Toyota is tightening the reins after seeing its first quarterly profit drop in two years. To maintain profits, Toyota plans to “hold off on investment decisions until the very last moment,” including EV and hybrid investments.
Toyota announced that its operating income in the first half of fiscal 2025 fell to around $16 billion (2.64 trillion yen).
In the second quarter, operating profit slipped 20% to about $7.55 billion (1.16 trillion yen), Toyota’s first quarterly profit loss in two years.
The lower profits are due to fewer car sales caused by certification issues that caused Toyota to pause production of its popular Yariss Cross and Corolla Fielder in Japan. A Prius recall in the US also led to fewer cars being sold globally.
As a result, Toyota’s global output fell for the first time in four years in the first half of fiscal 2025. Toyota built 4.71 million vehicles, down 7% from its record 5.06 million vehicles produced last year.
Toyota’s domestic output fell 9.4%, while overseas production dropped 6%. The company was hit especially hard in China, where domestic automakers like BYD continue squeezing foreign automakers out of the market with competitive, low-cost EVs.
Toyota to hold off on EV investments until last moment
Although Toyota said production is expected to recover in the second half of the fiscal year, the full-year total is expected to be 9.4 million, which is 100,000 vehicles less than last year.
Toyota’s vice president, Yoichi Miyazaki, outlined how Toyota plans to maintain operating income while still investing in the company’s future.
With EV and other next-gen tech investments dragging down profits, Toyota will “hold off on HEV, PHEV, BEV, or FCEV” investment decisions until “the very last moment,” Miyazaki said. The company plans to closely monitor the market before making a decision.
Meanwhile, the company is still advancing new tech, including advanced EV batteries. Toyota’s vice president confirmed the company is developing three types of EV batteries in-house: Ternary, LFP, and all-solid-state.
In March, Toyota’s battery unit (Toyota Battery) became a wholly owned subsidiary. The company said the move helps “optimize timing” and is crucial for mass-producing different types of batteries.
“There are two main things we want to accomplish,” Miyazaki explained. The first “is to increase how quickly we can respond to environmental changes in an age in which it is hard to predict the future.” Secondly, it is “to improve the fundamental capabilities that will enable us to carry on into the future.”