Here is another graphic that shows how pathetic Toyota situation is
![Rectangle Font Parallel Screenshot Circle]()
Why legacy automakers are panicking and Akio had to go
Panic is spreading among legacy auto manufacturers. Toyota lost valuable time and will pay the price.
EV market share has been doubling every year. In 3 years, EVs will represent half of total auto sales. And all these sales will go to Tesla, BYD, and those manufacturers who have a solid lineup of EV vehicles that appeal to customers in all income ranges (for example Hyundai/KIA, VW). Any manufacturer who doesn't have at least 4-5 EV models (a compact hatchback, a small SUV, a mid-size SUV and a couple of premium/luxury models) will lose market share. There is no way around it. Toyota MUST have competitive EV lineup in 2-3 years, or they will become irrelevant. Companies that didn't invest in EV technologies are panicking.
![Audio equipment Slope Font Electronic device Parallel]()
EV market share has been doubling every year. In 3 years, EVs will represent half of total auto sales. And all these sales will go to Tesla, BYD, and those manufacturers who have a solid lineup of EV vehicles that appeal to customers in all income ranges (for example Hyundai/KIA, VW). Any manufacturer who doesn't have at least 4-5 EV models (a compact hatchback, a small SUV, a mid-size SUV and a couple of premium/luxury models) will lose market share. There is no way around it. Toyota MUST have competitive EV lineup in 2-3 years, or they will become irrelevant. Companies that didn't invest in EV technologies are panicking.
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... and I added 2022 sales, added a trend line and ma projection for next 2 years. Time to buy Tesla stock, folks.
The R-square is almost perfect, 0.99.
![Rectangle Font Line Slope Plot]()
The R-square is almost perfect, 0.99.
You're right about US market. But don't forget that US represents only 11% of the global auto market.And yet most of the low hanging fruit has already been plucked. Once all the early adopters, Greenies, rich people wanting the latest tech and people that buy EVs because of government giveaway money have bought their cars, adoption of the general public will slow down. I'm not saying market share won't continue to increase (government regulations have all but made that a certainty). I know very few (if any) people that are interested in paying premiums for EVs (over conventional vehicles).
But a lot of people are waiting for the technology to sell itself, as a superior choice over an ICE vehicle, and we're not there yet. In fact governmental push even turns some people off. Meanwhile, PHEVs, which Toyota is a leader in, make much much much more sense for all factors involved.
Good debate though
The situation is very different elsewhere. In China, which is a auto market 3 times the size of the US, it's not the rich who buy EVs. China, the largest auto market in world, has plenty of affordable EV choices, and EVs are becoming the #1 choice for 1st time car buyers. Europe is moving fast, too.
And Toyota is NOT the leader in PHEV. Have a look at the graph I posted above. Toyota is in the bottom third when in comes to PHEV, well behind BYD, VW, Stellantis, BMW, Mercedes, CHJ. Again, don't assume that because Toyota is "big" in the US, the same applies to other place. The world is MUCH bigger than US.
To make things even worse for Toyota, Tesla is working on a new platform that is expected to cut EV cost in half.
Toyota already admitted that they can't match Tesla's (and BYD's) current manufacturing costs, so the new Tesla platform will make things even more challenging.
And Toyota is drawing in debt already, with over $200 billion of long term liabilities, slightly more than there total market capitalization. They will need billions more to develop new dedicated EV platform. Now, they do have substantial cash reserves, but this can easily dry up with supply chain challenges and rising costs. While Toyota appears to be highly profitable at first sight, there financial situation is actually quite similar to where GM was a few years before bankruptcy. GM was also profitable, but they had crushing long term liabilities which eventually exceeded their assets. Toyota is perilously close to the same situation - with debt being very close to their combined market cap + cash reserves. However, any major drawdown on the cash reserves (for example, an expensive multi-billion recall, or another economic upset like COVID or a major war) could very easily tip them toward insolvency, and technically their labilities will exceed their assets. From their, it's a domino effect. Toyota could very quickly become a target of a very cheap takeover by a cash-rich competitor like BYD.
insideevs.com
Toyota already admitted that they can't match Tesla's (and BYD's) current manufacturing costs, so the new Tesla platform will make things even more challenging.
