In October this year, Toyota announced a high-profile solid-state battery plan at the Tokyo Motor Show, and the white powder in the small red glass bottle in the news ** can make Toyota's salted fish turn over, and even subvert the huge advantages that Tesla and BYD have achieved? Personally, I don't think so. Because there is no necessary connection between the technological breakthrough and commercialization of solid-state batteries. As for the question in the conclusion: can Toyota turn over? I'm afraid it will take the entire article below to refine the author's point of view.
Confidence comes from more profitability than solid-state batteries
Toyota China's official Weibo.
Charging for 10 minutes to run 1200 kilometers, can solve the problem of multi-layer suppression, improve production efficiency, reduce the rate of defective products, etc., from the propaganda point of view, Toyota changed the Xi of doing first and then speaking, and put the future of technology on the table early. This is also a long-lasting experience for the author who has observed Toyota for 25 years! The only explanation is that morale is low and needs to be boosted! Of course, I always believe that Toyota's bet on solid-state batteries is just a route choice, and its confidence in stomping its feet and slapping the table is still its global performance.
Toyota's business philosophy is clearly described in Toyota's program: local and local production, only good products, lean cost control, in fact, all point to one sentence: cash is king, survival is the foundation. Sales volume is the foundation of everything, and profit is the best of everything. We all know that in economic theory, the marginal effect is the boundary between cost minimization and profit maximization. A tightrope walker often relies on the mastery of marginal effects to build a long-lasting business. However, new power brands often use anti-marginal theories to operate, blindly expanding and launching, and the result may be a blockbuster, but it is often counterproductive. This is especially true in the automotive industry, where the acceleration of gravity is followed and the entropy increase curve is obvious. Sure enough, the embarrassment of the opponent gave Toyota the opportunity to convince himself with his philosophy.
One of the most obvious counter-examples comes from NIO. In October this year, NIO sold 16,074 vehicles, which was not only far lower than the monthly sales of 40,000 yuan, but also lower than the monthly sales of 20,000 units of Xpeng. In 2022, NIO will lose 14.4 billion yuan. From January to June this year, NIO lost 10.8 billion. According to the Yangtze River Business Daily, from 2018 to the first half of 2023, NIO's net profit attributable to the parent company has accumulated a loss of 76.4 billion yuan in the past five and a half years, and the company's profit prospects are not optimistic. Press 12In terms of the delivery volume of 250,000 vehicles, it is almost a "loss" of nearly 120,000 yuan when selling a car.
In the face of difficulties, in early November, NIO announced a 10% layoff, and according to Li Bin, a 10% layoff would only save about 1.1 billion yuan. Considering his N+3 generous compensation, he also lost more blood while winning people's hearts. At the end of last month, Weilai successively asked Changan and Geely to cooperate to swap batteries, and Qin Lihong came forward to shout at the Guangzhou Auto Show that "Weilai will not go out of business". From the other side of the coin, they are all making up for their own business strategy mistakes. It remains to be seen whether the battery swap strategy will completely get out of the cost trap, but there is obviously a long way to go to turn losses into profits.
Toyota, on the other hand, is still cash flowing. According to the financial report for the first quarter of this year (April 1, 2023 - June 30, 2023), Toyota's total revenue during the reporting period was 1055 trillion yen (about 533.4 billion yuan), a year-on-year increase of 242%, beating market expectations of 98 trillion yen; Operating profit was 112 trillion yen (about 55.4 billion yuan), a year-on-year increase of 937%, better than the market expectation of 880 billion yen; Net profit attributable to the parent company was 131 trillion yen (about 65.4 billion yuan), a year-on-year increase of 78%. And this is the first time in Toyota's history that its quarterly net profit has exceeded 1 trillion yen.
