By Norihiko Shirouzu
BEIJING, (Reuters) – Toyota Motor (NYSE:) Corp is set to launch an all-electric, small sedan in China later next year. Four sources have told Reuters that Motor has turned to BYD, a local partner, for the key technology needed to create a roomy, affordable vehicle.
According to two people familiar with the issue, the car is Toyota’s electric holy grail. Toyota has tried for years for a small and affordable EV that would be both cost-effective in China and comfortable.
The sources said the breakthrough was chiefly down to BYD’s less bulky lithium-iron-phosphate (LFP) Blade batteries and its lower-cost engineering know-how – a turning of the tables for a Chinese company whose popular F3 saloon was inspired by Toyota’s Corolla back in 2005.
BYD or “Build Your Dreams”, was little known in China. Warren Buffett purchased 10% of it in 2008 and has been one of the most important manufacturers of so-called renewable energy vehicles.
Toyota’s new EV, which will slightly exceed the size of its Corolla compact car, is expected to be slightly larger than that. It could be described as a Corolla, with an even larger back seat section according to one source.
This concept vehicle will be presented at the Beijing automobile show in April. The second model will likely launch in Toyota’s new series of all-electric vehicles, the bZ Series.
One source told Reuters that the car was made possible by BYD technology. It has helped us overcome the challenges in creating a small, affordable electric sedan that offers a spacious interior.
The price will not be as high as premium EVs like Tesla’s Model Y and the Nio’s ES6. However, it is cheaper than the super-cheap Hong Guang Mini EV which retails for just $4,500. It’s now China’s most-sold electric vehicle.
The sources said that the new Toyota would have a competitive price, but two of them declined to name because they weren’t authorized to discuss the matter with the media.
One of them stated that it was likely to sell at below 200,000 yuan (30,000 USD). This is the segment Tesla plans on targeting with its small-sized car in the Chinese market.
A Toyota spokesperson stated that they don’t discuss future products. Toyota sees the use of battery electric vehicles to be one way to achieve carbon neutrality. It is actively involved in developing all kinds of electrified vehicle options.
BYD declined to comment.
‘ALL KINDA FLOOORED’
Toyota’s decision to seek out BYD for a solution to its low-cost electric vehicle dilemma is a sign of how much the world has changed in the last decade.
The poor quality of Chinese automobiles caused global automakers to be less concerned about their ability to compete in price. They left the Chinese market open for cheaper, low-cost cars.
However, times have changed.
Toyota executives began to be concerned in 2015, when BYD’s Tang plug-in hybrid was launched. It featured significant styling and quality improvements. It was also 30% less expensive than similar Toyota models.
A pivotal moment occurred in 2017, when Toyota’s highest-ranking engineers, including Shigeki Tenashi, drove several BYD cars like the Tang to their proving grounds in Toyota City close to Tokyo.
Terashi later visited BYD in Shenzhen to drive a Han prototype electric car.
According to one source, “Their longevity is still uncertain, but their design and quality were mature, while they were cheaper than comparable Toyota models,” which was the conclusion of one of four test drivers.
We were all kinda shocked by it.
Two of the sources said the BYD evaluations pushed Toyota to create its research and development (R&D) joint venture with BYD last year. Toyota currently has about 100 BYD engineers working alongside it in Shenzhen.
Toyota’s latest EV is coming at a moment when environmental groups are praising it for not committing to zero emission. According to them, Toyota wants to extend the commercial viability of its hybrid technology.
Toyota executives insist that they don’t oppose battery electric cars (BEVs), but point out that they will not be the panacea for cutting carbon emissions until renewable energy is more accessible.
Toyota Japan established a ZEV Factory Division to develop safer and more affordable battery technology, such as solid-state lithium ion cells, which could significantly increase the range of an electric vehicle.
Toyota long supported a compromise that does not compromise comfort to make BEVs more popular, but it is still struggling to create such a vehicle.
A problem arises when you have to pile heavy and bulky batteries below the floor. If the roof is not raised, they eat into the interior. That is why so many small EVs are called SUVs.
Toyota explored briefly the possibility of entering into a partnership with BYD in 2018, Following these interactions and other discussions, Toyota’s engineers discovered the LFP Blade BYD battery. The LFP Blade battery was described by them as an innovative solution that is both affordable and can be stored in a smaller space.
One of the sources stated that it was a “scales fell from our eyes” type of technology, which we first dismissed due to its simplicity.
BYD launched the Blade battery officially in 2020.
LFP batteries offer a lower level of energy density than many other lithium-ion battery cells, however they can be more affordable, last longer, and are not prone to overheating. LFP batteries have been used in Tesla’s Model 3 in China and Model Y in China.
According to one source, a Blade pack averages about 10 cm (3.9 inches) thickness when laid flat on the ground. This is approximately 5-10 cm thicker than the other lithium-ion packs.
BYD spokesmen said it is possible, depending upon how the automaker package Blade packs in cars.
Toyota may not have figured out the reason why BYD is so cheap, however two sources suggested that it could be because of its flexible and abbreviated design. Also, the quality assurance process which Toyota engineers view as a shortcut.
Sources said that Toyota’s planning process was more rigorous and detailed. Toyota rarely makes changes to its designs once it has determined the technology, components, and systems it will use during the three-to four year development period.
Toyota normally makes three prototyping and three production prototypes during this process. To ensure bulletproof reliability and quality, the vehicles are driven approximately 150,000km (93,000 miles).
BYD engineers are far more skilled at prototyping than other companies. There is typically only two of them, and design changes can occur as late as two-years into the project, according to one source. This, however, is not a Toyota problem. BYD declined to comment.
However, because of the last-minute adjustments, the technology found in a BYD car can be more up-to date than in Toyotas when they hit the market. It is also often less expensive.
According to the four sources, BYD’s continued advances in virtual engineering and simulation, along with its ability to produce a large number of components on its own, has helped close any gaps in reliability and quality that might have resulted from last-minute changes in design.
One source said that Toyota’s challenge is to decide whether it dismisses BYD’s engineering style as too loosey-goosey or risky.
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