshi Shioji, “Export Route Management in Automobile Exports (自動車輸出における輸出経路マネシメント),” J-Stage, 2010, accessed November 11, 2023, 17,
https://www.jstage.jst.go.jp/article/sisj/2010/25/2010_25_13/_pdf.
Page 19 W37150
ENDNOTES
1
“Koji Sato,” Toyota Newsroom, accessed November 11, 2023, https://pressroom.toyota.com/biographies/koji-sato.
2
Hans Greimel, “New Toyota CEO Koji Sato Will Prioritize Hydrogen, Even as Company Steps Up EVs,” Automotive
News, March 18, 2023, https://www.autonews.com/automakers-suppliers/toyota-ceo-koji-sato-says-hydrogen-crucial-
carbon-neutrality.
3
“Imagine the Possibilities of a Cleaner Future, in the 2023 Toyota Mirai Hydrogen Fuel Cell Electric Vehicle,”
Toyota Canada Newsroom, March 22, 2023, https://media.toyota.ca/en/releases/2023/imagine-the-possibilities-of-a-
cleaner-future-in-the-2023- toyota-mirai-hydrogen-fuel-cell-electric-vehicle.html.
4
John Voelcker, “Hydrogen Fuel-Cell Vehicles: Everything You Need to Know,” Car and Driver, September
26, 2022, https://www.caranddriver.com/features/a41103863/hydrogen-cars-fcev.
5
Mathilde Carlier, “Estimated Battery-Electric Vehicle Sales in the United States in 2022, by Brand,” Statista,
June 13, 2023, https://www.statista.com/statistics/698414/sales-of-all-electric-vehicles-in-the-us-by-brand.
6
Mark Kane, “Europe: Plug-In Car Sales Reached Spectacular Record in December 2022,” InsideEVs,
February 7, 2023, https://insideevs.com/news/651295/europe-plugin-car-sales-december2022.
7
Hiroaki Kimura, “China’s BYD EV Rolls into Japan with Plans for 100 Dealerships,” The Asahi Shimbun, February
1, 2023, https://www.asahi.com/ajw/articles/14829110.
8
“Toyota Motor Corporation Aims to Sell 3.5 million Electric Vehicles Worldwide by 2030, as the Shift toward EVs
Accelerates and Domestic Manufacturers also Rush to Respond (トヨタ自動車、2030 年に世界で EV350 万台販売へ EV シフト、国内
メーカーも対応急ぐ),” The Asahi Shimbun: SDGs ACTION, February 5, 2022, https://www.asahi.com/sdgs/article/14531763.
9
Masakuni Shiotani, “Toyota Establish a New ‘BEV Factory’ Centered on Battery-Electric Vehicles (トヨタ、バッテリ EV を軸にし
た「BEV ファクトリー」を新設),” Impress Corporation, May 10, 2023, https://car.watch.impress.co.jp/docs/news/1499397.html.
10
Jack Ewing and Ben Dooley, “Toyota, a Hybrid Pioneer, Struggles to Master Electric Vehicles,” The New York Times,
September 7, 2023, https://www.nytimes.com/2023/09/07/business/toyota-hybrid-electric-vehicles.html.
11
“The Great Kanto Earthquake and Rapid Increase in U.S. Vehicle Imports,” Toyota Motor Corporation, accessed
November 11, 2023, https://www.toyota-global.com/company/history_of_toyota/75years/text/
taking_on_the_automotive_business/chapter2/
section1/item1.html.
12
“Establishment of a Research Laboratory,” Toyota Motor Corporation, accessed November 11, 2023,
https://www.toyota- global.com/company/history_of_toyota/75years/text/taking_on_the_automotive_business/
chapter2/section3/item1.html.
13
“Assembly Production by Ford and General Motors,” Toyota Motor Corporation, accessed November 11, 2023,
https://www.toyota- global.com/company/history_of_toyota/75years/text/taking_on_the_automotive_business/chapter2/
14
“Construction of Motomachi Plant for Passenger Vehicles,” Toyota Motor Corporation, accessed
entering_the_automotive_business/chapter1/section1/ item1.html.
15
