TOYOTA’S FUTURE: HYDROGEN- AND BATTERY-POWERED
VEHICLES CASE STUDY SOLUTION
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SYNOPSIS
Even during and after the supply chain disruptions caused by the COVID-19 pandemic, Toyota Motor
Corporation (“Toyota”) had increased its sales and maintained the title of the world’s top-selling
carmaker for three consecutive years since 2020. However, global market trends (especially in China, the
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United States, and Europe) have gradually started shifting from internal combustion engine (ICE)
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vehicles to battery electric vehicles (BEVs), and Toyota is currently lagging behind in the BEV market.
In the midst of the threats posed by BYD Auto and Tesla in Toyota’s three main markets (the United
States, China, and Japan), the company designated Koji Sato as president in April 2023. Under the
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leadership of its new president, Toyota plans to establish BEV Factory with the goal of providing 1.5
million BEVs (mainly in the United States and China) by 2026. Given the current competitive BEV
market, will 2026 be soon enough for Toyota to catch up with the top BEV manufacturers? It is said that
So
Toyota’s hydrogen fuel cell electric vehicles (HFCEVs) are one reason the company is so behind in the
The Case Solution Starts From page 6
,OBJECTIVES
• Understand how and when a company can transfer its core competencies to a new business.
• Identify a preliminary competitor’s threat in the context of a shift in market trends from the
conventional to the innovative.
• Understand technological advancements associated with changes in the industry environment.
• Evaluate each competitor’s innovation pipeline, assessing their current and future product or service
offerings, as well as their research and development activities.
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ASSIGNMENT QUESTIONS
1. What does the competitive environment in the car industry look like? Do other BEV manufacturers
pose a real threat to Toyota? Based on Toyota’s strategic assets, analyze Toyota’s global market
situation in 2023.
2. Should Toyota keep investing in hydrogen research and development? Do HFCEVs have passenger car
market potential? If not, what strategy should Toyota adopt?
3. Does Toyota need to vertically integrate its value chain to compete with other BEV manufacturers?
4. Plot BEV market share on the DOI theory and compare the results for three markets: the United States,
the EU, and Asia. What does this analysis indicate for Toyota’s future in each market?
5. If the car market is shifting toward BEVs, how will that change the positioning of ICE vehicles? How
will the positioning of BEVs be changed accordingly? (*This is a bonus assignment question for a 120-
minute class).
The Case Solution Starts From page 6
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1. What does the competitive environment in the car industry look like? Do other BEV
manufacturers pose a real threat to Toyota? Based on Toyota’s strategic assets, analyze
Toyota’s global market situation in 2023.
To answer these questions, students need to understand Toyota’s core competencies and competitive
advantages in the ICE vehicle market. If Toyota cannot transfer these assets to the BEV market, the company
will need to develop new core capabilities to compete with BEV manufacturers such as BYD Auto and Tesla.
Unlike its hybrid car development (in which Toyota successfully transferred ICE technology to a hybrid
engine), Toyota cannot transfer its core competencies to BEV development. This is because BEV’s vehicle
architecture differs greatly from that of the ICE vehicle, as Wang Chuanfu, the founder of BYD, mentioned
in the teaching case: “For an electric vehicle, a single wire and four motors are enough to achieve four-
wheel drive and seamless variable speed. No engine or gearbox is needed.” The Toyota Production System
and Toyota’s supply chain network work perfectly for ICE vehicle production and distribution; however,
The Case Solution Starts From page 6
, e
pl
m
Sa
4. Plot BEV market share on the DOI theory and compare the results for three markets: the United
States, the EU, and Asia. What does the analysis indicate for Toyota’s future in each market?
n
The DOI theory, developed by Everett M. Rogers in 1962, can help students understand how a new product
(especially a high-tech one) gains momentum and diffuses among a specific population or social system.45
tio
By identifying where the BEV penetration stands within these three markets in 2023, students can also
discern the characteristics of consumers in each market. There are five adopter categories in the DOI theory,
and the ratio for each category is as follows:
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• Innovators (2.5 per cent): want to be the first to try an innovation and are very willing to take risks.
So
• Early adopters (13.5 per cent): represent opinion leaders and are already aware of the need for change.
• Early majority
• Late majority
• Laggards
The gap between the early adopters and the early majority is called “the chasm,” and high-tech businesses
generally aim to reach innovators (2.5 per cent) first and early adopters (13.5 per cent) thereafter. In reality,
The Case Solution Starts From page 6
, EXHIBIT -1 GDP GROWTH RATE FOR ASIA AND PACIFIC
Gross Domestic Product, Constant Prices, Purchasing Power Parity Per
Capita, Percentage
7 6.1
6
5 4
3.4 3.7 3.7 3.7 3.6 3.5
4
3
2
1
0
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2021 2022 2023 2024 2025 2026 2027 2028
pl
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EXHIBIT -2 TOYOTA & TESLA WORLDWIDE PRODUCTION BY UNITS 2014–2022
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Year 2013 2014 2015 2016 2017 2018
Toyota Units 8,892,095 9,004,825 8,929,075 8,973,988 9,007,511 8,885,573
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Tesla Units
tio
Year 2019 2020 2021 2022 10-Year Total
Toyota Units
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So
The Case Solution Starts From page 6
VEHICLES CASE STUDY SOLUTION
e
pl
m
Sa
SYNOPSIS
Even during and after the supply chain disruptions caused by the COVID-19 pandemic, Toyota Motor
Corporation (“Toyota”) had increased its sales and maintained the title of the world’s top-selling
carmaker for three consecutive years since 2020. However, global market trends (especially in China, the
n
United States, and Europe) have gradually started shifting from internal combustion engine (ICE)
tio
vehicles to battery electric vehicles (BEVs), and Toyota is currently lagging behind in the BEV market.
