In sales of pure electric cars, Toyota lags far behind in Europe. It currently controls only about one percent of the market with its battery cars. It wants to accelerate the transition to “electricity” significantly, it recently announced a new goal – the sale of electric cars should account for twenty percent of all its sales by 2026. Is it achievable?
That sounds like a huge speedup. But let’s look at it in a broader context. The transition of Toyota customers to pure electric cars should be much easier than for other brands, as they will be switching from hybrids, i.e. partially electrified cars. That is why even such an ambitious goal is realistic – twenty percent by 2026 and fifty by 2030. We will not tell people to switch from a diesel station wagon to an electric SUV, we will say that half of the hybrid cars they drive today will theoretically be completely electric the same.
But the battery in hybrids is further from the battery in pure electric cars than a die-hard Czech petrolhead to Brussels… These are completely different batteries. In addition, Toyota does not have a battery factory for electric cars in Europe, will that change?
Rather not. I assume that we will deepen cooperation either with gigafactories of other manufacturers in Europe, or we will import batteries directly from Asia. Toyota wants to break through with electric cars in the small car segment as well. We think that with them fully electric control is the most natural and the most usable. I can imagine that we will aim for the production of electric cars that will be similar in size to the very small Aygo X and Yaris models that we produce in Cologne. But it has its pitfalls.
For example?
There is a belief that the cars must be technically identical to what we are used to, i.e. have a range of at least hundreds of kilometers. However, it doesn’t have to be that way. If you want to make a car as small as the Yaris and Aygo X and equip it with a range of hundreds of kilometers, it will be unaffordable, terribly heavy and unusable. If we as drivers were able to accept the fact that a range of eighty to one hundred kilometers is enough for us with this type of car, we would be able to satisfy such demand much more easily and deliver the car to the market. At the same time, it would be cheaper in the range of 390 to 420 thousand crowns. The production of such cars would also fit into the development of electromobility at the Cologne Toyota plant, it would make sense overall.
Hybrids, which Toyota has been betting on for a long time, will not be recognized as emission-free by European regulation. The hydrogen drive, which you are also promoting, is very expensive for a change. How difficult will it be for the automaker to convert to pure battery cars?
In 2026 and 2027, we want to launch cars with new batteries that will use solid electrolyte technology. Those batteries will work completely differently, they should allow a range of up to 1,200 kilometers and recharge within ten minutes. By then, we will launch six new battery models. It will definitely be challenging. We will have to modify part of the production lines to produce battery cars. It won’t be a small investment. On the other hand, the production of electric motors and batteries is natural for us. It is not a brand that has a history of 22 million sold electric motors and the same amount of sold batteries.
Martin Peleska | E15 Michael Tomes
Car companies face uncertainty, it is not known how many electric cars the markets will accommodate and at what time. For example, Volkswagen stopped production of the ID.3 and Cupra Born models in Cvikov and Dresden until the end of the year due to low demand. The Czech Republic is one of the European Union markets with the smallest sales of electric cars. How do you evaluate the efforts of the Ministry of Industry and Trade, which is launching support for companies and entrepreneurs to purchase electric cars?
It took us a very long time. At a time when other countries are reducing or ending support, we are starting it, albeit with European money. Customers perceive that there is no continuous support in the Czech Republic, so this one-time help will probably not convince them to throw their two-year-old diesel off the cliff. I should probably be grateful, but at a time when the state is saving money, such support can worsen the image of electromobility in the eyes of the public.
The state should say that the plan will help improve the condition of the Czech fleet, which is tragically old and unable to accept more electric cars. By the way, we have instructed the lawyers to find out how the support will work. They found that there was more confusion than certainty about how it would work. We want to educate dealers so they know what to say to customers. Despite the uncertainty, companies are already appearing on the market that attack car manufacturers with offers. They want to cooperate, for thirty thousand crowns they will arrange for entrepreneurs to obtain subsidies.
How are your sales in the Czech Republic developing so far this year?
Year-on-year, we are up by half, the market as a whole by eighteen percent. So far this year, the number of newly registered cars has increased by roughly that much. But these are cars that were sold last year or the year before. Although there are a lot of them and our production capacity is full thanks to this, it will not last forever. We are seeing a noticeable drop in orders.
Martin Peleska
He started his automotive career in 1999 at Ford Motor Company, where he held many different positions in the field of after-sales services. Since 2006, he has been working for the Toyota and Lexus brands, where he started as a sales manager. Between 2009 and 2012, he worked at the European headquarters of Toyota Motor Europe in Brussels, where he was in charge of sales and production planning and subsequently pricing of selected models. After his return in 2012, he became the sales and marketing director of Toyota Motor Czech, and with the transition to Toyota Central Europe, he was appointed director of the representation of the Toyota and Lexus brands in the Czech Republic.
