In a deal that looks like it will boost the expertise of both companies, Toyota and Tesla Motors have agreed to jointly develop an electric RAV4 and possibly other models.
Tesla has become the leader in, if not all-electric car technology, then electric car technology with serious curb appeal – something that the big auto makers generally lack. Toyota, aside for the debacles of the past year or so, is a longstanding leader of quality products and especially profit-maximizing efficiency across all industries – something the delivery-challenged startup Tesla could use some help with.
Something in me would have liked Tesla to say on its own and become a dominant auto maker of the future, rather than slowly become part of one of the existing behemoths. It’s good to see idealistic, innovative companies angle to take over the world. But it is hard to deny that this move makes sense all around. All mega-corporations need the occasional infusion of idealism and energy and, while corporate bureaucracy often slows and even kills the startups that get swallowed, Tesla can benefit greatly from Toyota’s backing, expertise, customer base and business savvy. We’ll have to wait and see whether the maker of the Roadster gets digested or boosted by its partnership with Toyota.
Toyota Motor Co.
When it comes to keeping its current customers while attracting new ones amidst massive recalls, Toyota has its work cut out for them. But, as Don Esmond, senior vice president of Toyota Motor sales USA, put it, “We’ll figure what the right cruise missile will be.” A cruise missile is an accurate metaphor for the incentive plan the automaker will need to implement. With more than 8.5 million vehicles recalled worldwide, the number one car company’s reputation is on the line and needs swift, powerful action to staunch any further bleeding.
Toyota has already offered returning customers a $1,000 “loyalty” bonus, an incentive also offered by rivals GM, Ford, Chrysler, and Hyundai in an effort to lure away customers. According to sources, one option Toyota is considering is to offer another $1,000 rebate to customers. Another option being considered is a free maintenance program, which would include oil changes and regular services, and a revamped warranty program that would at least match Hyundai’s leading 10 year, 100,000 mile powertrain warranty.
Of the 131,000 inventory vehicles recalled in the United States, Toyota executives state that most have already had their faulty pedals replaced, and expect almost all of them to return to the showroom floor. Hopefully part of the company’s plan involves incentives to try and convince consumers to buy recalled vehicles.
Ford Motor Co.
Toyota’s current recall woes could mean a big increase in the United States for Ford Motor Company in 2010. While the year is still young, initial figures predict that Ford will sell 16.57 percent. Toyota, on the other hand, is expected to lose more than a percent on its sales, dropping down to 16.45 percent. This would mean that Ford would overtake Toyota as the number 2 automaker for the first time since 2007.
Though there are still 10 months left in 2010, the numbers for January and February definitely represent Ford’s upward momentum. Ford’s January numbers were 2.5 percent higher than they were a year ago, rising to 16.7 percent. Even more dramatic is the rise in Ford’s share for February. They are currently averaging a 16 percent market share, which is 11 percent more than usual. On the other hand, Toyota’s January numbers fell to 14.1 percent, the lowest they’ve been in four years.
Ford isn’t the only company that stands to gain from Toyota’s recent problems. General Motors’ market share stands to jump from 17.87 to 18.12 percent, keeping their spot as the number one U.S. automaker firmly in place. Honda is also predicted to gain a modest amount of the market, going from 11.14 to 11.32 percent, though these numbers don’t take into consideration their recent recall of 379,000 more cars due to airbag issues.
Coming on the heels of the recent Toyota recalls, Volkwagen recently unveiled an ambitious plan to overtake Toyota as the world’s biggest car company before the end of the decade. VW currently stands as the third largest automaker, behind Toyota and General Motors. With its new plan, VW aims to sell 10 million vehicles by 2018, which is over 3 million cars more than it sold in 2009 (6.3 million, if you were wondering). Somewhere in the middle of now and 2018, they hope to sell 8 million vehicles. This would put them still under the 8.27 million Toyota projects to sell this year, but supposedly would be on par with their overall goals.
The announcement comes at a crucial moment for Toyota. The company is currently mired by massive recalls due to cars that are unintentionally accelerating. While VW probably did not plan to capitalize on Toyota’s current woes, it undoubtedly makes their goals presently more feasible. The plan also does not factor in VW’s recent takeover of Porsche, who, as it turns out, tried to take over its much larger German peer. Much can happen in the next eight years, but as long as VW isn’t putting out cars that go all Speed Racer on their drivers, there’s no reason to believe their plan can’t ultimately succeed.
What does an auto company do when it’s offered an award in the middle of a massive recall? If the company is Toyota, decline it. Japan’s government recently awarded Toyota an energy efficiency award for the company’s hybrid car, the Prius. Because of the Toyota recall affects the Prius, spokesman Paul Nolasco said that Toyota must decline the award because accepting it would be inappropriate.
The award is given annually by Japan’s trade minister and is given to products that exemplify energy efficiency and ecological quality. The Prius was one of three products to receive the award this year. Toyota’s insistence on declining the award is fueled by the February 9th announcement that 437,000 of their hybrid vehicles, including the Prius, would be recalled to fix brake problems. This latest announcement brings the total number of Toyota cars recalled since last October to 8.5 million worldwide.
While the problems facing the Prius have nothing to do with the nature of the award, Toyota clearly feels that no model facing such a widespread problem should deserve being awarded. The Prius was the only car in the field of winners; Mitsubishi Electric Corp. won the award for an air conditioner, while Fuji Xerox Co. won for a multifunction copy machine.