"Coming together is a beginning," Henry Ford once said. "Keeping together is progress. Working together is success."
Japanese automakers, the behemoths of automotive mass production, have fallen behind in the electric vehicle race. Eyeing burgeoning Chinese, American and Korean carmakers, they’ve realized that uniting is the best way forward. Now one coalition is led by Toyota. The other is led by Honda. With that, Japan's entire car industry has transformed into two factions.
That kicks off the Friday edition of Critical Materials, your daily roundup of news and events shaping the electric car industry. Also in today’s edition: How Chrysler plans to survive as executives threaten to axe unprofitable brands. We also discuss a motorcyclist’s fatal crash involving a Tesla Model 3 driving on Autopilot.
30%: Japan’s Car Industry Consolidates Into Two Groups
In the EV industry, software is king. EVs are heavily dependent on software for pretty much every function, including battery management, power electronics, advanced driver assistance systems (ADAS), infotainment and more. Tesla mastered software and it now dominates the EV industry globally, although there’s been a recent decline in its sales. Japan’s automakers haven’t really aced software yet.
While Toyota continues to be the world’s largest carmaker by sales volumes, its impact on the EV industry has been little. In the meantime, China’s burgeoning automakers like BYD, Xpeng, Geely and Li Auto among many others are eyeing world dominance. And I’m afraid they’re largely succeeding at that. In an attempt to regain some of this lost ground, Japanese automakers think teaming up is the way to go.
Now on one side, you have a Toyota-led coalition involving Subaru, Suzuki and Mazda who have joined forces to develop EVs and next-generation combustion engines powered by alternative fuels.
On the other side, Honda recently teamed up with Nissan and Mitsubishi to form a “trilateral partnership” to master software, electrical architectures, EV components and more.
Here’s the latest from Bloomberg:
Whereas Toyota has tied up with its domestic peers from a position of strength—it’s been the world’s best-selling automaker for four years running—Honda, Nissan and Mitsubishi each are much smaller players. Their coming together is seen as a move by Japan’s government to fortify its auto industry in the wake of China having emerged as the world’s new No. 1 car exporter.
“This is coordinated by the government to build a competitive automaking industry,” said James Hong, analyst at Macquarie Securities Korea Ltd., adding that most automakers in Japan are too small to be able to invest in EVs individually. “It feels like a politically driven alliance.”
Nissan, Honda and Mitsubishi have been behind the curve in moving to what automakers increasingly refer to as software-defined vehicles, where code is as crucial as combustion engines were in the past. The Japanese government set a target last month for its companies to account for 30% of the software-defined vehicle market in 2030.
Adversity brings people together. In this case, large corporations too. Nissan is in a death spiral. Its profits plunged 99% last quarter. Mitsubishi was an early mover in the EV race with the i-MiEV, but in recent times, it has failed to generate any significant momentum on its own. Honda’s partnership with General Motors fell through, although the Prologue EV rides on GM’s Ultium platform.
They're distraught. And their coming together seems natural to me. They can all bring their own advantages to the table. Honda has a $65 billion plan to democratize EVs, Nissan brings the knowledge from deploying the world’s first mass-produced modern EV that was the Leaf and Mitsubishi holds a strong position in Southeast Asia.
Now as they group together, I think the real challenge would be to make their products unique and prevent software nightmares by learning from other carmakers’ hiccups. I’m thinking of you, Volkswagen.
60%: Chrysler EVs Are Coming, If The Brand Doesn’t Get Axed
Stellantis has 14 brands under its umbrella: Citroen, Opel, Vauxhall, Peugeot, Fiat, Abarth, Jeep, Dodge, Chrysler, Ram, Lancia, Maserati, DS Automobiles and Alfa Romeo. They sell cars on all continents, though I assume any presence on Antarctica is incidental at best. Its CEO Carlos Tavares threatened last week to kill any of these brands that don’t make money.
"If they don't make money, we'll shut them down," Carlos Tavares said. He didn’t single out any particular brand, but sources told Reuters that Stellantis could try to sell Maserati and kill off Lancia or DS. Chrysler and Ram, both headed by industry veteran Christine Feuell, may not be on the immediate chopping block, but they face an uncertain future.
Here’s the latest from Automotive News:
The CEO of Ram and Chrysler is guiding two brands with vastly different positions in the Stellantis portfolio. One is the all-important purveyor of high-priced pickups driving profits in North America that's faced slowed sales, while the other is a storied presence heading into an uncertain future where it will go electric vehicle-only by 2028.
But Feuell sees a way forward for Ram going into the year's final stretch and believes the brand has a chance to draw new audiences with the launch of the electric 1500 REV in early 2025 and the 1500 Ramcharger, an electrified pickup with an onboard gas generator to extend range that follows the REV later next year.
While Feuell juggles her Ram responsibilities, she's also looking to the future with Chrysler. She said the brand is getting its first EV, a crossover, in 2026. In the following years, Chrysler will debut another crossover, she said, and an "all-new" minivan. AutoForecast Solutions said both models will be EVs.
Turning a profit on EVs is a mountain of a task. Tesla turned its first full-year profit after nearly 18 years. Mass producing EVs, streamlining production lines, making up for the high cost of batteries by calculated compromises in other areas—it’s all complex, capital-intensive and tedious.
But unlike Lancia or DS, Chrysler may get a fair chance to succeed. The Chrysler Airflow concept is dead but the brand will launch a Tesla Model Y and Jeep Wagoneer S rival based on Stellantis’s STLA Large platform sometime in 2026. Further down the road, we may see upgraded versions of the Pacifica and Pacifica Hybrid minivan.
We could also possibly see Chrysler get serious about the swanky Halcyon concept, which I think looks rad with its “digital detox” theme. I’m sick of screens, so I hope Chrysler earns its mojo back by breaking away from the norm.
90%: Family Of Victim Sues Tesla For Autopilot Crash
Tesla’s Autopilot and Full-Self Driving (Supervised) systems are not winning any medals. The way things are going, they likely won’t in the foreseeable future.
Two years ago, 34-year-old Landon Embry passed away on the scene after a Tesla Model 3 struck the back of his Harley-Davidson at a speed of 75-80 miles per hour, according to a lawsuit filed in Utah, Reuters reported. The complaint not only alleges that the driver was “tired” but also that Autopilot failed to detect the motorcyclist. Now the victim’s family is suing Tesla, alleging that Autopilot is “defective and inadequate.”
Tesla is already under the microscope of the National Highway Traffic Safety Administration after an April 2024 investigation linked its ADAS to hundreds of crashes and dozens of deaths. CEO Elon Musk stated during the company’s annual shareholder meeting in June that self-driving cars would rocket Tesla’s future valuation to several trillions of dollars. The way things are going, I don’t see that happening.
100%: For Japan’s Automakers, Can Teamwork Make The Dream Work?
I’d be cautious before writing off Japanese automakers in the EV race. Toyota remains the largest automaker in the world by sales volumes. Models like the Corolla and RAV4 are still the go-to affordable and reliable options for thousands of Americans, including my Texan cousin, who believes the Corolla is the best car she’s ever driven. Granted, she hasn’t driven many cars.
But that’s beside the point. In a world where software is king, can Team Toyota and Team Honda bounce back in the EV race, especially now that Tesla’s dominance is waning? Both coalitions have dozens of electric models in the pipeline.
Will they be capable enough to capture your attention? I’d certainly put my money on an electric Corolla. Share your thoughts in the comments.
Contact the author: suvrat.kothari@insideevs.com