How big?
I estimate that there are fewer of them on the entire market by about a third – so many fewer cars are being ordered by customers now. It is interesting that, for example, among our new clients there is a slight increase in private customers, but a considerable decrease in companies. At the same time, everyone would expect the opposite. Before, companies accounted for about seventy percent of sales, now it’s almost half and half.
When even conventional cars are not “selling”, then achieving the already mentioned 20 percent share of electric cars in your sales will be all the more challenging, or not?
It depends on the demand and the mix, how many people switch from hybrids to electrics. However, I don’t think that the total size of the market would have a significant effect on the share that will go to internal combustion cars or electric cars. So even if the Europeans will save, I believe that the sales of electric cars can meet the goals of the manufacturers. In total European sales of all cars, Toyota is currently second behind Volkswagen, in the category of electric cars it is significantly behind, as you already said.
In the first wave, car companies introduced large electric sports utility vehicles to the market, now they are announcing that the next target is a smaller affordable model for a wider clientele for twenty thousand euros and above. Can manufacturers design a “so cheap” battery car that would also meet customer expectations for range or charging speed?
I also dealt with pricing in Brussels for three years and I know that the price is not determined by costs and margins, but by how the market behaves. Of course, manufacturers have to make some basic ideas about the future price more than five years before they put the car on the market. Although these are the best, they are still only estimates. All it takes is a significant change in the yen exchange rate or the price of steel, and you’re off schedule.
Chilli?
Electric cars will approach the prices of conventional cars, partly also by making conventional cars more expensive. Finally, after years of promises, we will also see the desired economies of scale. It will be cheaper to make electric cars because more and more of them will be made. This is already happening and will happen. I dare to say that the cheapest electric cars of most brands will start at 750 thousand crowns. If we continue to require a range of at least five hundred kilometers, the price will not drop below that. If we don’t require it, then what I said applies, that cars with a range of up to a hundred kilometers can come to the market at a price of around four hundred thousand.
The large Chinese car manufacturer BYD is planning to build a factory for its own electric cars in Hungary, but several Chinese manufacturers have expansion plans. Do they represent strong competition?
I do not think. It’s similar to when Japanese and Korean brands came to Europe in the 1980s. Yes, when you enter the market, you can relatively easily make a wow effect and show great numbers. And yes, the Chinese are stirring the water quite a bit. But it is something else to repeat those numbers, if not to increase them. You have to have a robust infrastructure – dealerships, services and so on. If the Chinese are not able to compete with standard established brands among conservative customers, they will not survive the second life cycle.
But if they offer cars that are competitive in price and quality, the market will have to adapt to them. If I forget that Chinese car manufacturers have the support of their own state, which has invested in the industry, they also benefit from the fact that they have very low distribution costs. The standard brand has them around 25 percent, they around eleven. But when the Chinese start building their dealer networks, distribution centers, European headquarters, their costs will increase. If they don’t, they won’t satisfy conservative customers. Yes, car distribution is a juggernaut – but there is no other way to do it.
A number of brands, for example those from the Volkswagen or Stellantis concerns, are switching from dealer sales to agency sales. How do you explain that? Will Toyota do the same?
They allowed themselves to be provoked by Chinese brands and Tesla. Switching to an agent model is a way to reduce distribution costs. The dealer will not have a contractually guaranteed margin of around ten percent, but will be paid as an agent when selling the car.
I still can’t understand it, because the price is not set by the car manufacturer or the dealer, but by the market. Although the car company will thus take money from dealers’ margins, it will still have to pay these funds out of its own pocket in order for the cars to remain price competitive. We are going in the opposite direction and are looking for new dealers. The Toyota network in the Czech Republic will grow from the existing 32 dealerships by up to ten new ones and will remain with the dealership sales model.
Let’s imagine that we are sitting in a new Toyota ten years from now. What will change against today?
We’re probably a bit exotic about it, we’re going against the grain of different car sharing and the like, because we’ll want the car to be much more connected to the owner or his family. Cars will understand people more. They will know who is getting into them and where they are going. If it is a regular trip to work, the car will advise where to go to drain the battery as little as possible – taking the terrain into account.
The car will understand the mood of the crew and adjust the music played accordingly. He will order dinner at a restaurant or book a seat at the cinema on your instructions. We see it in the studies that this is where the world is going to go. Whether we like it or not, the car will also become much more autonomous. It will cooperate with other cars and with the road if it is equipped with technologies. All this will be quite common in ten years.
2023-12-30 16:30:00
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