Toyota tackles Tesla trauma with radical EV production overhaul

SUSUNO, Japan — Toyota Motor Corp. is coming to grips with Tesla trauma by rekindling its famed manufacturing mojo.

Tesla taught the world that low-cost, ultraefficient, outside-the-box production engineering is the secret sauce for making modern electric vehicles. Now the company that invented lean manufacturing is digging deep into its roots to rethink its factories, production lines and logistics. Its conclusions about a better way to assemble vehicles could help Toyota rush out a new generation of EVs in just three years.

Among the solutions it will embrace: allowing cars to drive themselves through factories without assembly lines.

Tesla may have beat Toyota at its own game in reinventing key aspects of car building. But the Japanese giant insists its world-renowned Toyota Production System still has lots of tricks in store. And executives say the coming breakthroughs, rooted in the company's tried-and-true principle of kaizen, or continuous improvement, will catapult Toyota ahead with its next-generation EVs arriving in 2026.

"Of course, we admit Tesla has wonderful technology," Yoshio Nakamura, deputy chief of global production, told Automotive News. "But that just motivates us to work harder to catch up. If we are to learn from them, it won't be a copy. We will improve upon them through kaizen."

Nakamura and other Toyota top brass showed off their new production technologies during a daylong briefing this month at the company's Higashi-Fuji Technical Center in the foothills of Mount Fuji. Their goal is to halve the number of production processes, halve the amount of plant investment and halve the amount of production lead time needed to set up for new nameplates.

The advances are part of Toyota's new "BEV-first mindset" declared by CEO Koji Sato. Toyota, as a whole, wants global sales of 3.5 million EVs annually in 2030. That's compared with only 24,466 EV sales worldwide in 2022, so that ramp up will require a radical rethink, especially in manufacturing.

As production engineers work to introduce the new techniques in 2026, Takero Kato, president of Toyota's new battery-electric-vehicle development division, the BEV Factory, sums up the buzz this way: "Our aim is to change the future with BEVs."

The reality is that many of world's newest automotive players have already changed the face of the industry. Newer brands such as Tesla and China's BYD have given Japan's old-school metal-benders a shudder. The younger entrants are free of legacy factories and supply chains and unburdened by preconceptions about auto design rooted in internal combustion. They simply think differently, and it shows in low-cost manufacturing that is the envy of any kaizen guru.

In an interview this year with Japan's Nikkei newspaper, Honda Motor Co. CEO Toshihiro Mibe dubbed the upheaval the "Tesla Shock." But Toyota was perhaps the most gobsmacked when the Tesla Model Y eclipsed its stalwart Corolla as the world's top-selling nameplate in the first quarter.

"That was a big blow that really started tipping things," said one Toyota insider.

Some industry watchers have criticized Toyota's transition to the EV era as too slow and ham-fisted. Its debut EV, the long-awaited bZ4X crossover, had a dubious launch. Just two months after it reached the market in 2022, the vehicle had to be recalled over concerns that the wheels could fall off.

But many of Toyota's new production ideas mirror those developed by Tesla, including vertical integration, moving to a rolling chassis, a no-assembly-line approach and a shift to gigacasting, said Sandy Munro, CEO of Munro & Associates in Michigan, which conducts vehicle teardowns and recommends improvements to carmakers.

"The Toyota plan that I see is very similar to the Tesla production plan, and that is good because, currently, that's the best in the marketplace," Munro said.

"Toyota needs to also look outside for contrary points of view on how to run the company," he went on, "how to experiment and engineer, how to rethink manufacturing and where to find the new technology."

Munro predicted the biggest obstacle for Toyota will be internal resistance.

Toyota's corporate culture has sometimes been hobbled by the pride of a decadeslong string of successes that drove the company to the very pinnacle of the global industry. Takahiro Ishijima, the new president of Toyota's vehicle development center, concedes that it makes the world's largest automaker susceptible to big-company complacency.

"Toyota's history is full of successes," he said. "Sometimes that is a stumbling block."

Toyota's new approach is encapsulated in Kato's BEV Factory, a standalone group dedicated to electric vehicles. It is not a brick-and-mortar factory but an organization that brings all functions under one umbrella, from design and engineering to manufacturing and sales.

Manufacturing will occur at existing plants or on new EV lines with the technologies pioneered by the BEV Factory implemented at those sites.

"Toyota's BEV Factory plan is exactly the conversation they need to have to escape becoming irrelevant," said Conrad Layson, senior alternative propulsion analyst at AutoForecast Solutions.

"The BEV Factory plan would bring Toyota back among the first rank of legacy automakers in the transition to electric vehicles," he said. "The production processes overseen by the Toyota Production System were in need of an update."

Key among the updates is gigacasting. The technique, pioneered by Tesla, eliminates countless parts by casting the vehicle's front and back as two giant modules.

The under-rear section of the Toyota bZ4X, for example, is a complex amalgam of 86 parts manufactured through 33 processes. But Toyota is prototyping a way to stamp the same section as one piece from one process, thanks to the use of a gigapress.

