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Toyota axes Lexus EV: Billions in supplier losses loom
2 Jul
Summary
- Toyota will compensate suppliers for losses from canceled Lexus LF-ZC EV.
- Some suppliers could lose up to Y10bn due to Toyota's abrupt project cancellation.
- The LF-ZC EV project was scrapped after over two years of development.
Toyota Motor has decided to partially compensate suppliers following the cancellation of its Lexus LF-ZC electric sedan development. This unexpected move, reportedly driven by President Kenta Kon, who assumed leadership in April, is expected to cost Toyota tens of billions of yen. However, this figure is anticipated to have a minimal impact on the company's overall financial performance.
Suppliers involved in the LF-ZC project, which featured new battery technology and giga casting, could face individual losses reaching up to Y10bn ($61.54m). Many had committed to substantial investments, including new giga casting production lines or facility overhauls, based on the expectation that this technology would be integral to future vehicle manufacturing.
The cancellation was communicated to suppliers by May 27, more than two years after the project's inception. An internal source described the decision as unprecedented for Toyota, contrasting it with earlier models like the Prius and Mirai, which prioritized development over immediate profitability.
This development follows Toyota's recent announcement of a strategic manufacturing alliance with Joby Aviation for electric vertical take-off and landing (eVTOL) flying taxis, indicating ongoing shifts in its approach to new mobility technologies.
