Toyota eyes Europe production, sees region as reaching EV tipping point in a few years

EUROPE is still missing some key ingredients for widespread electric vehicle (EV) adoption, said to Toyota Motor’s top local executives, but the region is far along enough for the world’s largest automaker to start looking at localising production.

The Toyota brand will offer around 15 different zero-emission vehicles in Europe by 2026, and the company expects to deliver more than 250,000 battery EVs (BEVs) by then, Toyota Europe chief executive officer Yoshihiro Nakata told reporters last week in Brussels.

“We’ve always been clear that local production of BEVs would come when we are able to secure sustainable volume,” Nakata said. “We believe we’ll be able to make that step around this time frame.”

Localising production outside of Japan is not a move Toyota makes lightly. It has yet to assemble its pioneering hybrid car, the Prius, overseas after 26 years. The company manufactured its first gas-electric model in Europe in 2010, a decade after it started importing the Prius.

Given that cautious approach – as well as Toyota’s longstanding scepticism about the readiness of mainstream consumers to go fully electric – the company’s willingness to publicly float a rough start date for local production carries extra weight. It suggests that, for all the gloom about a slowdown in EV growth, the industry is trending in the right direction.

Europe still has work to do to build up its battery supply chain, expand public charging infrastructure networks and establish a used EV market, Toyota Europe chief operating officer Matt Harrison said in an interview. But the region has several factors working in its favour, including cohorts of environmentally conscious car buyers and policymakers who are steadfastly pursuing ambitious emissions-reduction efforts.

Toyota is gradually getting more comfortable with the medium-term outlook for EVs as several European automakers struggle to sell them. Mercedes-Benz Group recently described competition in the space as “brutal”, while Volkswagen laid off workers, paused production and scrapped plans for a new EV factory as orders fell short of targets. Renault postponed a potential listing of its EV business to next year.

“The enablers are not really fully there yet, so I’m not surprised we’re having a bit of a wobble,” Harrison said. “There are a lot of fundamentals that still need to be fixed before we start to move.”

So far, Toyota has not paid a price for biding its time on fully-electric vehicles – a strategy afforded by its line-up of more than two dozen hybrids. It has maintained an order bank in Europe of more than 300,000 vehicles, and expects to keep growing sales next year in a flat market.

SEE ALSO

Toyota to invest nearly US$400 million for third plant in India

Whereas Stellantis CEO Carlos Tavares recently told industry publication Automobilwoche that he is bracing for European Parliament elections in June to potentially lead to shifting policies towards EVs, Harrison said any leadership changes are unlikely to lead to dramatic shake-ups.

“I don’t think it’s as extreme as the US,” he said, referring to former president Donald Trump’s staunch opposition to incumbent Joe Biden’s policies. In Europe, Harrison said, “there’s a great underlying consumer sense of responsibility and behaviour that isn’t going to change around the environmental agenda”. BLOOMBERG