Toyota Motor Corp. raised its full-year outlook Wednesday due to the windfall from a weaker yen, as it reported record earnings for the first half of the fiscal year (2023-2024) on solid post-pandemic vehicle sales in all major markets.
At the same time, Toyota is switching the focus of its hydrogen fuel-cell technology development from passenger cars to commercial vehicles. Technical chief Hiroki Nakajima confirmed the change in approach at the Japan Mobility Show.
The world’s largest carmaker by volume lifted its net profit forecast for the current fiscal year (until March 2024) to a record 3,95 trillion yen (€24,7 billion) from its previous projection of 2,58 trillion yen. The new figure represents 61,1% growth from the last fiscal year.
The operating profit outlook was revised up to an all-time high of 4,5 trillion yen (€28,1 billion) from 3 trillion yen (as sales are now seen at a record 43 trillion yen (€269 billion) compared with an earlier estimate of 38 trillion yen. Toyota will become the first Japanese company with sales of over 40 trillion yen if the forecast is achieved.
The yen’s weakening was a significant driver for the upward revisions, boosting the operating profit projection by 1,18 trillion yen from the earlier estimate, the company said. Toyota expects the US dollar to trade at 141 yen on average for the whole year, compared with a previous assumption of 125 yen and its recent levels of around 151 yen.
Toyota’s group vehicle sales in the first half (April to September) rose 8,3% from a year ago to 5,6 million vehicles, led by solid growth in Japan and North America in particular, as it ramped up production to make up for lost output during the coronavirus pandemic, the company said.
Still, Toyota left unchanged its global sales plan for the current fiscal year at 11,4 million vehicles, even as it cut its electric vehicle sales estimate due to tough price competition in China while raising that of hybrid vehicles. The 11,4 million vehicles would, in any case, be a new record and a 7,8% increase compared to the previous exercise.
The Japanese car manufacturer has long been a pioneer of FCEV technology, most notably with the Toyota Mirai. Still, wider uptake hasn’t materialized yet, partly due to the complexity of setting up a network of hydrogen fuelling stations.
“We have tried Mirai but have not been successful,” said technical chief Hiroki Nakajima in Tokyo. “Hydrogen stations are very few and difficult to realize, so Mirai is smaller in volume than we expected.”
That’s why Toyota is partly changing its strategy: commercial vehicles are considered far more suitable for hydrogen, not only due to the lesser suitability of batteries to power them (due to the size and weight that would be needed) but also the ability to set up a more controlled fuelling network.
“For mid-size trucks, it’s easy to deliver a refueling network as it’s mainly A-to-B” for journeys, said Nakajima. “Huge numbers of trucks go from A to B so that one can operate stations with more stability. Commercial vehicles are the most important area to try and proceed on with hydrogen.” Pickup trucks also offered a potential use for hydrogen, Nakajima added.
No surrender yet
However, Nakajima said Toyota “did not want to give up on hydrogen passenger cars” and was looking at ways to downsize components, including the fuel cell stack and the tanks, to make it applicable to different types of cars and broaden its appeal. “We are looking to downsize the hydrogen technology in passenger cars,” he said.
The latest-generation hydrogen fuel cell in development at Toyota is said to halve the cost of the current generation cell while also improving durability to two. It also improves efficiency by 20%, something hugely significant in lowering fuel costs for commercial vehicles.
This new cell has been created with commercial vehicles in mind, but a half-size cell is also being developed to keep the technology open to cars. Toyota is also exploring non-automotive applications for these smaller cells, including in construction and medical industries.
Future of batteries
Nakajima also provided more details on Toyota’s battery development, which will result in the firm launching its solid-state battery technology in 2027 or 2028.
This future technology is considered a game-changer for battery electric vehicles, having the potential to improve the power density of batteries and thus reduce their size, weight, and cost, apart from being safer.
However, Nakajima said the first wave of solid-state batteries, which Toyota is developing with oil giant Idemitsu, would be very expensive. Their car use would initially be limited to a “high-performance car” or a car with “high-performance charging”.
In the meantime, Toyota will introduce its latest lithium-ion battery technology with its next generation of electric cars built on a new, highly modular architecture from 2026.
Nakajima said this had been created with an ethos of downsizing components such as the e-axles, HVAC system, and battery packs as much as possible to allow them to fit into broader types of cars. One such sports car concept using the new architecture is the Toyota FT-Se, which was revealed in Tokyo.
Toyota is also struggling with its sporty image. Nakajima stressed that they want to have fun driving in as many of their cars as possible, also the electric ones. That’s why it has developed an imitation manual transmission, which will become a staple offering of fun EVs.
Nakajima added that such cars should “not just be high-torque, high-power; the goal is how we can provide that fun-to-drive image”. The software potential of the new architecture would also allow people to download different performance packs for their cars, for example, the performance of the Lexus LFA or the steering feel of the Toyota GR86.
Doing ‘vroom, vroom’
The ‘manual transmission’ has been under development for three years and is almost entirely software-operated, with some hardware (clutch pedal, gearshift) borrowed from a Toyota GR86.
In the driving prototype (an altered Lexus UX 300e), you also have a rev counter and paddle shifts. There’s a secondary ‘engine start’ button, which fires up an ICE engine sound akin to that of… a Golf GTI. Strange people, these Japanese.