From the perspective of market capitalization, Toyota still sticks to Tesla after multiple rounds of shocks. Basically, its earnings per share reached 96 in local currency74 yen (about RMB 4.)87 yuan), 53 in the same period last year65 yen (about RMB 2.)70 yuan). On the other hand, NIO's ** in the U.S. stock market has fallen from a peak of $50 to single digits. When two sets of data are put in front of Toyota's executives, it is conceivable that the confidence that profitability gives Toyota is more real and effective than that of solid-state batteries.
Of course, success is also Xiao He, and defeat is also Xiao He. Toyota's hidden concern is also this, that is, how long can such an annual report and market value last? The answer to this question is in the Chinese market. Like Nvidia's share price, the impact of the Chinese market will come sooner or later. Whether it accounts for 25% of NVIDIA's global share or 20% of Toyota's global share, the Chinese market is very important to the global group operation, and even if only a part of the Chinese market share is lost, it will also bring a fatal blow to the next year's or next year's annual report.
According to the financial report, Toyota's global sales in the first half of fiscal year 2024 reached 517240,000 units, an increase of 91%, a new high for the same period. However, the sales growth in China is less than 1%, and the Chinese market is the world, why does Toyota always hold the pipa in the Chinese market?
According to the Toyota Guidelines, serving the country through industry is an important guideline. Toyota's global production capacity layout has never changed, and it can be summarized as three threes: that is, 30% of the production capacity is retained in Japan, with an annual output of about 3 million; The other third is in the U.S., and the last third is globally, the largest of which is in the Chinese market. But compared with Volkswagen, Honda, and even Mercedes-Benz and BMW, this proportion is still relatively small. This strategic layout determines that it is unlikely to have much growth in the Chinese market. At present, the market share of Japanese cars is declining, and the momentum for expansion in the Chinese market is also insufficient. In the United States, due to the exclusivity of the Inflation Reduction Act and the subsidy policies of various states, the transfer of expanding production capacity is strong.
In addition, new energy vehicles have not received enough attention in the era of Akio Toyoda, but have been suppressed. At a time when the penetration rate of new energy vehicles in the Chinese market is increasing, there are not many opportunities for Toyota to catch up. At present, the sales of both the BZ4X and the BZ3, a joint venture with BYD, are not ideal, and there are many changes in the name of its R&D layout in China, and relatively few direct investments (not transfer investments in operating net profits) are actually implemented. It is widely perceived as more symbolic and forward-looking, but vague about the way to realize commercial benefits. To sum up, the possibility of failure in the Chinese market is still stacking, and the confidence given by its annual report will also be lost little by little.
Opponents have a huge competitive advantage
In fact, if you only look at the Chinese market and talk about Toyota's salted fish turnover, the possibility is indeed relatively small. First of all, because the opponent is too strong. If you make a list of the strengths and weaknesses of Toyota's competitors in the Chinese market, Toyota's strengths are only a handful, but the weaknesses can be written on 18 pages, and they are positive and negative!
In 2010, China accounted for 29%, and 10 years later the proportion will be 62%。The vast majority of this is in electric vehicles and their components, connected and software technologies. Between 2010 and 2015, the number of automotive patent applications in China grew slowly, but over the next five years, the number of patents nearly quadrupled. In 2020, the top three patent filers in China's automotive industry were CATL, BYD and Great Wall, accounting for 55 percent of patent applications in China's automotive industry5%, in particular, CATL alone accounted for 44%. The field of automotive innovation is also gradually shifting from traditional powertrains to electric powertrain systems. Toyota and its partners, except for Photochemical, currently only have some advantages in solid-state batteries, and are under siege by GAC Aion and CATL, and the technological progress in other sub-sectors is almost invisible.
