• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Supply Snags Threaten EV Revolution, Top Toyota Scientist Says

Supply Snags Threaten EV Revolution, Top Toyota Scientist Says

Toyota Warns That Mexico Tariffs Could Raise Costs by $1Bn
June 3, 2022
Bloomberg

Surging battery prices and shortages of metals and materials are likely to last for some time, Toyota Motor Corp.’s chief scientist warned, trends that could weigh on the world’s embrace of electric vehicles.

The shift to EVs over the past decade has been driven by steadily falling battery prices, a dynamic that’s enabled plug-in vehicles to travel longer at costs approaching those of gasoline-powered cars. Now, manufacturers are running low on supplies of lithium, nickel and other key battery inputs, with trade frictions and the war in Ukraine exacerbating issues and forcing prices higher.

It’s not just these gyrations, Gill Pratt said in a recent interview at the Toyota Research Institute in Los Altos, California. The question is whether the industry has “invested the right amounts in different parts of the supply chain to make this change so fast,” said Pratt, TRI’s founding chief executive officer.

Over the past few months, automakers pushing forward with aggressive plans for EV roll-outs have been sounding alarm bells about impending shortages and an unprecedented rise in the cost of materials used to manufacture batteries. Higher inputs have pushed carmakers from Tesla Inc. to BYD Co. to hike vehicle prices.

In some respects, “the world has thought about this in too simple of a way,” Pratt said of the industry’s rapid shift to EVs. Taking into account various automaker and energy sector timelines, “you do come up against hard limits,” he said. 

“There’s going to be this crunch, not enough materials,” Pratt warned, adding that conditions are likely to remain “hard” in the near- and mid-term.

Pratt, a former Massachusetts Institute of Technology professor and well-known roboticist, was picked by Toyota President Akio Toyoda in 2016 to lead the Toyota Research Institute, a U.S.-based group working on automated driving, robotics and artificial intelligence. Pratt has also taken on the role of ambassador, communicating Toyota’s thinking and strategies to global audiences and relaying information back to headquarters in Japan.

On top of rising battery costs, new uncertainties are emerging over how quickly and widely EVs will spread. With the economies of the world’s two biggest automobile markets — the U.S. and China — under strain, there are signals that EVs, expensive already, may be drifting further out of reach for average consumers. 

EV Adoption Gap.png

With gas prices surging globally, “we haven’t yet seen any broad slowdown in EV sales,” said Kota Yuzawa, head of Asia auto research at Goldman Sachs Group Inc. But “there is fear that this month EV prices might go up again,” he said. 

For now, the base case for EV sales remains unchanged, but green inflation — a term for the sharp rise in energy transition-related prices — could put “negative downward pressure on EV penetration,” Yuzawa said.

According to data from Cox Automotive, the average transaction price for a new EV in the U.S. climbed to more than $65,000 in April, up 16% from a year earlier. That outpaced gains in total new vehicle prices over the same period and placed EVs squarely in the same price bracket as luxury cars. 

Watch: How Can We Supercharge the EV Rollout?

Raw-material costs may yet drive prices higher. The International Energy Agency forecasts that, after more than a decade of declines, battery packs could become 15% more expensive this year. While a flood of new models are underpinning EV sales at the moment, “ensuring future growth will demand greater efforts to diversify battery manufacturing and critical mineral supplies to reduce the risks of bottlenecks and price rises,” according to a recent IEA report.

“That’s what I’m worried about the most,” Pratt said. “If prices go up, and the amount of money people have may not keep up.” 

Even so, BloombergNEF’s 2022 EV outlook released Wednesday estimates that plug-in passenger vehicle sales will more than triple to 20.6 million in 2025, much higher than the 14 million it was forecasting just a year ago.

At the same time, BNEF warns that raw-material supply constraints are set to push back the point in time at which EVs reach price parity with combustion vehicles. There’s also a widening gap between wealthy and emerging economies’ EV adoption rates, suggesting the transition may “not be an equitable one,” according to the outlook.

While the industry builds out stable battery supply chains, a logical interim step is hybrid technology, according to Pratt. Hybrids are more efficient than traditional cars, though they still run on gasoline. They’re cheaper than all-electric models and are fitted with smaller batteries that require fewer raw materials.

Along with EVs, Toyota is continuing to invest heavily in hybrids, seeking to spread its bets and bide time as battery supply chains mature. The Japanese automaker’s relatively small number of pure-EV sales has fueled criticism that it’s been dragging its feet amid the EV revolution. 

Stung by those critiques, Toyota unveiled a 4 trillion yen ($31.4 billion) investment in EVs in December to make clear that it’s serious about the shift, even if it has a different timeline and path in mind.

For now, Toyota’s strategy to move cautiously into EVs while wagering on hybrids appears to be paying off. Toyota overtook General Motors Co. in the last three months of 2021 as the No. 1 automobile seller in the U.S. and retained its crown in early 2022 as soaring gas prices pushed consumers to flock to hybrids as an affordable, more fuel-efficient option.

Toyota’s idea is to not “have perfect be the enemy of good,” Pratt said. That, he said, means giving consumers vehicles that produce less carbon emissions “but that they can afford.”

RELATED CONTENT

RELATED VIDEOS

Sourcing/Procurement/SRM Global Supply Chain Management Supply Chains in Crisis Automotive High-Tech/Electronics
  • Related Articles

    The Top Miners Are Split on How to Chase the EV Battery Boom

    'Chokepoints' Threaten Global Food Supply, Report Says

Bloomberg

CVS, Rite Aid Ration Contraceptive Pills as Demand Surges

More from this author

Wake up to live
“Supply Chains in Crisis”
updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • coworkers collaborate

    Podcast | Linking Planning and Execution for Real-Time Decision-Making

    Sales & Operations Planning
  • FedEx

    FedEx Faces Big Changes as New Boss Confronts Higher Costs, Angry Contractors

    Last Mile Delivery
  • cyber crime

    The Cyber Blind Spot That Makes Every Supply Chain Vulnerable

    Regulation & Compliance
  • 0627_Guitars.png

    Sweetwater Responds to the ‘New Face of Agility’ in Supply Chain and Merchandising

    Inventory Planning/ Optimization
  • Port of Long Beach

    Supply Issues Account for Half of Surge in U.S. Inflation, Study Says

    Global Supply Chain Management

Digital Edition

Scb may 2022 sm

2022 Supply Chain ESG Guide

VIEW THE LATEST ISSUE

Case Studies

  • 3PL Doubles Productivity With Robots to Fulfill Medical Supply Orders

  • E-Commerce Company Cuts Order Fulfillment Time by 40%

  • Fashion Retailer Halves Fulfillment Time With Omichannel Automation

  • Distributor Scales Business by Integrating Warehouse Automaton Software

  • Fast-Growing Fashion Brand Scales E-Commerce Fulfillment With Whiplash

Visit Our Sponsors

Yang Ming Alithya Barcoding
Blue Yonder BNSF Logistics Generix
GEP GreyOrange Here
Honeywell Intelligrated IFM Inmar
Keelvar Kinaxis Korber
Liberty SBF Locus Robotics Logility
Lucas Systems Nvidia Old Dominion
ORTEC Parsyl QIMA
Redwood Logistics Saddle Creek Logistics Schneider Dedicated
Setlog Holding AG Ship4WD Shipwell
Tecsys TGW Systems Thomson Reuters
Tive Trailer Bridge Vecna Robotics
Verity
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2022 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing