Toyota is set to make waves in the Chinese electric vehicle (EV) market with its upcoming launch of an advanced self-driving electric car. The Japanese automaker, in partnership with the state-owned Guangzhou Automobile Group (GAC), plans to release its first electric model equipped with a sophisticated autonomous driving system in China next year. This move is poised to rival Tesla’s Full Self-Driving (FSD) technology, which has already begun making inroads in the Chinese market.
Bridging the Technology Gap
The joint venture between Toyota and GAC, known as GAC Toyota, is determined to reclaim its market share in China by catching up with local competitors in the realms of hybrid technology, battery innovation, and intelligent vehicles. At a recent event in Guangzhou, GAC Toyota unveiled an ambitious set of innovation targets designed to position the company at the forefront of autonomous driving technology among foreign brands in China.
The Bozhi 3X SUV will be the first model from GAC Toyota to feature this advanced driving assistance system, which promises to handle complex tasks such as parking, highway navigation, and urban traffic management. This significant leap forward in autonomous driving technology is being developed in collaboration with Momenta Global, a startup specializing in autonomous driving software that also counts Mercedes-Benz among its partners.
Partnerships with Tech Giants
In addition to its partnership with Momenta Global, GAC Toyota is collaborating with Huawei to integrate the tech giant’s in-vehicle operating software into its vehicles. This collaboration will kick off with the launch of an electric sedan in 2025, further bolstering Toyota’s presence in the Chinese EV market.
The joint venture also announced plans to introduce an iron phosphate lithium battery between 2026 and 2027. This new battery technology is expected to reduce the production costs of the bZ4X EV by an impressive 40%, making Toyota’s electric vehicles more competitive in terms of pricing.
The Competitive Landscape
Toyota’s strategic initiatives in China come on the heels of Tesla receiving tentative approval to launch its FSD system in the country. Tesla’s FSD technology, while still requiring driver attention, has been a significant revenue stream in the U.S., where users pay a monthly subscription fee for the service. Expanding this offering to China could significantly enhance Tesla’s financial performance amid growing concerns about the company’s long-term growth.
However, Tesla’s FSD system has faced scrutiny from U.S. regulators due to its involvement in several accidents, which has led to multiple investigations. Despite these challenges, Tesla remains a formidable competitor in the autonomous driving space.
Market Dynamics
Toyota’s foray into the autonomous driving segment in China is a critical step as the automaker seeks to reverse a recent decline in its market share. In the first four months of this year, Toyota ranked fifth among all car brands in China, experiencing a 22% drop in sales compared to the same period in 2023, according to data from the China Association of Automobile Manufacturers.
The introduction of the Bozhi 3X SUV and subsequent models equipped with cutting-edge technology is expected to rejuvenate Toyota’s position in the highly competitive Chinese market. The company’s stock has reflected investor confidence, edging up 0.5% to close at $204.97 on Friday, with a year-to-date gain of nearly 12%. In contrast, Tesla’s shares remained largely unchanged at $197.88 but have seen a decline of over 20% since the start of 2024.