“Exports to the United States,” Toyota Motor Corporation, accessed November 11, 2023,
https://www.toyota- global.com/company/history_of_toyota/75years/text/entering_the_automotive_business/chapter1/
16
“Exports to the United States,” Toyota Motor Corporation.
17
“Timeline of Major Accomplishments in Transportation, Air Pollution, and Climate Change,” United States
Environmental Protection Agency, accessed November 11, 2023, https://www.epa.gov/transportation-air-pollution-
and-climate-change/timeline-major- accomplishments-transportation-air.
18
“History of Overseas Business Trends and Expansion of Japanese Automobile Manufacturers (日系自動車メーカーの海外事業動向
と展開の歴史),” PROVE, April 29, 2022, https://www.provej.jp/column/ar/car-global.
19
“Toyota’s Initiatives in Emerging Countries ( 新興国におけるトヨタの取り組み ),” Toyota Annual Report 2012, 17, accessed
November 11, 2023, https://www.toyota.co.jp/pages/contents/jpn/investors/library/annual/pdf/2012/p16_20.pdf.
20
“Surging Yen,” Toyota Motor Corporation, accessed November 11, 2023, http://www.toyota-global.com/company/
history_of_toyota/75years/text/leaping_forward_as_a_global_corporation/chapter2/section2/item1.html.
21
“Prius Birth Secret Story: Episode 1 – Propose the Car of the 21st Century (＜プリウス誕生秘話＞第 1 回 21 世紀のクルマを提案せよ),”
Toyota Gazoo Racing, December 11, 2015, https://gazoo.com/feature/gazoo-museum/car-history/15/12/11.
22
“Prius Birth Secret Story: Episode 1,” Toyota Gazoo Racing.
23
24
“Prius Birth Secret Story: Episode 4 – Just in Time for the 21st Century (＜プリウス誕生秘話＞第 4 回 21 世紀に間にあった！),” Toyota
Gazoo Racing, January 8, 2016, https://gazoo.com/feature/gazoo-museum/car-history/16/01/08.
25
26
“FCV – The Road to a Hydrogen Society (2002) (【技術革新の足跡】FCV―水素社会への道（2002 年）),” Toyota Gazoo Racing,
November 21, 2014, https://gazoo.com/feature/gazoo-museum/car-history/14/11/21_1.
27
“Development of Electric Vehicles and Fuel Cell Vehicles” Toyota Motor Corporation, accessed
leaping_forward_as_a_global_corporation/chapter4/ section8/item2.html.
28
“FCV – The Road to a Hydrogen Society (2002),” Toyota Gazoo Racing.
29
30
“Development of Electric Vehicles and Fuel Cell Vehicles,” Toyota Motor Corporation, accessed
leaping_forward_as_a_global_corporation/chapter4/ section8/item2.html.
31
32
33
2024 to Apr 2025.
Page 20 W37150
34
35
36
Yasuhisa Shimamoto, “The True Reason Why Toyota Hasn't Given Up on the ‘Realization of a Hydrogen Society (ト
ヨタが｢水素社会の実現｣を諦めない本当の理由),” TOYOKEIZAI ONLINE, September 28, 2023, https://toyokeizai.net/articles/-/704092.
37
“The Baton Handover Took Place amidst the Deafening Roar, with President Toyoda Selecting Mr. Koji Sato as the
Next President ( バトンタッチは爆音の中で豊田社長が選んだ佐藤恒治次期社長 ),” Toyotimes, February 23, 2023,
https://toyotatimes.jp/ newscast/004.html.
38
Sayumi Take, “Toyota's New Chief Koji Sato Vows to Get Serious about EVs,” Nikkei Asia, March 29, 2023,
https://asia.nikkei.com/ Spotlight/The-Big-Story/Toyota-s-new-chief-Koji-Sato-vows-to-get-serious-about-EVs.
39
“The Baton Handover Took Place amidst the Deafening Roar,” Toyotimes.
40
“The Baton Handover Took Place amidst the Deafening Roar,” Toyotimes.
41
Ben O’Hare, “New Toyota CEO Still Wants to Prioritize Hydrogen Over BEVs,” InsideEVs, March 19, 2023,
https://insideevs.com/news/657990/toyota-ceo-hydrogen-over-bevs.
42
