Toyota Postpones Electric Vehicle Production in Light of Slowing Global Demand and Safety Scandals
Oct/03/2024
Toyota has delayed the start of electric vehicle production in the U.S. until 2026, moving away from its original target of late 2025, due to declining global demand for electric cars. The Japanese automaker plans to manufacture an unnamed electric SUV at its Kentucky factory, while another electric SUV will begin production at a plant in Indiana later that year. This decision comes amid broader industry concerns, as global automakers reassess their electric vehicle strategies; Volvo, for example, recently abandoned its goal to produce only electric vehicles by 2030. Compounding these challenges, on December 20, 2023, Toyota’s subsidiary Daihatsu came under investigation by the Japanese transport ministry for irregularities in safety testing, leading to the suspension of shipments for 64 of its models. Daihatsu, the third-largest subsidiary by sales volume within the Toyota Motor Corporation, had sold over 790,400 vehicles in 2023. The ongoing testing scandal has since escalated, revealing faulty data at several major Japanese automakers, including Toyota, which has since halted shipments of key models. Despite these issues, Toyota reported record revenues of approximately 45.1 trillion Japanese yen for its 2024 fiscal year, bolstered by strong domestic and North American sales. The chart below shows Toyota Motor Corporation’s revenue in FY 2024, by region. However, competition remains fierce, with the Toyota Corolla now ranking behind Tesla’s Model Y as the best-selling car globally, and ongoing scandals could jeopardize Toyota’s financial outlook for 2025.
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