China dominates the first-class chain of key raw materials and main components of electric vehicles, and many companies can realize full-stack self-development of electronic and electrical architecture. Stallantis, the world's third-largest automaker, has formed a joint venture with Leapmotor and CATL to produce in Europe. Volkswagen, Audi, Mercedes-Benz smart, and BMW MINI have also entered into joint ventures or equity transactions with Chinese companies. Mercedes-Benz and BMW also recently announced the establishment of a joint venture to jointly promote battery swap stations and charging piles. Toyota, on the other hand, has been slow to move in the EV business segment, with the exception of BYD's technology joint venture. In addition to the hardware, Toyota's disadvantage in software is even more obvious. The involution of China's auto market is characterized by the fact that product is king, and joint ventures are facing an almost insurmountable gap between time cost and development period. The layout of electric vehicles produced by the two fields is pitiful, especially in terms of software and intelligent cockpit, and Japanese companies even lag behind their German counterparts. You must know that Volkswagen's software development department CARIAD has been completely eliminated and turned to SAIC Motor's procurement. Japanese companies are half a generation behind Germany in the research and development of automotive software, a generation behind the United States, a generation and a half behind China's domestic brands, and two generations behind the new forces. I am afraid that this gap will be difficult to catch up with in the short term.
Once upon a time, Toyota dominated the world with the hybrid Prius. Now, the traditional concept of the strong has been subverted, and no one relies on a popular car bag to win the world. The market is full of great uncertainty, and I estimate that this bottleneck in Toyota's neck will continue for several more years.
Toyota's "stubbornness" and "difficulty in choosing".
Some people say that Toyota's slow move on electric vehicles is the main reason why Toyota is difficult to turn over. And if you dig deeper, it's because Toyota is not right, too conservative and stubborn. Many ** are willing to quote Akio Toyoda's speech at the Tokyo Motor Show to slam electric vehicles again, thinking that this is ironclad evidence. But I think this reason is a bit far-fetched. What needs to be explained here is that Akio Toyoda, like his predecessor, stepped down from the position of president to become president. That is, from CEO to chairman. From a management point of view, it is impossible for this position to influence the specific management of Toyota. Akio Toyoda's era is over, and now it is the era of Tsuneshi Sato, and the future may be the era of Daisuke Toyoda. Daisuke Toyoda, as a fourth-generation man of Toyota, is a rebel who decisively severed his marriage history with the Mitsui family, the major shareholder, and married a female star of the Takarazuka Theater Troupe. Toyota under his rule is afraid that everything will be different except for the brand name. It should also be added that, unlike Ford Chairman Bill Ford's B-category**, the Toyota family has a very small stake in the entire group, less than one percentage point, and there is no voting privilege. Therefore, even when he was in power, Akio Toyoda's voice was not as great as he imagined.
In addition, I think Akio Toyoda himself must have gone through a difficult mental journey. Zhang Nan said that the boycott of electric vehicles, I understand that it is based on the innocence of fuel vehicles, and carbon neutrality is the ultimate goal, so it cannot be rushed. Japan is short of natural resources and relies on imports of natural gas, oil and nuclear power plants for electricity. More than ten years after the 311 major ** in 2011, many nuclear power plants have not been counted, so it is impossible for Toyota to let electric vehicles become popular in the country, which is inconsistent with his national conditions. Of course, Toyota is not talking about this entirely for its own domestic market. Looking at the world, the current situation of inflation does not mean that the tram is necessarily cheap, including our domestic electricity price is also **, the price of electricity in Germany has even exceeded the price of oil, if you want to be reasonable, this truth is also correct. Of course, people say this not only from the overall situation, but also with their own small abacus, and more from different occasions and different times, so it is not good to evaluate it naively. In general, it should be said that a boycott of electric vehicles is neither possible nor necessary. This page has been turned, and there is not much point in discussing which is right and which is wrong.
Returning to Toyota's choice difficulty, now looking at Sato and Akio will not be entangled for too long, Toyota will definitely bet on solid-state batteries, and Europe may choose to let sodium-ion battery companies like Northvolt as an alternative route for so-called de-risking. As Li Bin of NIO said, the current competition in the auto market does not allow companies to have time to consider large and small, and it is necessary to choose a decisive route at least at the executive level.