“What are the Pros and Cons of Hydrogen Fuel Cells?” TWI Ltd., accessed November 11, 2023, https://www.twi-
global.com/technical-knowledge/faqs/what-are-the-pros-and-cons-of-hydrogen-fuel-cells.
43
“What are the Pros and Cons of Hydrogen Fuel Cells?” TWI Ltd.
44
“EVs Require a Vast Amount of Mineral Resources (EV には莫大な鉱物資源が必要になる),” The Canon Institute for Global Studies,
July 10, 2023, https://cigs.canon/article/20230710_7556.html.
45
“Hydrogen Cars vs Electric Cars: Which is the Better Choice?” Lhyfe HEROES, April 23, 2023, https://www.lhyfe-
heroes.com/about- hydrogen/hydrogen-cars-vs-electric-cars-which-is-the-better-choice.
46
“Hydrogen Cars vs Electric Cars: Which is the Better Choice?” Lhyfe HEROES.
47
Yoshihisa Murasawa, The Defeat of Japanese Cars (日本車敗北), 1st ed. (Tokyo, Japan: President Publishing, 2022), 105.
48
Polly Martin, “Hyundai Unveils the 2024 Version of its Hydrogen-Powered Nexo Fuel-Cell Car,” Hydrogen Insight,
June 12, 2023, https://www.hydrogeninsight.com/transport/hyundai-unveils-the-2024-version-of-its-hydrogen-powered-
nexo-fuel-cell-car/2-1- 1465779.
49
Voelcker, “Hydrogen Fuel-Cell Vehicles: Everything You Need to Know.”
50
“8 Vehicle Manufacturers Working on Hydrogen Fuel Cell Cars,” FASTECH, July 7, 2023,
https://www.fastechus.com/ blog/vehicle-manufacturers-working-on-hydrogen-fuel-cell-vehicles.
51
“8 Vehicle Manufacturers Working on Hydrogen Fuel Cell Cars,” FASTECH.
52
“Sales, Production, and Export Results for August 2023,” Toyota Motor Corporation, September
53
Sayumi Take, “Toyota to Make Hydrogen out of Waste from Thailand’s CP, Others,” Nikkei Asia, June
26, 2023, https://asia.nikkei.com/Business/Automobiles/Toyota-to-make-hydrogen-out-of-waste-from-Thailand-s-CP-
others.
54
All dollar amounts are in US dollars unless otherwise specified.
55
“Hydrogen Fueling Station Cost,” Department of Energy (DOE), November 2, 2021,
https://www.hydrogen.energy.gov/ docs/hydrogenprogramlibraries/pdfs/21002-hydrogen-fueling-station-cost.pdf.
56
Yoshihisa Murasawa, The Defeat of Japanese Cars, 96.
57
Peter Fröde, Morgan Lee, and Shivika Sahdev, “Can Public EV Fast-Charging Stations Be Profitable in the United
States?” McKinsey & Company, October 5, 2023, https://www.mckinsey.com/features/mckinsey-center-for-future-
mobility/our-insights/can- public-ev-fast-charging-stations-be-profitable-in-the-united-states.
58
“Why Are We Still Not Seeing Hydrogen Cars on Our Roads?,” Elmelin Ltd., October 24, 2023,
https://elmelin.com/why-are-we-still- not-seeing-hydrogen-cars-on-our-roads.
59
Yuki Saito, “The EV-Dedicated Organization of Toyota Starts Operating under the Leadership of the Top Executive
Involved in the BYD Joint Venture ( トヨタの EV 専任組織、 BYD 合弁に携わったトップの下で始動 ),” ITmedia Inc., May 11,
2023, https://monoist.itmedia.co.jp/mn/articles/2305/11/news106_3.html.
60
“Toyota Unveils New Technology that Will Change the Future of Cars,” Toyota Motor Corporation, June 13, 2023,
https://global.toyota/en/newsroom/corporate/39288520.html.
61
¥ = JPY = Japanese yen. US$1 = ¥132.7896 on April 1, 2023.
62
Gill Pratt, “(More) Straight Talk About Toyota’s Electric Vehicle Strategy,” Medium, August 23, 2021,
https://medium.com/ toyotaresearch/more-straight-talk-about-toyotas-electric-vehicle-strategy-f0aba4be40.
63
