Toyota makes a cautious launch with its first battery-electric vehicle, while competitors accelerate

Toyota Motor Corp will begin leasing its first-ever mass-manufactured battery electric vehicle in Japan on Thursday, a plan the carmaker claims would alleviate driver concerns regarding battery life as well as resale value, but which has analysts scratching their heads.

Electric vehicles (EVs), which accounted for only 1% of passenger vehicle sales in Japan last year, are significantly more widespread in Toyota’s home market. Nonetheless, the market is rapidly expanding, with international automakers such as Tesla Inc (TSLA.O) making visible advances on city streets such as Tokyo.

Toyota is going to lease the bZ4X SUV (sport utility vehicle) for the first four years for the equivalent of $39,000, which includes insurance, repair fees, and a battery guarantee. There is an extra cost if you cancel within the first 48 months.

While EV adoption has been slow in Japan, that is changing, and Christopher Richter, a CLSA analyst, believes Toyota could lose market share by focusing on a leasing plan rather than a purchase model.

“Anything that makes it more difficult to buy is probably not a good solution,” he remarked. “I’m not a fan of this strategy. It certainly seems to indicate that Toyota is treating the domestic market for granted.” Toyota announced in December that by 2030, it would invest $62 billion ( 8 trillion yen) in electrifying its vehicles.

In the current fiscal year, Toyota plans to lease about 5,000 SUVs, almost the same number of electric vehicles that analysts predict Tesla delivered in Japan last year. The bZ4X will be available in other regions sometime this year, and pre-orders in several European nations have already begun. According to a Toyota representative, the company has yet to decide when the automobiles would be sold in Japan.

According to Seiji Sugiura, who is a Tokai Tokyo Research Institute’s senior analyst, EVs became prominent in Europe thanks to employer-sponsored lease programs, and Toyota may be pursuing a similar strategy.

According to Shinya Kotera, KINTO president, the Toyota unit that offers the leases, first-time consumers are concerned regarding battery life and the potential loss in trade-in value over time. He stated, “It is our responsibility to remove concerns” about EVs. According to industry data, battery EV imports increased nearly threefold to a new high of 8,610 vehicles in 2021. According to analysts, Teslas accounted for around 60% of the total.

Nonetheless, Japanese automakers are wary of going all-electric. Toyota invented the hybrid more than two decades ago, and it still has major plans for hydrogen-powered and hybrid vehicles, even as it ramps up its battery-electric vehicle lineup.

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