At present, by 2035, the structure of the global automotive market should be: hybrid vehicles (HEVs, PHEVs, RREVs) account for about 40%, BEVs account for 30%, and fuel vehicles ICE (including e-diesel) will drop to about 20%. Vehicles fueled with hydrogen, FCVs and other biofuels will receive the final 10%. But in the short term, fuel vehicles will last for at least 5 years. BMW Group President Philip Zipzer said last month that at least 50 percent of the production capacity of gasoline vehicles would be maintained at the Munich headquarters. When it comes to hybrids, Toyota's THS advantage is still there, because hybrid vehicles need to use the experience and technology of fuel vehicles, and the long-term competition for quality and reputation has not yet been decided. Personally, I think that hybrid should even be the main direction for all joint ventures to seek breakthroughs in the current period of time, and in the field of pure electric vehicles, whether it is Toyota or Volkswagen, joint venture brands have almost no advantages. In the case of hydrogen fuel, it is limited by production costs and green hydrogen, and it will not be able to form a climate within five years. Therefore, for Toyota, there is only one answer to the elimination method, and I personally feel that it will still choose to focus on solid-state batteries. But this route is not enough to support Toyota's dream of turning over.
Solid-state batteries are facing the reality of skinny, profitability is facing the decline of the Chinese market, and the strength is facing the oppression of Tesla, if you tell me that Toyota's salted fish turns over and has the opportunity of a finger of Doctor Strange, then I am afraid there is only a competition in quality and reliability.
The underlying logic of Toyota's salted fish turnover is only quality and reliability
Whether it is a solid-state battery, a sodium-ion battery, or a single car profit, it is a palliative rather than a cure. If Toyota wants to turn around, the biggest possibility is to insist on QDC (quality, durability, reliability) and look forward to the opportunities brought by opponents making mistakes at the same time. I remember that 20 years ago, Fujifu Zhang came to China and said that he wanted to reach 1 million annual sales in the Chinese market. At that time, China** still thought he was bragging, and now Toyota is no longer this number, but so what? Its share is shrinking. Looking at it now, China's auto market is close to 30 million, and it is not a big problem to reach 40 million in the next ten years, so how big can Toyota's market share be at that time? In fact, this shrinkage is the general trend, and now is not the era of Toyota, but the era of Tesla and BYD, which is the era of China's electric vehicles. So from this point of view, it seems theoretically feasible to restore the former glory, but technically unlikely. There are so many competitors, and a new round of reshuffle is still underway. If Toyota wants to restore its own market position, the commercialization of solid-state batteries can only succeed and not fail, and the most important thing for other joint ventures now is to survive, which is not easy, look at Mitsubishi, DS, Guangfic, Mazda, you know how difficult it is.
I have had in-depth communication with several ministers of Yifeng, and they are also very emotional, saying that THS is so good and so good, why can't it regain its old glory. I would like to say one thing for sure, and that is that Toyota's QDR (Quality Durability Reliability) is its magic weapon. In the fierce competition, it is advisable to look at the volume, if what is the biggest factor hindering the automobile market at present? I think it's quality, and the China Association also pointed out in the monthly report that quality is the biggest factor that hinders consumers from buying cars. Indeed, everyone is rushing to new cars, and manufacturers are also putting their strength on the product side. But after all, a car is not a turnip cabbage, it needs quality, it needs safety, it needs reliability and durability. Toyota has strength in this regard. THS has sold 15 million units worldwide, and there have been no major safety incidents, but many new forces are facing the pressure caused by major accidents caused by spontaneous combustion and facing poor reviews of low quality. In the long run, the advantages of these old brands of Toyota will be highlighted. Therefore, the key now is that in the product dimension, we must come up with new products that are enough to subvert the entire market. Another is to live, to ensure sufficient cash flow for a long time, to ensure the stability of the first chain.
I hope that in the future, Chinese brands will occupy the majority of the table in the world car market, and I firmly believe that this will be a fact. I also hope that a company like Toyota, which is making cars in a solid way, will survive. We are working together to build a new generation of green and smart mobility that actively responds to the global climate crisis.