The wheels are already coming off Toyota’s long-awaited arrival to the electric vehicle market…literally.
The Japanese carmaker, which vies with Volkswagen Group as the world’s largest, is recalling the bZ4X, its first dedicated EV designed from scratch and built from the ground up, over safety concerns.
All sales and deliveries from its Motomachi plant have been frozen, and current customers are being told not to drive the car at all; they are receiving loaners instead.
“After low-mileage use, all of the hub bolts on the wheel of the subject vehicles can loosen to the point where the wheel can detach from the vehicle,” Toyota said in a statement to Fortune, adding the resulting loss of control would increase the risk of a crash.
Thursday’s news offers perhaps no better metaphor for a company that, after revolutionizing the industry with its Prius hybrid, surrendered its lead to a more disruptive technology and is now rushing to catch up.
While Toyota investigates the cause of the issue, it advised new buyers of the $42,000-plus crossover to leave their cars in the garage for now—an unusual and dramatic recommendation typically reserved for the most serious of recalls.
“No one should drive these vehicles until the remedy is performed,” the company said.
Making matters worse, Toyota’s Japanese partner Subaru was also affected by the problem; the latter’s Solterra shares much of the underlying chassis, known as e-TNGA, which allows the two companies to spread the costs for engineering and parts across a greater sales volume.
It bodes important lessons for the upcoming launch of Toyota’s premium Lexus RZ 450e that is scheduled to arrive in the U.S. market toward the end of this year.
With hundreds of moving parts and dozens of electronic control units running millions of lines of code, cars are among the most complex products a consumer can buy. No amount of testing and validation can entirely preclude the risk of glitches and faults, so automakers constantly build reserves for potential recalls.
The financial fallout is therefore minimal, and the number of vehicles affected globally—at 2,700 and 2,600 for the bZ4X and Solterra, respectively—are rounding errors for companies their size.
Late pivot
Nevertheless, the recall is a huge blow to Toyota’s reputation for setting the industry benchmark in reliability. Perhaps more important, it needed its first dedicated battery-powered electric vehicle, or BEV, to be a smash hit of a level that Hyundai enjoyed with its Ioniq 5.
“It’s embarrassing,” Christopher Richter, an analyst at CLSA, told Reuters. “People have waited so long for Toyota to get a mass-market battery electric vehicle…and just a few weeks after they get it in the market there’s a recall.”
For perhaps too long, Toyota relied on the fuel-efficient hybrid technology first launched with the Prius before making a tentative—and ultimately futile—bet on electric cars utilizing hydrogen fuel cells instead of batteries (FCEVs).
Toyota managers have argued hybrids are in certain cases a better proposition since CO2 emissions over the lifetime of the vehicle can undercut those of an EV powered by a large battery and using dirty electricity from the grid.
Many industry analysts have agreed the argument is not without its merits, as batteries carry a substantial ecological cost that needs years of operation before generating a positive return.
In April of last year, however, Toyota finally began to pivot toward BEVs in a capitulation that was symbolic for the broader industry: The last major holdout against the technology could no longer ignore the earth shifting beneath its feet.
After the COP26 in Glasgow concluded in November, Toyota raised its ambitions for its fledgling range of BEVs. It decided the following month to invest half its development budget, some 4 trillion yen or nearly $30 billion, over the nine-year period through the end of 2030 to build up its battery EV range.
By the end of the program, it aims to sell a total of 3.5 million BEVs annually, including its Lexus premium brand, up from a target of 2 million vehicles previously.
Yet competitors have been struggling to narrow the gap with Tesla. While the entire industry may collectively be chipping away at Tesla’s market share, individual carmakers are seeing the gap actually grow larger.
