Toyota’s Gaining On EV Front-Runners Tesla And BYD

Front-runners Tesla and BYD have been nabbing EV-related headlines this year, but Toyota’s slow-and-steady approach to innovation might transform the race’s odds.

🕰 Recap

• Tesla triggered a price war in the EV market, prioritizing market share over short-term profit by slashing its prices several times this year already.
• That strategy seems to be paying off, with numbers out last Sunday showing record-high deliveries during the second quarter.
• A day later, China’s BYD – the world’s biggest seller of EVs – also reported its best-ever quarterly sales.
• But Toyota, which has been much slower than rivals to roll out EVs, could soon be a serious contender in the EV market after announcing a major battery breakthrough this week.

✍️ Connecting The Dots

Tesla and BYD – the world’s two biggest EV firms by sales – set new milestones in the second quarter. Tesla’s deliveries hit a record 466,140 cars worldwide, easily outdoing investor estimates of 448,350. That marked a 10% uptick from the previous quarter, and a massive 84% leap from the same time last year when lockdowns hampered the firm’s operations in China. The firm also managed to trim the gap between production and deliveries – a figure closely watched by investors – to 13,560 units in the second quarter, down from nearly 18,000 in the previous one.

Meanwhile, BYD – China's top car brand, backed by Warren Buffett – reported its best-ever quarterly sales on Monday. The company sold 700,244 "new-energy" vehicles, which include fully electric vehicles and plug-in hybrids, in the second quarter. That’s almost double the number sold during the same period last year, helped by improved economic growth in China and the end of industry disruptions from Covid-related lockdowns.

But the real spark in this week's electrifying EV news came on Tuesday, when Toyota announced a major breakthrough in its solid-state lithium batteries with plans to fully commercialize the technology by 2027. The world’s best-selling carmaker claimed that the breakthrough will enable it to halve the size, cost, and weight of its batteries, and allow its EVs to have a range of roughly 750 miles and a charging time of 10 minutes or less. Toyota’s so far lagged behind rivals when it comes to rolling out EVs, but this new technology could be the shake-up it needs to narrow the gap with Tesla and BYD.

🥡 Takeaways

1. Where there’s EV battery smoke, there’s not always fire.

Solid-state lithium technology has long been heralded as the holy grail of the battery and EV industries. These game-changing batteries can overcome many of the performance shortcomings in today’s EVs: besides significantly increasing range and cutting charging times, solid-state batteries have longer lifespans, can better withstand subzero temperatures, and handily, they don’t catch on fire. Thing is, compared to current batteries, solid-state ones use up to 35% more lithium – a key metal that’s seen its price triple over the past two years and is increasingly embroiled in geopolitical tensions, particularly with China, which controls a significant portion of the global lithium market.

2. Recycle the present, save the future.

The world’s big push into EVs coincides with the US and its allies intensifying efforts to reduce their reliance on China for critical supplies – including battery materials. One potential solution for these countries is battery recycling: the process not only offers a safe, scalable, and sustainable solution to dealing with end-of-life EV batteries, but would also expand the domestic supply of key metals needed to power the future of transport and energy. That’s especially important for Japan, the US, and Europe, since they have scarce deposits of crucial battery metals like lithium, nickel, and cobalt.

🎯 Also On Our Radar

Saudi Arabia and Russia announced this week that they’re planning to extend or ramp up oil production cuts in August – a move that sent oil prices rallying. Saudi Arabia will extend the one million-barrels-a-day production cut announced last month for July into August. And the effort will be assisted by Russia, which will make a voluntary supply cut of another 500,000 barrels a day next month.