And Toyota is drawing in debt already, with over $200 billion of long term liabilities, slightly more than there total market capitalization. They will need billions more to develop new dedicated EV platform. Now, they do have substantial cash reserves, but this can easily dry up with supply chain challenges and rising costs. While Toyota appears to be highly profitable at first sight, there financial situation is actually quite similar to where GM was a few years before bankruptcy. GM was also profitable, but they had crushing long term liabilities which eventually exceeded their assets. Toyota is perilously close to the same situation - with debt being very close to their combined market cap + cash reserves. However, any major drawdown on the cash reserves (for example, an expensive multi-billion recall, or another economic upset like COVID or a major war) could very easily tip them toward insolvency, and technically their labilities will exceed their assets. From their, it's a domino effect. Toyota could very quickly become a target of a very cheap takeover by a cash-rich competitor like BYD.
Tesla Confirms Next-Gen Vehicle Platform Is Under Development
Tesla is working on an all-new, next generation vehicle platform, which is expected to be ready in not too distant future.
insideevs.com
In 1922 Sarah T. Bushnell published the biography “The Truth About Henry Ford”. She included a story about attorney Horace Rackham whose law firm drew up the incorporation papers for Henry Ford’s automobile company in 1903. Rackham was asked to become an investor, but his health was poor, and he feared risking his precious savings. So he visited an unnamed leading banker to obtain advice.
The banker took him to a window. “Look,” he said pointing to the street. “You see all those people on their bicycles riding along the boulevard? There is not as many as there was a year ago. The novelty is wearing off; they are losing interest. That’s just the way it will be with automobiles. People will get the fever; and later they will throw them away. My advice is not to buy the stock. You might make money for a year or two, but in the end you would lose everything you put in. The horse is here to stay, but the automobile is only a novelty — a fad.”
Also
It's obvious that the author of the investmentwatchblog is not an engineer. He's worried about power distribution infrastructure. The part that he missing completely is the fact that EVs can actually alleviate the power distribution problem. You can think of the electric grid as comprised of three elements: generation, distribution and consumption.
There is already a revolution going on in the generation area with distributed generation via solar panels installed on private homes. The problem is that this distributed generation is very uneven (the sun only shines a few hours per day) so it requires the conventional power generation to step in almost instantaneously to supplement the variations. This is expensive and puts a lot of strain on the distribution. It would be really nice if one could store the excess energy produced during intense sunshine hours and use it later when needed. And here is where EVs step in. Most EVs have way more storage capacity then they need 90% of the time. Your EV can can have 300 miles range, but on average people drive only 20-30 miles per day. So what can you do with this excess stored energy? "Inject" it back to the grid so your Tesla can "sell" its excess electricity to the neighbor's Tesla that is getting ready for a long road trip. Of course this requires that all these "smart" devices talk to each other. But the technology not only exists already, it's actually put in practice. Have you ever seen a guy from the utility company to ever come to your house to read the electric meter like they did 30 years ago? Of course not, because now your meter is constantly "talking" digitally with the utility company using the same wires that bring electricity to your house. And there is no reason why your meter (and Tesla) can't talk real time with your neighbor's meter (and Tesla). All the communication infrastructure is already there. And it's being tested as we speak.
Toyota, Texas Utility Partner on Vehicle-to-Grid Research
The Japanese carmaker has teamed up with Oncor, a Dallas-based utility provider, to research how energy can be pulled from an electric car’s battery and put back into the electric grid when it is under strain.
www.govtech.com
Let's talk in 10 years ...
It's the essence of S-curve in innovation. EVs are the disruptive innovation that is allowing new players to step in and replace old, mature competitors.
Funny enough the pic below shows the transition from compact cassette to CD. The Dutch company Philips invented the former, while the latter was invented in partnership between Philips and SONY. Both were leaders in consumer electronics, very much like Toyota is today in automotive field. Philips did a great job by creating disruptive innovation not once, but twice in a row. But eventually both Philips and SONY faded into becoming irrelevant because they didn't catch on the digital revolution and were outclassed by Apple and its iPod.
Toyota is the SONY, Tesla is the Apple. Some established companies realized the potential of EVs and invested early (Hyundai/KIA, Mercedes-Benz, VW). New players sprang overnight (BYD). Toyota, on the other hand, is behaving exactly like SONY did when CD was becoming obsolete - SONY developed Blu-Ray, an incremental improvement to CDs which helped them to stay relevant for a few years, but eventually was replaced by streaming and solid state storage. Does anybody buy SONY TVs these days? I haven't seen one in stores in ages - it's Samsung, LG, Visio, etc. Toyota's hybrids are a perfect analogy to Blu-Ray, an incremental (and significant) improvement over previous technology, but not a disruptor.
Innovation S-curve - episodic evolution - THE WAVES
Innovation S-curve forming the core of innovation lifecycle helps to derive insights about unfolding opportunities, risks and pitfalls
www.the-waves.org
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