“Sales, Production, and Export Results for August 2023,” Toyota Motor Corporation, September
64
“Toyota and Subaru Agree to Jointly Develop BEV-Dedicated Platform and BEV SUV,” Toyota Motor Corporation,
June 6, 2019, https://www.media.toyota.ca/en/releases/2019/toyota-and-subaru-agree-to-jointly-develop-bev-dedicated-
platform-and-bev-suv.html.
65
Mark Kane, “Toyota Goes Electric Starting In 2020: Announces Massive EV Offensive,” InsideEVs,
June 7, 2019, https://insideevs.com/news/353600/toyota-six-global-bevs.
66
“BYD, Toyota Agree to Establish Joint Company for Battery Electric Vehicle Research and Development,” Toyota
Motor Corporation, November 7, 2019, https://global.toyota/en/newsroom/corporate/30565932.html.
67
CN¥ = CNY = Chinese yuan renminbi. US$ = CNY 6.8683 on April 1, 2023.
68
Peter Johnson, “First Toyota and BYD Co-Developed Electric bZ3 Rolls off the Line in China for under $30K,”
electrek, March 3, 2023, https://electrek.co/2023/03/03/first-toyota-bz3-ev-co-developed-with-byd-rolls-off-the-line.
69
A lithium iron phosphate battery was a type of rechargeable lithium-ion battery that used lithium iron
phosphate as the cathode material, and was known for its high safety, long cycle life, and thermal stability.
70
Takaki Nakanishi, Toyota’s EV War (トヨタの EV 戦争), 1st ed. (Tokyo, Japan: Kodansha, 2023), 257.
71
“Toyota Reveals the Future of Cars with Next-Generation Battery and Hydrogen Technologies,” Toyota Times, June
13, 2023, https://toyotatimes.jp/en/report/technical_workshop_2023/001_1.html.
72
“Toyota Reveals the Future of Cars,” Toyota Times.
2024 to Apr 2025.
Page 21 W37150
73
74
75
76
Kate Abnett, “EU Countries Approve 2035 Phaseout of CO2-Emitting Cars,” Reuters, March 29, 2023,
https://www.reuters.com/ business/autos-transportation/eu-countries-poised-approve-2035-phaseout-co2-emitting-
cars-2023-03-28.
77
“European EV Market Analysis: Strong Growth Continues as Plug-in Vehicle Registrations Rise in April,” European
Commission, June 14, 2023, https://alternative-fuels-observatory.ec.europa.eu/general-information/news/european-
ev-market-analysis-strong- growth-continues-plug-vehicle.
78
“New Car Registrations: +28.8% in March, Battery Electric 13.9% Market Share,” ACEA, April 19, 2023,
https://www.acea.auto/ pc-registrations/new-car-registrations-28-8-in-march-battery-electric-13-9-market-share.
79
“FACT SHEET: President Biden Announces Steps to Drive American Leadership Forward on Clean Cars and
Trucks,” The White House, August 5, 2021, accessed November 11, 2023, https://www.whitehouse.gov/briefing-
room/statements-releases/ 2021/08/05/fact-sheet-president-biden-announces-steps-to-drive-american-leadership-
forward-on-clean-cars-and-trucks.
80
Justin Fischer, “Electric Vehicle Sales and Market Share (US – Updated Monthly),” CarEdge,
December 1, 2023, https://caredge.com/guides/electric-vehicle-market-share-and-sales.
81
“How Many DC Fast-Chargers Are Needed in USA?” Clean Technica, accessed November
11, 2023, https://cleantechnica.com/2023/04/25/how-many-dc-fast-chargers-are-needed-in-usa.
82
Alicia García Herrero, “The Future of Electric Vehicles in Asia,” HKUST IEMS, No. 64 (Summer
2022): 2, https://ideas.repec.org/p/hku/briefs/202264.html.
83
Giulia Interesse, “China Extends NEV Tax Reduction and Exemption Policy to 2027,” China Briefing,
