Is Toyota Poised to Become the BlackBerry of the Automotive World?
[Dec. 18, 2019]
In build up to the iPhone introduction in 2007, BlackBerry had become the status symbol of businesspeople, with access to email and the web in the palm of your hand. For a time, it looked like BlackBerry had even supplanted the then-dominant Nokia as the mobile status symbol. Then came 2007 and the introduction of the iPhone. Pundits and analysts were skeptical of the sleek, minimalist newcomer, saying it will never catch on.
Early versions of the Prius (like this 2004 model) were the most “green” vehicle on the road at the time.
Twelve years later, we know how things played out. Although not a perfect analogy, I see the makings of a similar disruption between Toyota and Tesla. Prior to Tesla, Toyota arguably had the “greenest” reputation of the automakers, built largely on the success of the Prius hybrid. Those who wanted to virtue signal their green credentials, or simply wanted to maximize their fuel economy, flocked to the wedge-shaped hatch. Fun fact: Although the second-generation model is the most recognized Prius, the Prius dates back as far as 1997 in Japan, and the first-generation model went on sale in the U.S. in 2000.
Despite its virtues, namely fuel economy and practicality, the Prius was strictly an “eat your vegetables” car. It was bought out of need or pragmatism, not passion. Although driving dynamics improved in subsequent generations, “sporty” and “fun to drive” have never been top attributes of the Prius.
The most recent versions of the Prius feature a far improved interior, but are the changes enough to compete against the likes of Tesla?
In 2012, Tesla unveiled the highly anticipated Model S luxury sedan. Although still well in the premium price strata, it was the first electric car whose appeal went beyond simply making a vehicular political statement. Its lines were vaguely evocative of Jaguar, but with a high-tech minimalist elegance befitting its Silicon Valley origins. People that hadn’t previously considered an electric car were now intrigued. The German troika of BMW, Mercedes-Benz, and Audi scoffed at this upstart newcomer and didn’t see it as a significant threat to their oligopoly of the luxury market. Yet as Tesla slowly overcame its production hiccups, it was clear the Model S wasn’t just going to quietly fade into the margins.
But Elon Musk wasn’t done yet. The company still had yet to reveal its promised “mass-market” sedan that would start at around a claimed $35,000, and promised to go toe-to-toe with the BMW 3-Series, the undisputed standard-bearer of the sport sedan world. When the Model 3 was finally revealed in March 2016, it shared a strong stylistic resemblance to its big brother Model S, with the exception of its blank nose. The avant-garde styling statement shocked many, but was simply an acknowledgement of the less demanding cooling needs of an EV. Three and a half years later, the Model 3 is now impudently stealing marketshare from said 3-Series, among many others, including, ironically enough, the Prius.
The all-electric Tesla Model 3 changed the game in the affordable “green car” market that had previously been dominated by hybrids.
The Model 3 is a rare vehicle with crossover appeal to both environmental activists and driving enthusiasts. Even the base model has a 0-60 time of around 5 seconds. It appeals to car enthusiasts, tech enthusiasts, and environmentalists. That appeal is about to get even greater with the imminent introduction of the crossover Model Y, the completion of Gigafactory 3 in Shanghai, and the construction that’s scheduled to start on Gigafactory 4 outside of Berlin in 2020.
Toyota has enjoyed decades of dominance and goodwill built upon the rock-solid quality of its vehicles, and over the last 15 years, the perception of environmental leadership with the Prius. Yet as other automakers are at least publicly proclaiming their support for battery electric vehicles, Toyota is doubling-down on its hybrid technology, and touting its leadership in hydrogen fuel cells, a technology that over the course of more than two decades has never moved beyond being a niche market.
Toyota remains solidly and reliably among the three largest automakers by volume, selling more than eight million units in 2018. Tesla, in comparison, sold only 350,000 units in the same year, or approximately the same number of Camry sedans sold that year. It’s going to be quite a while until Tesla’s total sales volume approaches that of the global leaders (although that’s assuming Tesla could even scale to that level).
Yet it took a mere five years for BlackBerry to go from the dominant global enterprise mobile handset in 2008, to its market share imploding five-fold, and just a few years after that, being acquired by an investor group and reorganized into a software services business. It’s a poignant reminder that success can never be taken for granted, and that complacency is rarely a winning formula for maintaining market leadership.
(Images courtesy of the manufacturers)
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