In the midst of the threats posed by BYD Auto and Tesla in Toyota’s three main markets (the United
States, China, and Japan), the company designated Koji Sato as president in April 2023. Under the
lu
leadership of its new president, Toyota plans to establish BEV Factory with the goal of providing 1.5
million BEVs (mainly in the United States and China) by 2026. Given the current competitive BEV
market, will 2026 be soon enough for Toyota to catch up with the top BEV manufacturers? It is said that
So
Toyota’s hydrogen fuel cell electric vehicles (HFCEVs) are one reason the company is so behind in the
The Case Solution Starts From page 6
,OBJECTIVES
• Understand how and when a company can transfer its core competencies to a new business.
• Identify a preliminary competitor’s threat in the context of a shift in market trends from the
conventional to the innovative.
• Understand technological advancements associated with changes in the industry environment.
• Evaluate each competitor’s innovation pipeline, assessing their current and future product or service
offerings, as well as their research and development activities.
e
pl
m
Sa
n
tio
lu
So
ASSIGNMENT QUESTIONS
1. What does the competitive environment in the car industry look like? Do other BEV manufacturers
pose a real threat to Toyota? Based on Toyota’s strategic assets, analyze Toyota’s global market
situation in 2023.
2. Should Toyota keep investing in hydrogen research and development? Do HFCEVs have passenger car
market potential? If not, what strategy should Toyota adopt?
3. Does Toyota need to vertically integrate its value chain to compete with other BEV manufacturers?
4. Plot BEV market share on the DOI theory and compare the results for three markets: the United States,
the EU, and Asia. What does this analysis indicate for Toyota’s future in each market?
5. If the car market is shifting toward BEVs, how will that change the positioning of ICE vehicles? How
will the positioning of BEVs be changed accordingly? (*This is a bonus assignment question for a 120-
minute class).
The Case Solution Starts From page 6
, e
pl
m
Sa
n
tio
lu
So
1. What does the competitive environment in the car industry look like? Do other BEV
manufacturers pose a real threat to Toyota? Based on Toyota’s strategic assets, analyze
Toyota’s global market situation in 2023.
To answer these questions, students need to understand Toyota’s core competencies and competitive
advantages in the ICE vehicle market. If Toyota cannot transfer these assets to the BEV market, the company
will need to develop new core capabilities to compete with BEV manufacturers such as BYD Auto and Tesla.
Unlike its hybrid car development (in which Toyota successfully transferred ICE technology to a hybrid
engine), Toyota cannot transfer its core competencies to BEV development. This is because BEV’s vehicle
architecture differs greatly from that of the ICE vehicle, as Wang Chuanfu, the founder of BYD, mentioned
in the teaching case: “For an electric vehicle, a single wire and four motors are enough to achieve four-
wheel drive and seamless variable speed. No engine or gearbox is needed.” The Toyota Production System
and Toyota’s supply chain network work perfectly for ICE vehicle production and distribution; however,
The Case Solution Starts From page 6
, e
pl
m
Sa
4. Plot BEV market share on the DOI theory and compare the results for three markets: the United
States, the EU, and Asia. What does the analysis indicate for Toyota’s future in each market?
n
The DOI theory, developed by Everett M. Rogers in 1962, can help students understand how a new product
(especially a high-tech one) gains momentum and diffuses among a specific population or social system.45
tio
By identifying where the BEV penetration stands within these three markets in 2023, students can also
discern the characteristics of consumers in each market. There are five adopter categories in the DOI theory,
and the ratio for each category is as follows:
lu
• Innovators (2.5 per cent): want to be the first to try an innovation and are very willing to take risks.
So
• Early adopters (13.5 per cent): represent opinion leaders and are already aware of the need for change.
• Early majority
• Late majority
• Laggards
The gap between the early adopters and the early majority is called “the chasm,” and high-tech businesses
generally aim to reach innovators (2.5 per cent) first and early adopters (13.5 per cent) thereafter. In reality,
The Case Solution Starts From page 6
, EXHIBIT -1 GDP GROWTH RATE FOR ASIA AND PACIFIC
Gross Domestic Product, Constant Prices, Purchasing Power Parity Per
Capita, Percentage
7 6.1
6
5 4
3.4 3.7 3.7 3.7 3.6 3.5
4
3
2
1
0
e
2021 2022 2023 2024 2025 2026 2027 2028
pl
m
EXHIBIT -2 TOYOTA & TESLA WORLDWIDE PRODUCTION BY UNITS 2014–2022
Sa
Year 2013 2014 2015 2016 2017 2018
Toyota Units 8,892,095 9,004,825 8,929,075 8,973,988 9,007,511 8,885,573
n
Tesla Units
tio
Year 2019 2020 2021 2022 10-Year Total
Toyota Units
lu
So
The Case Solution Starts From page 6
