Toyota is preparing to expand its electric vehicle production capabilities with “Area 35.” This global initiative aims to increase manufacturing capacity and embrace the production of 3.5 million EVs annually by the decade’s end.
With an emphasis on optimizing existing resources and reducing production complexities, the Japanese giant hopes to compete with Tesla and the Chinese car makers, which are aggressively buying market share with incentives.
Existing car brands face a completely different manufacturing reality in the wake of electrification than new players. They need to factor in the transformation of the existing factory footprint, which has been constructed around labor-intensive combustion engines and car construction practices.
Toyota is addressing the challenge with the Area 35 plan, a concerted effort to maximize the efficiency of its existing global production network. Instead of building new plants for the all-electric lineup, the existing ones will be reformatted to incorporate the extra assembly lines.
This approach aligns with Toyota’s pressure to adopt a more cost-conscious strategy for EVs and avoid the financial risks associated with building new factories.
Less manufacturing, more profit
The goalposts for streamlining its operations are reducing the diversity of parts used across its lineup by 35%, a move that will free up the same percentage of floor space in its plants. “We are working to optimize the number of types of specifications and parts,” CFO Yoichi Miyazaki said.
“We are expanding the space for finished vehicle production and increasing development efficiency.”
Reducing parts complexity is projected to improve manufacturing efficiency and accelerate product development timelines, with Toyota estimating a 3.5% increase in profitability as a result. The automaker focuses on high-demand core models while trimming low-performing variants.
This strategy is designed to ensure flexibility in production across its portfolio of hybrids, plug-in hybrids, and total battery-electric vehicles.
Initial and long-term success
Toyota’s Area 35 rollout comes as other automakers adjust their EV strategies in response to slower-than-expected market growth. Ford recently reduced its EV spending by 25% and delayed the introduction of new models.
At the same time, General Motors postponed key EV launches and investments, and Fiat paused production of the all-electric 500e due to weak demand. By contrast, Toyota is emphasizing scalability and market responsiveness, seeking to avoid the overcapacity issues that have impacted its rivals, Volkswagen and Stellantis.
To achieve its ambitious production targets, Toyota is integrating key innovations like hyper-automation, gig casting for single-piece component production, and autonomous assembly lines where EVs move independently via radio-controlled signals.
These advancements are expected to halve production lead times and cut equipment costs by 25% while doubling productivity on dedicated EV production lines. Toyota began implementing Area 35 in August last year, revamping processes at ten plants globally.
This initial phase has already added 80,000 vehicles of annual capacity, and Toyota plans to roll out similar updates across its 54 assembly plants worldwide. The Japanese car maker’s new modular EV platform will debut by 2026 under the Lexus brand.
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