June 28, 2023, https://www.china-briefing.com/news/china-extends-nev-tax-reduction-and-exemption-policy-to-2027.
84
Interesse, “China Extends NEV Tax Reduction and Exemption Policy to 2027.”
85
Mark Kane, “China: Plug-In Car Sales Increased in March 2023 – 34% Share,” InsideEVs, May
8, 2023, https://insideevs.com/news/665891/china-plugin-car-sales-march2023.
86
Herrero, “The Future of Electric Vehicles in Asia.”
87
Cissy Zhou, “How China’s BYD Went from Bargain Battery Maker to Tesla’s Biggest Rival,” Nikkei Asia,
November 8, 2023, https://asia.nikkei.com/Spotlight/The-Big-Story/How-China-s-BYD-went-from-bargain-battery-
maker-to-Tesla-s-biggest-rival.
88
Zhou, “How China’s BYD Went from Bargain Battery Maker to Tesla’s Biggest Rival.”
89
“Corporate Development in 1996,” BYD Company Limited, accessed November 11, 2023,
https://electronics.byd.com/ elecen/index.html.
90
Leo Breevoort, “The Big Read: History of BYD,” CarNewsChina.com, August 1, 2021,
https://carnewschina.com/ 2021/08/01/the-big-read-history-of-byd.
91
Breevoort, “The Big Read: History of BYD.”
92
93
94
95
96
HK$ = Hong Kong dollar. US$ = HK$7.8499 on April 1, 2023.
97
“BYD History,” BYD Auto, February 28, 2022, https://www.bydauto.co.nz/news/byd-history.
98
99
“BYD E6 Electric taxis hit roads in south China city,” Electric Vehicle News, May 18, 2010,
http://www.electric- vehiclenews.com/2010/05/byd-e6-electric-taxis-hit-roads-in.html
100
“BYD History,” BYD Auto, February 28, 2022, https://www.bydauto.co.nz/news/byd-history.
101
“BYD’S New Blade Battery Set to Redefine EV Safety Standards,” BYD Motors Inc., accessed November
11, 2023, https://en.byd.com/news/byds-new-blade-battery-set-to-redefine-ev-safety-standards.
102
Daniel Bleakley, “Tesla’s Switch to BYD Batteries Is Achieving Faster Charging Times,” The Driven, May
22, 2023, https://thedriven.io/2023/05/22/teslas-switch-to-byd-batteries-is-achieving-faster-charging-times.
103
104
105
106
Shoya Okinaga, Sei Matsumoto, and Miho Tankai, “China EV Maker BYD Close to Overtaking Nissan in Global
Sales,” Nikkei Asia, October 31, 2023, https://asia.nikkei.com/cms/Business/Automobiles/China-EV-maker-BYD-close-to-
overtaking-Nissan-in-global-sales.
107
108
“BYD History,” BYD Auto.
109
“Annual Report 2022,” BYD Company Limited, 30, accessed November 11, 2023,
https://www1.hkexnews.hk/listedco/ listconews/sehk/2023/0418/2023041801101.pdf.
110
Sayumi Take, “China’s BYD Starts EV Sales in Japan as It Chases Tesla,” Nikkei Asia, January 31, 2023, accessed
November 11, 2023, https://asia.nikkei.com/Business/Automobiles/China-s-BYD-starts-EV-sales-in-Japan-as-it-chases-
Tesla.
111
Take, “China's BYD Starts EV Sales in Japan as It Chases Tesla.”
112
Alexandru Arba, “Sales Share of Electric Vehicles in Japan from 2013 to 2022,” Statista, August 30, 2023,
accessed November 11, 2023, https://www.statista.com/statistics/711994/japan-electric-car-market-share.
113
Take, “China's BYD Starts EV Sales in Japan as It Chases Tesla.”
114
Take, “China's BYD Plans to Beat Nissan.”
115
Take, “China's BYD Plans to Beat Nissan.”
116
“Profile – BYD,” Forbes, accessed November 11, 2023, https://www.forbes.com/companies/byd.
2024 to Apr 2025.
Page 22 W37150
117
“Overview – Company Information, Company Profile,” Toyota Motor Corporation, accessed November
