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Wednesday, April 19, 2023 6:21:20 PM
By Norihiko Shirouzu and Joseph White
April 17, 2023
SAN ANTONIO, Texas - At Toyota Motor Corp's (7203.T) sprawling factory here, just 16 miles 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 (TSLA.O) 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 (GM.N), Ford Motor Co (F.N) and other automakers that have bet on an EV-dominated future.
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."
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.
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