Toyota (7203.T) pioneered the world’s most successful hybrid car, but China in particular has some catching up to do when it comes to all-electric vehicles.
The Hong Guang Mini EV, a tiny, no-frills car from General Motors (GM.N) joint venture costing less than $ 5,000, is a huge hit in the world’s largest auto market, while Toyota doesn’t yet have a small, low one of its own Must bring car to market-cost electric vehicle in China.
Toyota, the world’s largest automaker, will unveil its solution at the Shanghai Auto Show on April 19th: a new universal platform for electric vehicles (EVs) called e-TNGA, which will support a range of models from small runarounds to large SUVs.
It will also showcase its concept of an electric midsize sport utility vehicle (SUV) based on the e-TNGA platform that will be sold worldwide within a few years, said two people familiar with Toyota’s plans.
Toyota’s executives have long called for a small electric runabout, but the fact that it comes first with a midsize SUV is a sign of the challenges facing making small, affordable electric vehicles that are also competitive, comfortable, and safe .
In the face of growing pressure on automakers to reduce emissions, Toyota is making efforts to manufacture electric vehicles that are world-wide with the mini electric vehicles, the high-end sedans from Tesla (TSLA.O), the mid-range models from Volkswagen (VOWG_p.DE) and Renault (RENA) .PA) and elegant electric vehicles from Chinese startups like (NIO.N) and Xpeng (XPEV.N).
While Toyota’s Prius hybrid was becoming a world bestseller, one of its early efforts to develop a small EV, the eQ, was a flop.
After selling around 100 eQs in 2012, Toyota dropped them due to concerns about electric vehicle limits such as high price, short range and long charge time.
The eQ, an electric version of Toyota’s mini-iQ, cost 3.6 million yen ($ 33,000), about the same as its midsize Camry.
A key issue in developing an affordable, small electric vehicle is the need to use electric drives that don’t yet have parity with their gasoline counterparts, according to those familiar with Toyota’s plans.
Another challenge is cramming bulky batteries into a tiny car.
Many electric vehicles have high floors because the batteries are stacked underneath, leaving automakers with a choice of building cars much taller to accommodate passengers, or keeping them lower and sacrificing comfort, the sources say.
Toyota does not want to compromise on quality, comfort or performance with its small electric vehicle, but recognizes that it needs to develop expertise in reducing technical costs in order to deliver such a vehicle at a price well under $ 20,000 .
It is precisely this know-how that GM used to manufacture the Mini EV, which can cost just 28,800 yuan ($ 4,410).
The SAIC-GM-Wuling (SGMW) joint venture is the largest manufacturer of no-frills delivery vans from around 30,000 yuan in China and uses this know-how to control costs.
“Basically, Wuling just had to replace gasoline engines in these commercial vehicles with simple electric drives,” said Yale Zhang, director of consulting firm Automotive Foresight.
He expects sales of the Mini EV and its upscale macaron version to hit 500,000 this year.
Zhou Xing, an SGMW vice president of sales and marketing for Wuling and Baojun, said it plans to launch four small electric vehicles under its brands by early 2022 and increase the model range to 10 as more competitors enter the market.
The Mini EV also cuts corners that would not be allowed in the US or Europe, underscoring the challenge Toyota faces to develop a viable rival that is easy to handle in a crowded city, yet still offers high quality and performance having.
For example, the Mini EV has only one airbag, none for passengers or on the sides to protect the occupants when it rolls.
The car has an anti-lock braking system but no stability control, although its relatively tall, blunt profile makes it easy to tip over when cornering sharply, two people familiar with its development told Reuters.
“First, the product meets all of the safety requirements for vehicles in China. The Hong Guang Mini EV is basically a pendulum tool that helps people get from point A to point B in city traffic. It is highly unlikely that they will get this car at height drive speeds, “said Zhou of SGMW.
The no-frills approach certainly didn’t detract from its appeal.
Budget-conscious Chinese customers and young, fashionable townspeople, launched in July, buy about 100,000 mini-electric vehicles per quarter, making them one of the top electric vehicle sellers in China.
Some younger drivers are buying it and other Wuling cars in part after a video of a Wuling delivery truck skilfully speeding down a winding mountain road went viral. For many, it tickled their national pride to see a simple Chinese van performing tricky maneuvers.
“I am proud of what Chinese-made vehicles like Wuling work horse carts can do,” said Huang Peixian, 26, a small business owner in Shantou City, Guangdong Province.
“When I saw the Hong Guang Mini EV, I thought it might be a good car for me,” she said. “I’m not only attracted to the car because of its low price, it’s also really fun to drive.”
Many drivers personalize their mini electric vehicles with a new paint job and elegant headlights and taillights. Some even customize their other cars like Audis and BMWs with Wuling stickers and badges.
Huang went all out, turning the inside of her Mini EV pink and splashing characters from the Japanese cartoon series Chibi Maruko-chan on the white exterior.
GREEN CREDIT BOOST
Toyota’s electric SUV will be the first car to be manufactured by the new zero-emission vehicle design division in Japan known as the ZEV Factory.
However, to get the low-cost expertise it needed, it turned to Chinese battery and automaker BYD (002594.SZ) through a joint research and development company they founded last year.
It is planned to leverage BYD’s expertise in building small electric vehicles and some key components, including batteries.
But there’s still a good chance Toyota is using the electric powertrain technology – a combination of motor, inverter, and transmission – called e-Axle, which is made by its subsidiary BluE Nexus, according to one of the people familiar with Toyota’s plans.
The Hong Guang Mini EV also plays an important role for GM and SAIC as it generates green car credits. Automakers in China need to produce enough new energy vehicles (NEV) to get loans to offset their production of internal combustion-engine cars.
The success of the Mini EV means that GM and SAIC will have the ability to sell loans to competitors or produce more, larger, luxury gasoline vehicles without being penalized.
Zhang of Automotive Foresight also said that the mini EV system means that the price of the mini EV can be very competitive until it barely makes a profit.
SGMW’s Zhou declined to say whether the Mini EV is making money or how much it is making from green credits.
“We’ve seen some companies come to us and buy loans from us. But we don’t want to reveal who they are,” he said.
The two sources familiar with Toyota’s plans said there were no plans to lose money on the retail price of its small electric vehicle or use green loans to make it more competitive.
A company spokesman declined to comment on whether Toyota has enough Chinese NEV loans or whether it would consider selling it as an integral part of its strategy.
($ 1 = 108,9200 yen)
($ 1 = 6.5280 Chinese yuan renminbi)
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