11, 2023, https://global.toyota/en/company/profile/overview.
2024 to Apr 2025.
Page 23 W37150
118
Kirsten Korosec, “Tesla Blows Past Toyota to Become Most Valuable Automaker in the World,” TechCrunch,
July 1, 2020, https://techcrunch.com/2020/07/01/tesla-blows-past-toyota-to-become-most-valuable-automaker-in-the-
world.
119
“Tesla Market Cap Eclipses that of Top 5 Rival Carmakers Combined,” Reuters, October 26, 2021,
https://www.reuters.com/ business/autos-transportation/tesla-market-cap-eclipses-that-top-5-rival-carmakers-
combined-2021-10-26.
120
“Toyota Motor Corporation,” Britannica, December 22, 2023, https://www.britannica.com/topic/Toyota-Motor-
Corporation.
121
Nansel Nanzip Bongdap, “Tesla’s Vertical Integration Strategy and Examples,” Financial Falconet, May 29,
2023, accessed November 11, 2023, https://www.financialfalconet.com/tesla-vertical-integration-strategy-example.
122
Takaki Nakanishi, Toyota’s EV War (トヨタの EV 戦争), 1st ed. (Tokyo, Japan: Kodansha, 2023), 201.
123
Nakanishi, Toyota’s EV War, 202.
124
Nakanishi, Toyota’s EV War, 202.
125
“Toyota Production System,” Toyota Motor Corporation, accessed November 11, 2023,
https://global.toyota/en/company/vision- and-philosophy/production-system.
126
“Toyota Production System,” Toyota Motor Corporation.
127
128
129
130
131
“Financial Summary FY2023,” Toyota Motor Corporation, May 10, 2023,
https://global.toyota/pages/global_toyota/ir/financial- results/2023_4q_summary_en.pdf.
132
“Consolidated Financial Results for the Fiscal Year Ended March 31, 2023,” Honda Motor Co., Ltd.,
May 11, 2023, https://global.honda/content/dam/site/global-en/investors/cq_img/library/financialresult/
FY202303_4Q_financial_result_e_2.pdf.
133
“Financial Results for the Six Months Ended September 30, 2023,” Nissan Motor Co., Ltd., November 9, 2023,
https://www.nissan- global.com/EN/IR/LIBRARY/ASSETS/DATA/2023/20232nd_financialresult_945_e.pdf.
134
Willy C. Shih, “What Really Makes Toyota’s Production System Resilient,” Harvard Business Review, November
15, 2022, https://hbr.org/2022/11/what-really-makes-toyotas-production-system-resilient.
135
Shih, “What Really Makes Toyota’s Production System Resilient.”
136
137
138
139
140
141
Osamu Katayama, “The Power of Network,” TOYOKEIZAI ONLINE, October 4, 2019,
https://toyokeizai.net/articles/-/569369.
142
Katayama, “The Power of Network.”
143
144
145
146
147
148
149
150
151
Cissy Zhou, “How China's BYD Went from Bargain Battery Maker to Tesla’s Biggest Rival.”
152
“Tesla Company – Business Strategy Analysis,” Vested, accessed November 11, 2023,
https://vestedfinance.com/ in/blog/tesla-strategy-analysis.
153
Charles Morris, “Does Toyota’s BEV Factory Really Represent a New Direction?” CHARGED: Electric Vehicles
Magazine, June 21, 2023, accessed November 11, 2023, https://chargedevs.com/newswire/does-toyotas-bev-factory-
really-represent-a-new-direction.
154
“Hydrogen Business Strategy,” Toyota Motor Corporation, June 13, 2023,
https://global.toyota/en/newsroom/corporate/ 39288520.html.
155
Tsuyoshi Inajima, “Toyota Maintains Title as World’s No. 1 Carmaker for Third Straight Year,” The Japan Times,
January 30, 2023, https://www.japantimes.co.jp/news/2023/01/30/business/toyota-global-top-automaker.
2024 to Apr 2025.