Toyota uses a 4,000-ton press from Japanese press maker Ube Corp. to verify casting modules, Nakamura said. Toyota is also trying to develop its own in-house gigapresses.

Toyota hasn't tried to buy its own gigapress, Nakamura said. Global supply of them is extremely tight as automaker interest in the technology takes off. Volvo is also moving to gigapresses, and other producers are considering them.

The 4,000-ton press from Ube is a little smaller than the industry standard, which is around 6,500 tons, Nakamura said. But there is no Japanese supplier of such big presses, he added.

The press used in testing is almost double the size of the biggest one used by Toyota to cast parts. That press, a 2,500-tonner, makes front and rear suspension towers.

The gigapress is cheaper in production preparation and in cost of operation than Toyota's current method. It is also "overwhelmingly faster," Nakamura said.

The bZ4X under-rear section can be gigapressed in about 100 seconds, he said. Under the current method, the dozens of processes needed to make the same module can take 30 minutes, although in practice many of those processes happen concurrently.

Gigacasting will be deployed at plants making next-generation EVs from 2026, Nakamura said. Those cars will have essentially three simplified modules: a front, a rear and a middle battery pan. That approach will improve manufacturing efficiency by 20 percent, he forecast — which means that with the same amount of materials and processes, Toyota would be able to make 20 percent more vehicles.

Nakamura said Toyota has an edge in deploying this technology because of the company's long history in managing quality in its stamping operations. Gigacasting, because of the extreme pressures and complexity involved, puts a premium on controlling strain and torsion on the parts.

"This kind of manufacturing will give us higher productivity," Nakamura said.

In another new approach, Toyota will eliminate anchored production lines. Self-propelled production has cars drive themselves through the plant.

Toyota already uses the approach at its Motomachi assembly plant in Toyota City, where the bZ4X drives itself, but only from final assembly to final inspection. Those vehicles pilot themselves from one building, out a garage door, make a right turn onto a factory service drive, then turn left before driving through another door into a nearby building — all without a driver behind the wheel.

The system uses remote-control technology, similar to that in a radio-controlled car, to move the vehicles. And because they are EVs, they can move under power of their batteries.

Engineers want to extend that self-driving mode through all of final assembly, essentially letting the car drive to where its various parts are, rather than bringing the parts to the car. The plan should slash the amount of factory investment because there will be no fixed conveyors hauling cars through the factory.

It will also reduce labor.

"We would be able to totally remove hangers from our plants, and we would have completely flexible layouts," Nakamura said. "We will connect the battery, and the car will move on its own."

It will allow for more compact layouts and more flexible parts storage. Nakamura predicted it could save hundreds of millions of dollars in investment just in terms of conveyors.

The bottom line, he said: It could cut production time in half.

Another new tool will be a mass deployment of digitalization across factory floors. The goal is to use digital twin technology that will allow Toyota's production engineers to speed up the creation, testing and verification of new factory line designs by creating a virtual-world doppelganger.

Toyota said this allows it to cut mass production preparation lead times by half by improving the accuracy of reproducing line layouts to the 1-mm error level.

The shift will also result in hyperautomated factories with more robots and fewer people.

"We will shift to more efficient production lines with unmanned transport using connected technology, autonomous inspections, and take on the challenge to drastically change the manufacturing situation by adopting TPS concepts," Toyota said in its presentation.

Toyota expects to deploy these new technologies to any plant around the world that builds the company's next-generation EVs. But because the new systems are developed in Japan, a domestic site will likely be the mother plant for initial output.

Toyota's Lexus plant on the southwestern island of Kyushu is a lead contender for initial installation because the company's first next-generation EV is expected to debut under the premium brand.

Toyota's big leap doesn't guarantee it will jump to the front of the EV pack, or even stay competitive, because its competitors aren't standing still.

Caresoft Global Technologies, an engineering company in Michigan that does digital and physical benchmarking and cost reductions, forecasts that Tesla will be able to slash capital investment in plants by up to 30 percent and cut assembly times by as much as 25 percent in its next model upgrades. Meanwhile, Caresoft projects that Tesla's factory floor space will be compacted by 30 percent, and paint shop efficiency will be significantly improved.

"Tesla has a corporate culture of pursuing radical improvements from year to year, even in the same nameplate's design," Caresoft CEO Mathew Vachaparampil said.

As an example, the Model Y went to a single-piece rear casting in 2021 from a two-piece rear casting in 2020.

Tesla's changes are revolutionary and plotted long in advance in a building block style, he said, while legacy automakers evolve incrementally in kaizen fashion.

Tesla has many learning cycles on EVs and continues to lead the industry, Vachaparampil said, while Toyota has some catching up to do. According to Caresoft's analysis of EVs, the bZ4X is some three years behind Tesla's Model Y in its material and manufacturing costs.

"The past is usually the best predictor of how a company moves in the future," Vachaparampil said. "While I find the recent announcements from Toyota intriguing, the proof of the pudding is in their next EV. Unless Toyota has reworked its designs remarkably in the last few years, I'd like to see the vehicle before I say it can be done."