Toyota Lowers EV Sales Forecast for FY2024-25 Amid Safety Scandal and Market Challenges

Revised EV Sales Outlook Following Safety Scandal
Toyota has revised its global electric vehicle (EV) sales forecast for the fiscal year ending March 31, 2025, projecting a total of 160,000 units, a reduction of 11,000 units compared to its original target. This downward revision follows significant operational disruptions between June and September 2023, triggered by allegations of falsifying safety test results. The controversy has cast a shadow on the company’s reputation and forced the automaker to re-evaluate and enhance its safety measures and quality control processes, affecting its overall vehicle production, including EVs.

Financial Impact and Operational Adjustments
As a result of the lowered sales forecast, Toyota has also revised its financial projections for the fiscal year 2024-25, cutting its EBITDA forecast by ¥90 billion ($584 million), now expected to be ¥4.9 trillion. These financial adjustments reflect both the reduced sales volume and the costs associated with restoring the company’s operational integrity. The fallout from the scandal and resulting operational disruptions have led Toyota to reevaluate its safety protocols and internal management systems.

Weak EV Demand and Declining Domestic Sales
The reduction in Toyota’s EV sales forecast also highlights broader challenges in the global automotive market, particularly outside of China. Japan’s domestic market, in particular, is struggling with a persistent decline in car sales, with a 29% year-on-year drop in September 2023. Additionally, the proportion of EVs in Japan’s overall car market has fallen to just 1.8%, down from 2.5% the previous year, pointing to slower-than-expected adoption of electric vehicles within the country. This weak demand, coupled with the company’s safety scandal, has placed added pressure on Toyota to meet its revised targets.

Strategic Response and Long-Term Outlook
Despite these setbacks, Toyota is focused on restoring its reputation and ensuring the long-term sustainability of its electric vehicle strategy. The company remains committed to restructuring its safety protocols and improving its operations. However, the challenges posed by weak EV demand outside of China, along with the lingering effects of the scandal, make achieving the revised sales targets more difficult. Toyota’s efforts to restructure and realign its operations will be crucial in navigating the evolving global transition toward electric mobility.