W37150 PDF Eng

Uploaded by

Copyright:

Available Formats

W37150 PDF Eng

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

W37150 PDF Eng

Uploaded by

Copyright:

Available Formats

W37150

TOYOTA’S FUTURE: HYDROGEN- AND BATTERY-POWERED VEHICLES

Copyright © 2024, Ivey Business School Foundation Version: 2024-06-14

Rapid Growth in the United States: The 1970s to the 1980s

From Hybrid to Hydrogen

Passing the Baton

TOYOTA’S HYDROGEN FUEL CELL ELECTRIC VEHICLE (HFCEV)

TOYOTA BATTERY ELECTRIC VEHICLE (BEV) DEVELOPMENT

THE GLOBAL BEV ENVIRONMENT

BYD Auto’s Business Model

BYD Auto’s Market Entry in Japan

THE TOYOTA PRODUCTION SYSTEM (TPS)

THE TOYOTA DEALER NETWORK

THE FUTURE PATH: HYDROGEN- AND BATTERY-POWERED VEHICLES

EXHIBIT 1: THE NUMBER OF BEVS SOLD IN 2022 BY COUNTRY/REGION

China EU USA Others

EXHIBIT 2: NUMBER OF BEVS SOLD BY TOP CARMAKERS IN 2022

200,000 133,246 122,486

EXHIBIT 3: TOYOTA’S ELECTRIFIED VEHICLE SALES

HEV MHEV PHEV HFCEV BEV

MHEV PHEV HFCEV BEV

EXHIBIT 4: HFCEV VERSUS EV

 Versatility of use  High production costs

 Zero tailpipe emissions  Longer charging time

EXHIBIT 5: TOYOTA’S SALES IN 2022 BY MAJOR REGION/COUNTRY

Region / Country Units %

Note: Incl. = including; Excl. = excluding.

EXHIBIT 6: THE ASIAN AND EMERGING COUNTRIES’ LIGHT

EXHIBIT 7: ASIAN ELECTIFIED VEHICLE MARKET OUTLOOK

Note: HEV = hybrid electric vehicle; BEV = battery electric vehicle.

EXHIBIT 8: ELECTRIC VEHICLE REVENUE BY COUNTRY (IN US$ MILLIONS)

EXHIBIT 9: THE TOP 10 BEV BATTERY MANUFACTURERS IN 2022

Note: ROW = rest of the world.

EXHIBIT 10: DEALERSHIP NETWORK IN JAPAN

Toyot Toyop Coroll Netz

EXHIBIT 11: EXPORT ROUTE MANAGEMENT

You might also like