https://asia.nikkei.com/Business/Au...=4&pub_date=20230210085958&seq_num=6&si=44594
Tesla earns 5 times more per car than Toyota, earnings show
EV maker catching up to Japan's top automaker in net profit
Tesla electric vehicles at a sales and service center in California. The U.S. EV maker has a limited lineup of just four high-end models. © Reuters
KEI MIYATA and YUKI FUKUMOTO, Nikkei staff writersFebruary 10, 2023 05:20 JST
NAGOYA, Japan -- Toyota Motor earned less than a fifth in per-vehicle earnings compared with Tesla during the April-December period as Japan's giant automaker struggles to absorb rising costs.
Toyota earned 240,000 yen ($1,820) in net profit per unit during that time span last year. In contrast, Tesla raked in the equivalent of 1.26 million yen per vehicle during the same period.
This discrepancy shows the limits of Toyota's "multi-solution" strategy that puts out gasoline vehicles alongside fuel cell and electric vehicles. The wide-ranging approach has exposed Toyota to a costlier business environment while Tesla has remained more insulated by its EV-focused lineup.
During the nine months ended December 2022, Toyota's raw material costs increased 1.1 trillion yen compared with a year earlier. Toyota expects 210 billion yen in groupwide cost savings for the financial year ending March, but that number falls well short of offsetting the extra costs.
The trend is particularly conspicuous in Toyota's North American operations, where it is normally easier to pass on higher costs to sticker prices compared with Japan.
In the three quarters through December, Toyota earned 49.2 billion yen in operating profit in North America, a decline of roughly 450 billion yen from the year-earlier period. The company suffered an operating loss in that region during the October-December quarter.
"The price hikes on vehicles haven't kept up" with increased material costs, said a manager.
In Japan, an executive at a parts supplier in Aichi prefecture that works with Toyota expressed a sense of relief despite facing rising fuel expenses.
"It looks like Toyota will pay for 70%-80% of it," said the executive.
Toyota has been partly covering energy bills and material costs for suppliers since summer last year. The parts supplier in Aichi has successfully negotiated a deal with Toyota in which the automaker will shoulder most of the extra fuel costs.
"There's no other automaker that takes care of electricity and gas bills like Toyota," said a senior manager at another parts supplier.
A Toyota dealership in Michigan. Toyota Motor's North American operation has been unable to cover cost increases through price hikes. © Reuters
Globally, Toyota does business with roughly 400 first-tier suppliers alone. Covering fuel and material outlays for that number of suppliers is a highly cost intensive endeavor.
Toyota looks to maintain its supply chain so that it can realize cost savings jointly with suppliers, though much of the scale comes from the fact that Toyota, the world's top-selling automaker, has adopted a strategy that spans roughly 50 models from gasoline vehicles to EVs.
Because of that full-lineup business model, the higher costs have started to weigh on Toyota. The company's per-vehicle profit in April-December is down by 56,000 yen from a year earlier, while Tesla is up by the equivalent of 500,000 yen.
Unlike Toyota's wide-ranging lineup, Tesla fields just four high-end models. Since 2021, Tesla has significantly expanded its production and sales volume, which improved the company's earning capacity.
For the three quarters through December, Tesla earned the equivalent of 1.26 trillion yen in net profit, which is closing in on the 1.9 trillion yen Toyota generated during the same period.
BYD, the Chinese maker of mass-market EVs, is earning between 190,000 yen to 200,000 yen per vehicle and is gaining on Toyota. Last year, BYD sold 1.86 million electrics, including plug-in hybrids, a volume that is up by a factor of 3.1.
This momentum comes courtesy of BYD's vertical integration. The company manufactures automotive batteries in-house and controls a subsidiary that makes semiconductors.
BYD is quickly expanding operations worldwide, the latest move being the launch of EV sales in Japan this January. Along with Tesla, BYD is steadily making a name for itself through its strong earning capacity.
For Toyota to stage a comeback against the rivals, the company faces the immediate challenge of boosting production volume. Toyota plans to sell up to 10.6 million units this calendar year under the Toyota and Lexus brands.
If Toyota achieves its production goals, it would be able to use its economy of scale to bring costs down while not missing out on sale opportunities. Raising prices on vehicles would likely become easier under this scenario.
However, ramping up production is easier said than done. Toyota on Thursday said it plans to only make 9.1 million units this fiscal year, a downgrade of 100,000 units due to a semiconductor shortage.
Toyota looks to respond by minimizing the number of semiconductors used per vehicle. For example, if each Lexus vehicle comes with just one keyless fob instead of two, that would free Toyota to manufacture roughly 100,000 extra vehicles.
In addition, Toyota group company Aisin is redesigning transmissions and other components it produces. Aisin is adopting designs that can accommodate off-the-shelf semiconductors.
This spring, Lexus will add the fully electric RZ to its lineup. Koji Sato, Toyota's incoming president, oversaw the development of the model. Toyota plans to expand its EV lineup, an approach that had been delayed by the company's multi-solution strategy.
