Revised EV Strategies: Jim Farley’s Admission vs Akio Toyoda’s Vision
What should be clear today is the road to a fully electric future is neither straight nor predictable. Ford CEO Jim Farley admitted as much recently when he described how most automakers like Ford incorrectly assumed, during the chip crisis, that demand for EVs such as the Tesla Model Y would remain robust, while EV prices could continue rising aggressively. Farley essentially called this a false sense of a new normal that most automotive chiefs were sucked into believing.
Even when Tesla began reducing its vehicle prices, Farley assumed this was an effort by Elon Musk to be predatory, which also was a popular sentiment voiced by Musk followers on social media. Frankly, this predatory pricing opinion never made much sense to me. Historically, automakers only lower prices or add incentives when the challenge of filling manufacturing capacity becomes more difficult due to slowing vehicle demand. We now know that this was the primary reason for the price reductions at Tesla as well.
While Farley’s acknowledgement and correction of his mistake is noble today, the Chairman of Toyota Akio Toyoda has always championed a vision of cautious innovation and strategic diversification. Toyota did not rush headlong into electrification, but instead invested in a broad spectrum of powertrain technologies, including hybrid, plug-in hybrid, fuel cell and EV.
Many industry experts believed Toyota was being left behind as other auto companies focused their development efforts entirely on electric vehicles. These EV investment announcements also captured a lot of headlines, which also helped to drive similar decisions across the industry. Yet, Toyota’s strategy aimed at sustaining leadership in a rapidly evolving industry, might ultimately win the day.
The auto market will not be monopolized by a single technology or approach. Instead, it will likely be shaped by companies like Toyota that can navigate the intricacies of global markets, regulatory environments, and technological advancements while remaining flexible.
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