Toyota Motor Corp has announced that it expects its operating profit to increase by 10% this business year, largely due to a five-fold increase in sales of pure electric vehicles (EVs). Toyota forecasts that battery EV sales, including those from its Lexus subsidiary, will reach 202,000 worldwide during the current business year ending March 2024, up from 38,000 in 2020. However, this new forecast still only represents 2% of Toyota’s total sales volume, up from 0.4% of its total vehicle sales during the last fiscal year.
This comes as Toyota aims to focus more on EVs, despite its previous go-slow approach to all-electric cars. The Japanese automaker has sought to provide more consumer choice before moving aggressively to electrification. However, the company has since outlined plans to introduce 10 new battery-powered vehicles and focus on next-generation battery EVs.
The outlook from Toyota comes after the company released its earnings for the fiscal fourth quarter through March which saw operating profits surge by more than a third to JPY 626.9bn ($5.8bn), exceeding analysts’ expectations of JPY 553.46bn. The positive results were mainly down to the weak yen’s boost to the value of overseas sales.
Despite this, Toyota will have to navigate through several challenges. It is currently facing pressure in China, the world’s largest auto market, where the rapid shift to EVs has hurt demand for petrol-powered cars that have traditionally sold well in the country. Additionally, Toyota faces problems at affiliate Daihatsu, which rigged safety tests for some Toyota-branded cars.
Toyota is still a long way off industry leader Tesla, which sold 499,550 vehicles in FY2020. However, the increasing shift towards EVs will be a key focus for the Japanese automaker in the years ahead. The company’s newly appointed CEO, Koji Sato, hopes to reposition Toyota at the forefront of the automotive industry, specifically in the EV market.
Nonetheless, like all automakers, Toyota is still grappling with the chip shortage. The company has sought to stay ahead of the game by investing in chip production facilities and looking to rely less on third-party chip suppliers. However, there is little the company can do in the short term, but hope for an easing of supply chain disruption in the coming months.