Toyota’s EV struggle

This is an audio transcript of the FT News Briefing podcast episode: ‘Toyota’s EV struggle’

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, January 11th, and this is your FT News Briefing.

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Marc Filippino
Twitter faces more legal trouble, this time from former workers in the UK. Toyota is struggling with electric vehicle sales, and one of the world’s biggest oil companies has a new leader. We’ll talk about what Shell CEO Wael Sawan will do with his company’s record profits.

Tom Wilson
Does he keep returning it to shareholders or does he suddenly decide to divert a much larger chunk of that cash towards the newer parts of the business?

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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Marc Filippino
Twitter has another lawsuit on its hands. Several dozen former workers in the UK say their dismissals were conducted illegally and they say the social media company did not give them the severance they’re owed. Twitter didn’t respond to an FT request for comment. In total, 180 UK staffers were fired as part of mass lay-offs in November, right after Elon Musk bought the company. In the US, Twitter faces at least 200 legal complaints and four class action lawsuits from laid-off workers.

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Marc Filippino
Toyota is struggling to sell electric vehicles. The company botched the rollout of its first EV model. The bZ4X had to be recalled within weeks of its launch last year, and sales have been lacklustre ever since. Our Tokyo correspondent Eri Sugiura said Toyota had planned to deliver 5,000 in Japan during the first year.

Eri Sugiura
The carmaker is delivering the bZ4X in Japan exclusively through the leasing subsidiary. But the head of that subsidiary told us in an interview that it would not meet the sales target in the first year nor the following year. The executive also said that this is the first time in Toyota’s history that a product recall occurred immediately after the product was launched and that this has surround the model launch off track.

Marc Filippino
What do we know about how the sales are doing globally?

Eri Sugiura
The bZ4X is sold in Europe, China and the US. We don’t have exact figures, but talking to my sources, even at the global scale the sales of the bZ4X is not that great.

Marc Filippino
But now it’s not as if Japanese people are snapping up other companies’ electric vehicles, right? I mean. In a piece you wrote, you cited a recent figure that shows that in 2021, EVs only made up like 1 per cent of Japan’s car market.

Eri Sugiura
Yes. And there hasn’t been much improvement last year either. And this is because consumers in Japan are still not confident enough of having enough charging when driving or whether their cars will hold their value when the time comes for them to sell up and buy a new one.

Marc Filippino
So now, as you report, Toyota is overhauling its EV strategy. What can you tell us about that?

Eri Sugiura
So Toyota wants to make its electric car manufacturing process more cost-effective. And sources told us that a new team was established last year, led by a former chief technology officer, to review the process from scratch. Toyota is basically known to practice various cost-cutting efforts. But analysts said Toyota may not have been able to find out yet good ways to streamline costs when it comes to EVs. But Toyota has pledged before to invest $35bn in the shift to electric vehicles by 2030 and to make 3.5mn of them by the end of the decade. So there is a chance that it can recover the EV sales with models following the bZ4X if it really focuses on EVs.

Marc Filippino
Eri Sugiura is the FT’s Tokyo correspondent.

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Marc Filippino
The biotech company behind Pfizer’s massively successful Covid vaccine is leaning into artificial intelligence. Germany’s BioNTech has agreed to pay more than £500bn to buy a British artificial intelligence start-up called InstaDeep. It’s BioNTech’s biggest-ever deal and part of a plan to move beyond vaccines. BioNTech wants to use machine learning to improve the drug discovery process and develop personalised treatments for cancer patients.

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Marc Filippino
Global energy giant Shell has a new CEO. Last week, Wael Sawan took the helm after 25 years at the company. The Lebanese-Canadian dual citizen replaces Ben van Beurden, and he’s the first non-western European to lead Shell. To find out what Sawan brings to the company and what challenges he’s going to face, I’m joined by energy correspondent Tom Wilson. Hi, Tom.

Tom Wilson
Hi, Marc.

Marc Filippino
So I understand you met with Sawan. Why don’t you just tell me a little bit about him. What’s he like?

Tom Wilson
The first thing to say is he’s a real people person. And speaking to insiders at Shell, it’s clear that he’s been a high flyer for a very long time. And when it became clear that Ben van Beurden would be stepping down, he was a clear frontrunner. So he is experienced. He’s slick. He’s a good communicator. And my sense is the company is excited about the changes that he might bring.

Marc Filippino
What are some of his top priorities going into his tenure?

Tom Wilson
So he enters the business in a pretty interesting position because Shell is in phenomenal financial health and it’s on course for record profits this past year in 2022, on the back of sky-high oil and gas prices due to the Russian invasion of Ukraine. However, it’s still facing big existential questions about what type of energy company Shell wants to become over the next 30 years. Under Ben van Beurden, Shell has set net zero targets to cut emissions from its business towards net zero by 2050, and they have articulated a strategy about how to get there. Now that strategy, as Shell describes it, is about what they call decarbonising their customers. However, Shell hasn’t really gone as far as BP in articulating a real change in the way it does that it’s left quite a lot of options open as to how it actually reduces those emissions over time. And so the big question is what would Sawan do with these billions of dollars of profits? Does he keep returning it to shareholders or does he suddenly decide to divert a much larger chunk of that cash towards the newer parts of the business and to set Shell on an even faster path towards net zero?

Marc Filippino
What are the biggest challenges Sawan is going to face? Is there any skill set he needs to brush up on before he can really do this job well?

Tom Wilson
Sawan as a very skilled professional has been in show for 25 years. If you get a look at his track record and say, where does he have the least experience, where’s he spent the last number of years? It is actually in these newer areas of the business. In renewables and power trading, the new parts of the business that are going to be central to Shell’s transition strategy. That being said, when I talk to Shell insiders, no one sees this as a major problem. They can describe him as somebody who is fiercely intelligent and a keen listener, and they believe he has the skills necessary to (a) develop knowledge in those areas whereby he be lacking, and (b) assemble the right type of team around it.

Marc Filippino
Tom Wilson is the energy correspondent for the FT. Thanks, Tom.

Tom Wilson
Thanks, Marc.

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Marc Filippino
Monday was supposed to be a historic day for Virgin Orbit. The company tried to launch the first commercial satellites from western Europe. It didn’t turn out as planned. Due to “an anomaly” Virgin Orbit’s Launcher One rocket wasn’t able to reach orbit. It was a blow to customers who had satellites on the rocket. It was also a setback to Britain’s space ambitions. And the failure hit Virgin Orbit shares. They crashed 14 per cent yesterday.

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Marc Filippino
Before we go, we want to remind you about our special sale for Briefing listeners. An annual subscription to FT.com is now half off. It’s normally $375, and in my humble opinion, worth every penny. But it’s now half of that. Quite a deal. Go to ft.com/briefingsale. That’s ft.com/briefingsale. That link is in the show notes. You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.