Toyota turns to Chinese technology to bring electric vehicles to market

BYD’s Han electric car. (Getty)

BEIJING (Reuters) – Toyota Motor Corp will launch a small, all-electric sedan in China at the end of next year, after turning to local partner BYD for key technology to ultimately create an affordable but roomy solution, have four sources told Reuters.

Two of four people familiar with the matter described the car as an electric holy grail for Toyota, which has struggled for years to deliver a small electric vehicle that is both cost-competitive in China and uncompromising on comfort.

Sources said the breakthrough was mainly due to BYD’s less bulky lithium-iron-phosphate (LFP) Blade batteries and lower-cost engineering know-how – a turning point for a Chinese company whose popular F3 sedan has was inspired by the Toyota Corolla. back in 2005.

Little known outside of China at the time, BYD, or “Build Your Dreams,” hit the headlines in 2008 when Warren Buffett bought a 10% stake and has since grown into one of the largest manufacturers of so-called vehicles. new energy to the world. .

Toyota’s new electric vehicle will be slightly bigger than its compact Corolla, the world’s best-selling car of all time. A source said she considered it “a Corolla with a larger rear seat section”.

It will be unveiled as a concept car at the Beijing auto show in April and will then most likely be launched as the second model in Toyota’s new bZ series of fully electric cars, although it won’t go on sale. than in China at the moment.

“The car was fitted with BYD battery technology,” one of the sources told Reuters. “This has more or less helped us solve the challenges we faced in delivering an affordable small electric sedan with a spacious interior.”

It will be placed below high-end EVs like Tesla’s Model Y or the Nio ES6, but above the ultra-cheap Hong Guang Mini EV, which starts at just $ 4,500 and is now the EV. the most sold in China.

Two of the four sources, all of whom declined to be named because they are not authorized to speak to the media, said the new Toyota will be competitively priced.

One said it would likely sell for less than 200,000 yuan ($ 30,000), targeting a segment of the Chinese market that Tesla is expected to target with a small car over the next two years.

“We don’t comment on future products,” a Toyota spokesperson said. “Toyota sees battery electric vehicles as a way to help us achieve carbon neutrality and is committed to the development of all types of electrified vehicle solutions.”

A BYD spokesperson declined to comment.

‘All a little overwhelmed’

The fact that Toyota was forced to turn to BYD to solve its low-cost electric vehicle conundrum shows how the competitive balance of the global auto industry has shifted over the past decade.

When the quality of Chinese vehicles was considered below average, global automakers weren’t too concerned that they could not compete on price, and let Chinese companies control the domestic market for cheap, no-frills cars.

But times have changed.

Toyota executives started to worry in 2015 when BYD launched its plug-in hybrid Tang, with significant improvements in style, quality and performance. Most worrying was that it was still around 30% cheaper than comparable Toyota models.

There was a critical turn of events in 2017 when key Toyota engineering officials, including then-executive vice president Shigeki Terashi, drove several BYD cars such as the Tang through its lot. test in Toyota City near its headquarters in Japan.

Terashi then visited BYD’s headquarters in Shenzhen and drove a prototype of his Han electric car.

“Their long-term quality is still a question mark, but the design and quality of these cars showed levels of maturity, but they were much cheaper than comparable Toyota models,” said one of the four. sources, who participated in the trials.

“We were all a little stunned by this.”

Two of the sources said BYD ratings prompted Toyota to form its research and development (R&D) joint venture with BYD last year. Toyota now has two dozen engineers in Shenzhen who work side-by-side with around 100 BYD counterparts.

Blade winner

Toyota’s new electric vehicle comes at a time when it is under fire from environmental groups who maintain it has not made a commitment to zero emissions. They say Toyota is more interested in extending the commercial utility of its successful hybrid technology.

Toyota executives say they’re not against battery-electric vehicles (BEVs), but argue that until renewables become more widely available, they won’t be a silver bullet for reducing carbon emissions.

Nonetheless, Toyota has created a division in Japan dedicated to zero-emission cars called the ZEV Factory and is developing safer and less expensive battery technologies, including solid-state lithium-ion cells that would significantly increase the range of an EV. .

While Toyota has long advocated a solution that does not compromise on comfort as the best way to popularize BEVs, it has struggled to produce such a car.

One problem stems from the need to stack large, heavy batteries under the ground, as they eat away at the interior unless the roof is also raised – which is why many small EVs are SUVs.

In 2018, Toyota briefly explored the idea of ​​a battery business with BYD. This and subsequent interactions led Toyota engineers to discover BYD’s LFP Blade battery. They described it as a game changer because it was both cheaper and free up space.

“It’s a kind of ‘my fallen eyes’ type of technology that we initially rejected because it’s design is so drastically simple,” one of the four sources said.

BYD officially launched its Blade battery in 2020.

LFP batteries have a lower energy density than most other lithium-ion cells, but are cheaper, have a longer lifespan, are less prone to overheating, and do not use cobalt or nickel. Tesla is already using LFP batteries in its Model 3 and Model Y in China.

One of the sources said that a typical Blade pack is around 10cm (3.9in) thick when the modules are laid flat on the ground, which is around 5cm to 10cm thinner than other packs. lithium-ion.

A BYD spokesperson said it was possible, depending on how an automaker packs the Blade pack into a car.

Do it quickly at the expense of quality?

While Toyota hasn’t fully solved the puzzle of how BYD continues to cut costs, two of the sources said one factor could be its short, flexible design and quality assurance process – that some Toyota engineers see it as shortcuts.

Toyota’s planning process is much more rigid and in-depth, the sources said. Once he’s decided on the technologies, components, and systems early in a car’s three to four year development process, he rarely changes his design.

In the process, Toyota typically makes three design prototypes and three manufacturing prototypes. Some travel around 150,000 km (93,000 miles) to achieve rock-solid quality and reliability in emissions testing or on-road durability.

At BYD, engineers do much less prototyping – there is usually only two – and designs can be changed as late as two years after the process begins, which is definitely banned at Toyota, a source said. . A BYD spokesperson declined to comment.

But as a result of these last-minute changes, the technology in a BYD car is much more up-to-date than that of a Toyota when it hits the market, and is often cheaper.

All four sources believe that further advancements in simulation and virtual engineering know-how, as well as the fact that BYD produces a wide range of its own components, have helped it close potential gaps in quality and reliability that could arise from the last few minutes. design change.

“Our challenge at Toyota is whether we reject BYD’s engineering method as cowardly and too risky, or if we can learn from it,” said one of the sources.


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