Euphoria on Toyota shares. Japanese giant challenges Tesla? 🔌

The shares of automaker Toyota (TM.US) gained nearly 8% in the Asian session and it's ADRs are up nearly 5% ahead of Wall Street's open. The company has announced a technological breakthrough and wants to introduce electric vehicles with novel, next-generation batteries starting in 2026. It will also redesign the entire production chain, with the ultimate goal of saving costs and speeding up assembly. The world's largest automaker intends to become a global leader in EV energy consumption. The company is becoming more 'green' than under the previous CEO, Toyoda.

Toyota has unveiled a number of solutions to improve its competitiveness:

• The company is developing batteries in-house through its new BEV Factory unit, which opened in May. Units for all-electric cars require complex materials (1 BEV battery = 90 hybrid-electric batteries). Toyota's new solution is expected to partially help circumvent this problem;
• BEV Factory wants to produce an average of about 1.7 million vehicles per year, by 2030. Toyota is targeting sales of 1.5 million all-electric cars per year by 2026 and 3.5 million all-electric vehicles per year by 2030. Solid-state batteries are expected to be commercialized in 2027 - 2028 (improving the range of cars by 20 to 50%, up to 1,000 km with 570 km for Tesla with extended range);
• The company wants to produce revolutionary batteries on a large scale, and has reported overcoming an important 'technical hurdle' (battery life in solid-state batteries). It also wants to introduce them in conventional hybrid models (HEVs) and accelerate implementation in full electrics (BEVs);
• The company intends to eliminate conveyors in factories and use die-casting instead of welding (similar to Tesla). Three investment funds have called on Toyota to improve its climate change disclosures but the company has voted against, citing adverse externalities. However, there is little chance that the eventual ESG controversy will stop funds from investing.

The market as well as shareholders at Toyota's general meeting gave a positive reception to the new CEO, Koji Sato, who has been in office since April and has heralded a technological revolution. The market has recently been reacting very positively to the general expansion of the entire EV industry. On Western trading floors, Tesla (TSLA.US) or lithium producers for car batteries like Albemarle (ALB.US) are also posting gains.

ADR Toyota Motors (TM.US). The U.S.-listed company's stock broke above the SMA200 (red line) and the 23.6 and 38.2 Fibonacci retracement. Pre-opening quotes point to $165 per share, and if $170 is broken, the road to $188 per share could be open. Source: xStation5

The euphoria on Japan's Nikkei index (JAP225, golden candles), which broke through the 1989 peaks, continues - yet Toyota's ADRs were unable to match the rally,. Toyota shares listed on the Tokyo Stock Exchange, despite the impressive rally, are still trading below the historical maximums of January 2022. Source: xStation5

Toyota Motor's fundamentals and valuation indicators. Source: XTB Research