Biden's push for electric vehicles hits deep in the heart of Texas
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[April 19, 2023] By
Norihiko Shirouzu and Joseph White
SAN ANTONIO, Texas (Reuters) - At Toyota Motor Corp's sprawling factory
here, just 16 miles (26 km) from the Alamo, a new gasoline-fueled Tundra
pickup truck or hybrid Sequoia SUV rolls off the assembly line every 60
seconds.
"We can't produce enough of the Sequoias and Tundras today," said plant
manager Kevin Voelkel. "There is a waiting list."
Less than two hours to the north in Austin, the Tesla Inc Gigafactory is
also straining to meet demand. That plant is ramping up output of Model
Y electric SUVs and pushing to launch production of Tesla's long-delayed
Cybertruck that will compete with Toyota's Tundra.
The two Texas factories represent what is at stake as U.S. President Joe
Biden's administration drives to lock in tougher vehicle emissions
standards designed to push electric vehicles to 67% of the U.S. new car
and truck market by 2032, from about 7% currently.
The Biden administration's emissions proposals would give a powerful
boost to Tesla, General Motors Co, Ford Motor Co and other automakers
that have bet on an EV-dominated future.
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Clamping down on combustion vehicle emissions will raise the cost of
trucks like the Tundra. Billions in production and charging
infrastructure subsidies should help make EVs cheaper and more desirable
to consumers.
Toyota, the No. 2 automaker in the U.S. market by sales volume, has been
outspoken in its skepticism of the administration's EV goals - despite
criticism from environmental groups.
"EPA's proposal would effectively require two out of every three
vehicles sold in 2032 to be battery electric. This target is ambitious
and heavily reliant on factors outside the control of the auto
industry," Toyota said in a statement, referring to the U.S.
Environmental Protection Agency. "Vehicle standards should help drive a
level playing field that allows consumers access to a variety of clean
vehicle and fuel options."
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TOYOTA'S PAST SUCCESS
Washington's push to accelerate the shift to battery-electric vehicles
amplifies the threat posed by Tesla to Toyota's position as the world's
largest automaker.
Toyota displaced GM as the world's top automaker in part because it
pioneered a lower-cost, higher-quality lean production system that
enabled it to build vehicles with fewer hours of labor and less capital
investment. Toyota's production system - based on continuous, often
incremental improvements - is central to the work of the San Antonio
truck plant's 3,800 direct employees, as well as another 5,600 with
suppliers on the same campus.
Toyota San Antonio has weathered a series of challenges since it built
its first truck in 2006. But over the past decade, the factory has
thrived as U.S. consumer preferences began to shift decisively in favor
of trucks and SUVs.
Workers racked up overtime each day and one weekend day every week to
keep up with demand. From 2016 through 2018, the plant produced more
than its capacity of 208,000 vehicles a year.
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![](../images/041923PIX/busine54.jpg)
Tundra trucks move through the assembly
process at Toyota's truck plant in San Antonio, Texas, U.S. April
17, 2023. REUTERS/Jordan Vonderhaar
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Toyota invested almost $400 million to upgrade the assembly line to
build refreshed 2022-model Tundras and Sequoias.
The Biden administration's emissions standards now threaten to run
large combustion and hybrid vehicles like the Tundra and Sequoia off
the road.
THE TESLA THREAT
Tesla's Austin factory represents another threat: Tesla CEO Elon
Musk's challenge to everything Toyota has accomplished since it
first entered the U.S. market in 1958.
Tesla's battery EVs do not run on fossil fuels - or use the sort of
hybrid gas-electric technology Toyota champions in its Prius line.
Tesla is also challenging Toyota's lead in lean production. Tesla
builds Model Ys using large, one-piece "mega-castings" to create big
chunks of the vehicle's body structure. Mega-castings replace scores
of metal parts Toyota and other manufacturers use to create vehicle
bodies - along with the expensive machines that weld them together.
The floor of a Tesla Model Y is the top of the SUV's battery pack -
a design that yields a 14% gain in efficiency, said Terry Woychowski,
president of Caresoft Global Technologies. Caresoft dissects and
analyzes vehicles down to the nuts and bolts in a suburban Detroit
workshop.
"The Tesla approach is very, very disruptive," Woychowski said,
standing near a Model Y that had been taken apart by Caresoft staff.
Tesla executives told investors in March they are working on a new
approach to assembling vehicles that could cut production costs by
half.
The future for factories like Toyota San Antonio will play out
across the next several years.
The emissions targets the Biden administration proposed last week
kicked off a months-long negotiating process among regulators, auto
industry officials and climate action advocates.
Bargaining over the details of the rules will take place against the
backdrop of the 2024 U.S. presidential campaign. Republicans are
already attacking the proposed rules.
"The ‘electrification of everything’ is not a solution," said U.S.
Senator John Barrasso, the top Republican on the Energy and Natural
Resources Committee. "It’s a road to higher prices and fewer
choices.”
The future of the workers at Toyota San Antonio could also depend on
how quickly and successfully Toyota develops EVs the plant can
build.
"We will find a way," said Voelkel, the plant manager. "We always
rise to the occasion."
(Reporting by Norihiko Shirouzu in San Antonio, Texas, Joseph White
in Detroit and David Shepardson in Washington; Written by Joseph
White; Editing by Ben Klayman and Matthew Lewis)
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