Will Toyota’s solid-state battery triumph bring the magic back?

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This week, Toyota shares continued their journey toward all-time highs, up nearly 30 percent since the start of the year, according to Refinitiv data out of 17 “buy” recommendations from analysts Went. ,

impossible stuff, perhaps, for a century-old leviathan whose 2022 sales The number of pure battery electric vehicles was only 1.8 percent that of Tesla, whose all-powerful global bestseller – the Corolla – was to be overtaken by Elon Musk’s Model Y in the first quarter of 2023.

The Japanese company has been accused of entering the global EV race reluctantly and half-heartedly. Its flagship EV offering – the bZ4X – was burdened with a nameless door-entry code and was withdrawn shortly after its launch due to genuine concerns that the wheels might fall off.

A factor helping to explain the share price-versus-setback paradox are the words “solid state” — the elusive, game-changing technology that could in theory allow for much lighter, faster-charging and more powerful batteries and in which Toyota Last said it had achieved a breakthrough in a month.

Toyota said, with various caveats, that the durability issues had been resolved earlier, and acknowledging the tough challenge, the company is expected to mass-produce, commercialize and test a solid-state battery in a vehicle as early as 2027. Must be able to mount. Success is not guaranteed, however. Toyota, whose chief technology officer said the company doesn’t see solid-state batteries as the end-all solution, doesn’t seem psychologically committed to the technology.

But markets often overlook those details: For many investors, the prospect that Toyota may have been overtaken by rivals in one of the great tech races of that era raises some awkward questions for those who have normally paid little attention to technology. Japan’s remanufacturing powers, and Toyota’s in particular, had been dismissed. After all, who would want to leave out the possibility that Japan’s most valuable company is looking at a battery capable of driving a car 1,200 km on a 10-minute charge?

But CLSA auto analyst Christopher Richter argues that this is only part of the new glow around Toyota. Along with the attractive solid-state Ginger, Toyota has provided timelines for the launch of four other battery technologies.

Some have felt desperation. The messaging intended with the tech announcements was two-fold: first, that Toyota is now really serious about EVs and second, in a world where many EV-makers depend on others to develop and commoditize batteries, Toyota The magical differentiator of this is that it can be done in-house. The tires of both these messages need a good kick. Long-term faith in Toyota requires a good deal more than belief in its potential for technological breakthrough.

The difficulty lies in framing the issue in a way that appropriately measures achievement against ambition. Toyota is the world’s number one automobile manufacturer in terms of production and sales. But rapidly changing times and the progress of Tesla — and even, arguably, of China’s BYD — have left Toyota feeling somewhat distant from the global top spot in terms of importance and leadership.

The psychological trauma to the company has been heavy. For decades, it dominated the combustion-engine industry where newcomers were few and the advantages of its existing position were large. Toyota could certainly see that the world was moving towards EVs and wanted the market to follow, but it desperately hated to compete in an area where the barriers to new entrants are relatively low.

Now that Toyota has made it clear that it intends to compete on EVs, it clearly deserves a reappraisal – not least because a deep-pocketed and resilient company like Toyota is at its best in the face of a crisis. is on display. But instead of solid-state batteries, the focus should be on three questions.

The first is whether the cultural change announced at the top of Toyota can be quickly and fully disseminated through the company. Second is whether it is really needed: Kaizen The Toyota-perfected process of continuous small improvements — is what got the company here. It may not be the right formula in this moment of massive disruption, but who’s to say that magic won’t return once EVE becomes the dominant life form?

The third question is whether the tremendous growth of more streamlined players like Tesla has blinded markets to the long-term importance of Toyota’s global complexity and range of offerings. The shift to EVs may have fueled Tesla’s proposition that a handful of models and cars-only-iPhone-on-wheels attitude is correct: In 10 years, the market may decide otherwise.

leo.lewis@ft.com