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

Toyota

Toyota, Japan’s leading automaker, has revised its global electric vehicle (EV) sales outlook for the fiscal year ending March 31, 2025. The company now projects sales of 160,000 EV units, a reduction of 11,000 units compared to its original target announced in May 2023. This adjustment follows operational disruptions between June and September 2023, stemming from allegations of false safety test reporting.

Safety Test Allegations and Operational Adjustments

Toyota faced accusations of tampering with safety test results earlier this year, leading to a temporary suspension of some operations. The fallout from this controversy prompted Toyota to overhaul its safety measures and quality management protocols. A company representative confirmed that the downward sales revision affects all vehicle categories, including EVs.

This adjustment extends beyond sales targets to financial projections. Toyota has reduced its forecast for Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the fiscal year 2024-25 by ¥90 billion ($584 million), bringing the revised figure to ¥4.9 trillion. These financial adjustments reflect the broader impact of the sales decline and operational challenges.

Weak EV Demand and Declining Domestic Sales

Toyota’s lowered sales outlook also highlights the challenging global market for EVs, particularly outside of China, where demand remains relatively stronger. Japan’s overall domestic car sales have experienced a consistent decline, with September 2023 marking the 11th consecutive month of falling sales. Preliminary data from industry groups, including the Automobile Dealers Association, indicate a 29% year-over-year drop, with total sales at 6,429 units.

The proportion of EVs in Japan’s domestic passenger car market has also diminished, standing at 1.8% of total sales in 2023—a drop of 0.7 percentage points from the previous year. This downward trend underscores the broader challenges facing EV adoption in Japan and other global markets.

Toyota’s Road Ahead: Challenges and Strategic Adjustments

While Toyota remains a dominant force in the automotive industry, its revised EV sales forecast highlights ongoing difficulties in achieving ambitious targets amid weak demand and reputational challenges. The safety scandal has cast a shadow on the company’s operational integrity, prompting significant internal reforms.

The global EV market’s sluggish performance outside of China further complicates Toyota’s efforts to meet its revised targets. Despite these setbacks, Toyota’s commitment to restructuring its safety protocols and operational strategies demonstrates a long-term vision to regain trust and align with the growing global shift towards electric mobility.