Toyota Motor Corp (7203.T) said on Wednesday that it expects operating profit to rise 10% this fiscal year, thanks to a five-fold increase in pure electric vehicle (EV) sales and a reduction in global supply chain disruption caused by a semiconductor shortage.
The growth strategy was presented by new CEO Koji Sato, who was appointed last month, and suggests a more aggressive drive towards electrification by the Japanese company, which had previously taken a cautious approach to all-electric vehicles, claiming that its policy would allow greater consumer choice.
The world’s largest automaker by sales predicted that battery EV sales, including those of its luxury Lexus brand, will reach 202,000 worldwide this fiscal year through March 2024, up from 38,000 units last year.
Toyota expects operating profit to climb to 3.0 trillion yen ($22.2 billion) this fiscal year, matching the average expert prediction of 3.02 trillion yen.
According to Refinitiv statistics, operating profit for the fiscal fourth quarter through March increased by more than a third to 626.9 billion yen, substantially exceeding the average 553.46 billion yen profit expected by 10 analysts.
Toyota’s strategy has put it under pressure in China, the world’s largest car market, where nimble Chinese manufacturers like BYD Co Ltd (002594.SZ) have moved quickly with battery EVs, undermining established Western brands’ dominance. However, Sato stated that demand for exclusively battery-powered vehicles in China was essentially a new market requirement that was distinct from desire for hybrid vehicles.
The increased EV sales target, while still a fraction of industry leader Tesla (TSLA.O), would increase Toyota’s battery EVs to nearly 2% of overall sales volume, up from 0.4% in the previous fiscal year. Toyota has announced plans to introduce ten new battery-powered vehicles, with the goal of selling 1.5 million EVs per year by 2026, in an effort to up its game in the EV sector, where it has been outpaced by emerging Chinese automakers as well as Tesla.
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