Stock of the week: Toyota

-- | 03/08/2021

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Toyota Snapshot

Andrew Willis: It seems like every automaker right now is rallying to design and build electric vehicles as quickly as possible, but Toyota (TM) is taking a few different routes…

It might be surprising to hear that a company with such efficient hybrid vehicles like the Prius wouldn’t be all-in on the all-electric opportunity – but they contend the best way forward is still somewhere in between gas and electric – until the end of the decade, at least.

Sector strategist David Whiston says Toyota doesn’t expect the infrastructure required to run electric vehicles will be dramatically better by 2030. They’re also making big bets on hydrogen. There are plans to build a city in Japan called ‘Woven City’ that runs on CO2-free hydrogen – with Toyota helping to supply the vehicle.

We think hydrogen fuel cells, however, may prove to be more of a Japan-only fuel, and it’s worth considering what Toyota’s automaker peers are doing in the electric vehicle space to gauge how much they may fall behind.

Toyota targets only 25% of vehicles that use electric power to be all-electric or fuel cells by 2030, while Honda targets 40%, and then 80% five years thereafter and 100% by 2040…We do think Toyota can catch up if need be – and I bet they’ll be thankful they did a battery deal with Panasonic.

For Morningstar, I’m Andrew Willis.

This report appeared on www.morningstar.com.au 2021 Morningstar Australasia Pty Limited

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