Tesla earns 5 times more per car than Toyota, earnings show
EV maker catching up to Japan's top automaker in net profit
Tesla electric vehicles at a sales and service center in California. The U.S. EV maker has a limited lineup of just four high-end models. © Reuters
KEI MIYATA and YUKI FUKUMOTO, Nikkei staff writersFebruary 10, 2023 05:20 JST
NAGOYA, Japan -- Toyota Motor earned less than a fifth in per-vehicle earnings compared with Tesla during the April-December period as Japan's giant automaker struggles to absorb rising costs.
Toyota earned 240,000 yen ($1,820) in net profit per unit during that time span last year. In contrast, Tesla raked in the equivalent of 1.26 million yen per vehicle during the same period.
This discrepancy shows the limits of Toyota's "multi-solution" strategy that puts out gasoline vehicles alongside fuel cell and electric vehicles. The wide-ranging approach has exposed Toyota to a costlier business environment while Tesla has remained more insulated by its EV-focused lineup.
During the nine months ended December 2022, Toyota's raw material costs increased 1.1 trillion yen compared with a year earlier. Toyota expects 210 billion yen in groupwide cost savings for the financial year ending March, but that number falls well short of offsetting the extra costs.
The trend is particularly conspicuous in Toyota's North American operations, where it is normally easier to pass on higher costs to sticker prices compared with Japan.
In the three quarters through December, Toyota earned 49.2 billion yen in operating profit in North America, a decline of roughly 450 billion yen from the year-earlier period. The company suffered an operating loss in that region during the October-December quarter.
"The price hikes on vehicles haven't kept up" with increased material costs, said a manager.
In Japan, an executive at a parts supplier in Aichi prefecture that works with Toyota expressed a sense of relief despite facing rising fuel expenses.
"It looks like Toyota will pay for 70%-80% of it," said the executive.
Toyota has been partly covering energy bills and material costs for suppliers since summer last year. The parts supplier in Aichi has successfully negotiated a deal with Toyota in which the automaker will shoulder most of the extra fuel costs.
"There's no other automaker that takes care of electricity and gas bills like Toyota," said a senior manager at another parts supplier.
A Toyota dealership in Michigan. Toyota Motor's North American operation has been unable to cover cost increases through price hikes. © Reuters
Globally, Toyota does business with roughly 400 first-tier suppliers alone. Covering fuel and material outlays for that number of suppliers is a highly cost intensive endeavor.
Toyota looks to maintain its supply chain so that it can realize cost savings jointly with suppliers, though much of the scale comes from the fact that Toyota, the world's top-selling automaker, has adopted a strategy that spans roughly 50 models from gasoline vehicles to EVs.
Because of that full-lineup business model, the higher costs have started to weigh on Toyota. The company's per-vehicle profit in April-December is down by 56,000 yen from a year earlier, while Tesla is up by the equivalent of 500,000 yen.
Unlike Toyota's wide-ranging lineup, Tesla fields just four high-end models. Since 2021, Tesla has significantly expanded its production and sales volume, which improved the company's earning capacity.
For the three quarters through December, Tesla earned the equivalent of 1.26 trillion yen in net profit, which is closing in on the 1.9 trillion yen Toyota generated during the same period.
BYD, the Chinese maker of mass-market EVs, is earning between 190,000 yen to 200,000 yen per vehicle and is gaining on Toyota. Last year, BYD sold 1.86 million electrics, including plug-in hybrids, a volume that is up by a factor of 3.1.
This momentum comes courtesy of BYD's vertical integration. The company manufactures automotive batteries in-house and controls a subsidiary that makes semiconductors.
BYD is quickly expanding operations worldwide, the latest move being the launch of EV sales in Japan this January. Along with Tesla, BYD is steadily making a name for itself through its strong earning capacity.
For Toyota to stage a comeback against the rivals, the company faces the immediate challenge of boosting production volume. Toyota plans to sell up to 10.6 million units this calendar year under the Toyota and Lexus brands.
If Toyota achieves its production goals, it would be able to use its economy of scale to bring costs down while not missing out on sale opportunities. Raising prices on vehicles would likely become easier under this scenario.
However, ramping up production is easier said than done. Toyota on Thursday said it plans to only make 9.1 million units this fiscal year, a downgrade of 100,000 units due to a semiconductor shortage.
Toyota looks to respond by minimizing the number of semiconductors used per vehicle. For example, if each Lexus vehicle comes with just one keyless fob instead of two, that would free Toyota to manufacture roughly 100,000 extra vehicles.
In addition, Toyota group company Aisin is redesigning transmissions and other components it produces. Aisin is adopting designs that can accommodate off-the-shelf semiconductors.
This spring, Lexus will add the fully electric RZ to its lineup. Koji Sato, Toyota's incoming president, oversaw the development of the model. Toyota plans to expand its EV lineup, an approach that had been delayed by the company's multi-solution strategy.
