TSLA - Toyota: Failing To Follow Long-Term Consumer Trends In The EV Market

2024-03-15 19:31:49 ET

Summary

• Toyota's focus on solid state batteries may not be enough to compete with Tesla in the electric vehicle market.
• Toyota's financials are decent, but its stock price may not be justified without strong execution on its electrification strategy, among other crucial moves like developing fully autonomous self-driving software.
• However, Toyota eschews both battery electric vehicle development in the near to medium term and all fully autonomous self-driving software – two missteps that point to a deeper structural issue.
• The issue plaguing Toyota is that the company is unwilling to center its business pursuits around consumer-driven trends; should this continue, Toyota’s financials and stock price are likely to decline.

Introduction

In response to my late 2023 article on Tesla, Inc. ( TSLA ) and the Detroit Three automakers, a reader posted an intriguing comment: "Solid state batteries are going to render Musk's Gigafactory worthless…" The resulting comment thread essentially debated solid state batteries, developers of such batteries like QuantumScape Corporation ( QS ), and how solid state batteries can impact carmakers like Toyota Motor Corporation ( TM ) ( TOYOF ) and give the company a leg up in the auto industry.

The discussion about Toyota and solid state batteries isn't a niche topic confined to debates among investors and financial analysts. It is occurring elsewhere in the EV world, and in the wider tech world as well; tech news outlet PC Mag reported on Toyota's solid state battery benefits, and the auto news site TopSpeed is openly wondering whether Toyota's solid state battery vehicles will eventually make the company's EVs the next "Tesla Killer."...

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