Toyota, renowned for its legendary production system, is gearing up to take on the Tesla challenge head-on. Eager to shed the shadows of the past and propel itself into the future, Toyota has embarked on a radical overhaul of its manufacturing processes. The company’s visionary move seeks to modernize and revolutionize its production system, introducing a wave of cutting-edge technologies set to debut within a few short years.
With this strategic transformation, Toyota aims to tackle the Tesla trauma, vying for dominance in the EV market and cementing its position as a true contender in the race towards sustainable mobility. Today, let’s find out how Toyota intends to successfully compete in the EV sector with market leaders like Tesla.
Toyota is responding to the competition from Tesla by reinvigorating its renowned manufacturing practices. Tesla has demonstrated that innovative and efficient production engineering is crucial for successful electric vehicle manufacturing. As the originator of lean manufacturing, Toyota is revisiting its traditional approach to factories, production lines, and logistics. By reevaluating its methods, Toyota aims to accelerate the development of a new generation of electric vehicles, potentially achieving this in just three years.
Yoshio Nakamura, deputy chief of global production at Toyota, acknowledged Tesla’s impressive technology but stated that it serves as motivation for Toyota to work even harder to catch up. Toyota aims to learn from Tesla without merely copying its methods. Instead, they intend to improve upon Tesla’s innovations through the application of kaizen.
Recently, Nakamura and other high-ranking Toyota executives showcased their new production technologies at a briefing held at the Higashi-Fuji Technical Center, located near Mount Fuji. Their objective is to streamline production processes, reduce plant investment, and reduce production lead time by half when introducing new vehicle models.
These advancements reflect Toyota’s newly declared “BEV-first mindset” under CEO Koji Sato. Toyota, as a whole, has set a target of selling 3.5 million EVs annually by 2030. Given the minimal global EV sales of only 24,466 units in 2022, achieving this ambitious goal will require a significant reevaluation of manufacturing practices, particularly in terms of scalability and efficiency.
As Toyota’s production engineers strive to implement new techniques in 2026, Takero Kato, the president of Toyota’s BEV Factory, or the battery-electric-vehicle development division, sums up their ambitions: “Our aim is to change the future with BEVs.” However, the reality is that many of the industry’s newest players have already reshaped the automotive landscape. Brands like Tesla and China’s BYD have unsettled Japan’s traditional automakers. These new entrants are unrestrained by legacy factories and supply chains, enabling them to approach auto design with fresh perspectives untethered to internal combustion. Their different mindset is evident in their low-cost manufacturing, which is highly admired even by proponents of kaizen.
Honda CEO Toshihiro Mibe referred to this disruption as the “Tesla Shock” in an interview with Japan’s Nikkei newspaper. However, Toyota was particularly taken aback when the Tesla Model Y surpassed its long-standing Corolla as the world’s best-selling nameplate in the first quarter, leaving a significant impact on the company.
Critics have accused Toyota of being slow and clumsy in its transition to the era of electric vehicles. The debut of their highly anticipated EV, the bZ4X crossover, faced a dubious launch. Just two months after its market introduction in 2022, the vehicle had to be recalled due to concerns about potential wheel detachment.
Nevertheless, many of Toyota’s new production concepts align with those pioneered by Tesla. These include vertical integration, the adoption of a rolling chassis, a departure from assembly lines, and a shift toward gigacasting. Sandy Munro, the CEO of Munro & Associates, a Michigan-based company that conducts vehicle teardowns and provides recommendations to automakers, states that Toyota’s plan closely resembles Tesla’s production plan, which is currently regarded as the best in the market.
He said, “The Toyota plan that I see is very similar to the Tesla production plan, and that is good because, currently, that’s the best in the marketplace. Toyota needs to also look outside for contrary points of view on how to run the company, how to experiment and engineer, how to rethink manufacturing, and where to find the new technology.” Munro predicts that the main hurdle to Toyota’s progress will be internal resistance to change.
Toyota’s long history of success has occasionally hindered its corporate culture, as the company’s pride in its achievements has led to potential complacency within the world’s largest automaker. Takahiro Ishijima, the newly appointed president of Toyota’s vehicle development center, acknowledges that this success can sometimes serve as an obstacle.
Toyota’s fresh approach is embodied in the BEV Factory, led by Kato, which is a dedicated group focused on electric vehicles. Rather than being a physical factory, it functions as an organization that consolidates all aspects of EV development, including design, engineering, manufacturing, and sales. Manufacturing will take place at existing plants or on new EV production lines, incorporating the innovative technologies developed by the BEV Factory.
Conrad Layson, a senior alternative propulsion analyst at AutoForecast Solutions, views Toyota’s BEV Factory plan as a necessary conversation to prevent the company from becoming irrelevant. Layson believes that this plan has the potential to elevate Toyota back to the forefront of legacy automakers during the transition to electric vehicles. He suggests that Toyota’s production processes, overseen by the Toyota Production System, are in need of modernization and updating.
A key update in Toyota’s manufacturing process is the implementation of gigacasting, a technique pioneered by Tesla. Gigacasting involves casting the vehicle’s front and back sections as two large modules, eliminating numerous smaller parts. For instance, the under-rear section of the Toyota bZ4X currently consists of 86 parts produced through 33 processes. However, Toyota is prototyping a method to stamp the same section as a single piece through one process using a gigapress.
