On May 29, Toyota announced the cessation of development of the model, which was supposed to rely on new generation batteries and advanced manufacturing techniques, most notably the “Gigacasting” technology for casting large parts of the car’s body in one piece, which is the technology for which Tesla was famous, despite the challenges associated with mass production.
According to the Nikkei Asia newspaper, the decision caused a shock in Toyota’s supply chain, which includes about 60,000 companies, as the losses of major direct suppliers are estimated at about 10 billion yen ($61.5 million) for each company, while the total losses reach tens of billions of yen.
Toyota confirmed that it is holding separate talks with suppliers to determine the compensation mechanism, noting that the circumstances of each company differ from the other.
The decision reflects a shift in the company’s strategy led by new CEO Kenta Kon, who is focusing on enhancing profitability, reevaluating the model lineup and reducing projects with limited returns, even if this means canceling large projects.
The decision is painful for suppliers who invested large sums of money to develop production lines for the project, and Toyota officials acknowledged that its cancellation ended years of engineering and development work.
Analysts believe that the move may raise questions about the pace of Toyota’s shift towards electric cars, but on the other hand, it reflects a more conservative approach aimed at protecting the company’s profitability and the sustainability of its business, at a time when it is facing a decline in global sales for the fourth month in a row, with a decline of 7.2% last May, amid escalating competition from Chinese electric car companies.
