(JW Insights) Apr 24 -- Toyota’s new chief executive Koji Sato has pledged to boost local supply chains for electric vehicles as technological and geopolitical challenges intensify and warned of “a sense of crisis” surrounding its business in China, Financial Times reported on April 24.

Koji Sato, who took the helm of Toyota earlier this month, pledged “bold” efforts to push for further localization as the Japanese group tried to keep pace with a rapid technological shift in the world’s largest car market. “I do feel an underlying sense of crisis that we need to accelerate our efforts to do business in this market,” he said.

In recent months, Japanese carmakers have posted the sharpest sales declines in China among foreign brands owing to the slow rollout of battery-powered vehicles. Toyota’s own 2022 vehicle sales in China fell for the first time in a decade.

Toyota unveiled two models from its electric bZ series at last week’s Shanghai motor show. But Sato said the event underscored the scale of the advances China has made in electric vehicles as well as autonomous driving technology.

“It is important to raise the speed from development to production of battery EVs in China,” Sato said.

For foreign carmakers, decoupling has been harder since they all have joint ventures with local Chinese groups and companies have continued to invest in the market due to its sheer size. Volkswagen last week announced it would spend EUR1 billion on setting up a new innovation centre in China.

Toyota signed a deal with Chinese battery group CATL in 2019 to develop batteries for electrified vehicles. It also partnered with BYD, China’s largest electric and hybrid carmaker, on the sedan bZ3, its second mass-produced electric model in China, expected to launch this year.

Toyota stressed it had always produced cars close to their consumers and many of its existing models in China were locally produced. Still, Sato said “a compact supply chain” with lower logistic costs was essential to boost productivity in electric vehicles.

“In areas where there is an acceleration in the shift towards battery EVs, like China and the US, we need to be bold with local production,” Sato told Financial Times.

(Yuan XY)