To verify the casting modules, Toyota currently utilizes a 4,000-ton press from Japanese press maker Ube Corp. However, the company is also working on developing its own gigapresses internally. Despite the high demand for gigapresses among automakers, Toyota has not attempted to purchase its own as the global supply is limited. Other manufacturers, such as Volvo, are also exploring gigapresses.
Although the 4,000-ton press used by Toyota is slightly smaller than the industry standard of around 6,500 tons, there are no Japanese suppliers for such large presses. In testing, this press, which is almost double the size of Toyota’s largest press for casting parts, a 2,500-tonner used for front and rear suspension towers, has been employed.
Compared to Toyota’s current method, gigacasting offers cost advantages in production preparation and operation. It is also significantly faster. The under-rear section of the bZ4X can be gigapressed in approximately 100 seconds, whereas the current method involving multiple processes takes around 30 minutes.
Toyota plans to implement gigacasting in plants manufacturing next-generation EVs starting in 2026. These vehicles will consist of three simplified modules: a front module, a rear module, and a middle battery pan. Nakamura forecasts that this approach will improve manufacturing efficiency by 20%, meaning that with the same materials and processes, Toyota will be able to produce 20% more vehicles.
Nakamura highlights Toyota’s advantage in deploying this technology due to the company’s extensive experience in quality management within stamping operations. Gigacasting, given the extreme pressures and complexities involved, requires precise control of strain and torsion on the parts. Nakamura believes that this type of manufacturing will significantly enhance productivity for Toyota.
Toyota is also adopting a new approach in which anchored production lines will be eliminated. A self-propelled production system will be implemented, where cars will drive themselves throughout the plant. This method is already in use at Toyota’s Motomachi assembly plant in Toyota City, where the bZ4X autonomously navigates from final assembly to final inspection. The vehicles drive themselves from one building to another without the need for a driver.
Remote-control technology, similar to that used in radio-controlled cars, is employed to move vehicles, taking advantage of their electric power. Engineers aim to extend this self-driving capability to cover the entire final assembly process, allowing the car to move to where its various components are located rather than bringing the parts to the car. This approach will significantly reduce the need for fixed conveyors to transport cars within the factory, resulting in a reduction in factory investment and labor.
By implementing self-propelled production, Toyota can completely remove hangers from their plants and create more flexible layouts. The compact layouts and flexible parts storage enabled by this approach are expected to yield significant cost savings, with hundreds of millions of dollars potentially saved in conveyor-related investments alone. Moreover, Nakamura predicts that this new production method could reduce production time by half.
Another plan for Toyota is to implement digitalization extensively across its factory floors as a new tool. The objective is to leverage digital twin technology, creating virtual replicas of the factory lines. This approach will enable Toyota’s production engineers to accelerate the design, testing, and verification of new factory line configurations.
By utilizing digital twin technology, Toyota aims to reduce the lead time for mass production preparation by half while significantly enhancing the accuracy of reproducing line layouts, achieving an error level as precise as 1 millimeter.
This shift towards digitalization will also lead to the establishment of hyper-automated factories with a higher presence of robots and a reduced number of human workers. Toyota’s goal is to develop more efficient production lines by employing connected technology for unmanned transport, implementing autonomous inspections, and embracing the concepts of the Toyota Production System to bring about substantial changes in the manufacturing landscape.
The company intends to deploy these new technologies in any plant worldwide that produces its next-generation EVs. However, since these systems are developed in Japan, it is likely that an initial installation will occur at a domestic site, serving as the primary production facility. Toyota’s Lexus plant located on the island of Kyushu is a strong contender for this initial implementation, particularly considering that the company’s first next-generation EV is expected to debut under the Lexus premium brand. Toyota’s ambitious advancements in the EV space do not guarantee that it will immediately rise to the forefront of the EV market or maintain its competitive edge, as its rivals are also actively progressing.
Caresoft Global Technologies, an engineering company specializing in benchmarking and cost reductions, predicts that Tesla, for instance, will be able to reduce capital investment in plants by up to 30% and cut assembly times by as much as 25% with its upcoming model upgrades. Caresoft also forecasts a 30% reduction in Tesla’s factory floor space and significant improvements in the efficiency of its paint shop.
According to Caresoft CEO Mathew Vachaparampil, Tesla’s corporate culture revolves around pursuing radical improvements from year to year, even within the same model. For instance, the Model Y transitioned from a two-piece rear casting in 2020 to a single-piece rear casting in 2021. Vachaparampil highlights that Tesla’s changes are revolutionary and strategically planned well in advance, whereas traditional automakers tend to evolve incrementally using the kaizen approach.
Vachaparampil asserts that Tesla, with its extensive experience and industry leadership in EVs, is ahead of Toyota, which still has ground to cover. Caresoft’s analysis of EVs reveals that the bZ4X lags behind Tesla’s Model Y by approximately three years in terms of material and manufacturing costs. While Vachaparampil finds Toyota’s recent announcements intriguing, he emphasizes that the ultimate proof lies in their next EV.
“The past is usually the best predictor of how a company moves in the future,” Vachaparampil stated. “While I find the recent announcements from Toyota intriguing, the proof of the pudding is in their next EV. Unless Toyota has reworked its designs remarkably in the last few years, I’d like to see the vehicle before I say it can be done.”
In summary, while Toyota’s plans are notable, the competitive landscape remains fierce, and Tesla’s ongoing advancements and expertise position them as industry leaders. Toyota will need to demonstrate significant progress and innovation to effectively compete in the EV market.