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Tesla’s production innovations are influencing Toyota’s EV strategy: report

Dietmar Rabich / Wikimedia Commons / “Dülmen, Auto Bertels, Toyota GR Supra -- 2021 -- 9563” / CC BY-SA 4.0

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In late February, reports emerged stating that Japanese carmaker Toyota had conducted a teardown of the Tesla Model Y, one of the electric vehicle maker’s best-selling cars. The veteran automaker was reportedly quite shocked at the Model Y, with one executive stating that the all-electric crossover was a “work of art.” 

This was partly due to Tesla’s constant innovations that have been implemented with the Model Y. The vehicle, after all, may look understated and unassuming on the surface, but underneath the hood, the Model Y is a tour-de-force of technology and disruptive manufacturing processes. 

Citing four people reportedly familiar with the matter, Reuters recently noted that Toyota is planning a factory overhaul as part of its efforts to develop a new, dedicated platform for EVs. The publication’s sources also noted that Toyota recognizes that it needs to match Tesla’s design and manufacturing innovations if it wants to drive down production costs and develop a high-margin electric vehicle business.  

Koji Sato, Toyota’s new CEO, may confirm the development of a new EV architecture at his first briefing as the company’s chief executive on Friday, the publication’s sources noted. However, it is unclear whether the plan has been formally approved. If it does get implemented, however, the new EV platform would be the result of a comprehensive review of the company’s electric vehicle strategy that was undertaken last year. 

Toyota has caught quite a bit of flak for its slow adoption of battery electric cars. The company’s current production architecture, the e-TNGA system that was launched in 2019, produces EVs alongside gasoline cars and hybrids on the same assembly line. Such a system is not ineffective, but it lacks the cost savings Tesla was able to achieve through its manufacturing innovations. Thanks in no small part to these innovations and cost optimizations, Tesla is estimated to have made nearly 8x the profit per car as Toyota for the third quarter.

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While Toyota has placed its bet on hybrids and alternative systems like hydrogen fuel cells, the automaker has seen the global demand for electric cars outpace its modest estimates, thanks in no small part to the strong sales of vehicles like the Model Y crossover. Unfortunately for Toyota, its battery-electric crossover, the bZ4X, faced an early recall over loose wheels and had limited sales.

Toyota’s lack of electric vehicles seems to be affecting the company’s sales already. In the first quarter of 2023, Toyota’s US sales fell by nearly 9%, while General Motors experienced an 18% boost, partly driven by higher demand for EVs from fleet and commercial customers. This was despite GM only selling over 20,000 electric vehicles during that period, substantially less than Tesla. Data from S&P Global Mobility also suggest that Toyota and Honda have seen many customers switch to electric vehicles. 

Katherine Garcia, director of the Clean Transportation for All Campaign at the Sierra Club, emphasized that if Toyota doesn’t focus more on EVs under CEO Koji Sato, the company risks “leaving money on the table” as eclectic vehicles become more prominent. Christopher Richter, an analyst at CLSA, also highlighted that Toyota needs to prioritize EVs over hybrids in its future production.

“Some of the statements that came out of Toyota when Akio Toyoda was CEO sort of made it sound kind of like hybrids are going to be there forever. No, it’s your standby. It’s your hedge. EVs have to be first,” Richter said.

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Tesla China breaks 8-month slump by selling 71,599 vehicles wholesale in June

Tesla China’s June numbers were released by the China Passenger Car Association (CPCA) on Tuesday.

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Credit: Tesla Asia/X

Tesla China was able to sell 71,599 vehicles wholesale in June 2025, reversing eight consecutive months of year-over-year declines. The figure marks a 0.83% increase from the 71,599 vehicles sold wholesale in June 2024 and a 16.1% jump compared to the 61,662 vehicles sold wholesale in May. 

Tesla China’s June numbers were released by the China Passenger Car Association (CPCA) on Tuesday.

Tesla China’s June results in focus

Tesla produces both the Model 3 and Model Y at its Shanghai Gigafactory, which serves as the company’s primary vehicle export hub. Earlier this year, Tesla initiated a changeover for its best-selling vehicle, the Model Y, resulting in a drop in vehicle sales during the first and second quarters.

Tesla’s second-quarter China sales totaled 191,720 units including exports. While these numbers represent a 6.8% year-over-year decline for Tesla China, Q2 did show sequential improvement, rising about 11% from Q1 2025, as noted in a CNEV Post report.

For the first half of the year, Tesla sold 364,474 vehicles wholesale. This represents a 14.6% drop compared to the 426,623 units sold wholesale in the first half of 2024.

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China’s competitive local EV market

Tesla’s position in China is notable, especially as the new Model Y is gaining ground in the country’s BEV segment. That being said, Tesla is also facing competition from impressive local brands such as Xiaomi, whose new YU7 electric SUV is larger and more affordable than the Model Y. 

The momentum of the YU7 is impressive, as the vehicle was able to secure 200,000 firm orders within three minutes and over 240,000 locked-in orders within 18 hours. Xiaomi’s previous model, the SU7 electric sedan, which is aimed at the Tesla Model 3, also remains popular, with June deliveries surpassing 25,000 units for the ninth straight month.

While China’s EV market is getting more competitive, Tesla’s new Model Y is also ramping its production and deliveries. Needless to say, Tesla China’s results for the remaining two quarters of 2025 will be very interesting.

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Tesla reveals it is using AI to make factories more sustainable: here’s how

Tesla is using AI in its Gigafactory Nevada factory to improve HVAC efficiency.

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Credit: Tesla

Tesla has revealed in its Extended Impact Report for 2024 that it is using Artificial Intelligence (AI) to enable its factories to be more sustainable. One example it used was its achievement of managing “the majority of the HVAC infrastructure at Gigafactory Nevada is now AI-controlled” last year.

In a commitment to becoming more efficient and making its production as eco-friendly as possible, Tesla has been working for years to find solutions to reduce energy consumption in its factories.

For example, in 2023, Tesla implemented optimization controls in the plastics and paint shops located at Gigafactory Texas, which increased the efficiency of natural gas consumption. Tesla plans to phase out natural gas use across its factories eventually, but for now, it prioritizes work to reduce emissions from that energy source specifically.

It also uses Hygrometric Control Logic for Air Handling Units at Giafactory Berlin, resulting in 17,000 MWh in energy savings each year. At Gigafactory Nevada, Tesla saves 9.5 GWh of energy through the use of N-Methylpyrrolidone refineries when extracting critical raw material.

Perhaps the most interesting way Tesla is conserving energy is through the use of AI at Gigafactory Nevada, as it describes its use of AI to reduce energy demand:

“In 2023, AI Control for HVAC was expanded from Nevada and Texas to now include our Berlin-Brandenburg and Fremont factories. AI Control policy enables HVAC systems within each factory to work together to process sensor data, model factory dynamics, and apply control actions that safely minimize the energy required to support production. In 2024, this system achieved two milestones: the majority of HVAC infrastructure at Gigafactory Nevada is now AI-controlled, reducing fan and thermal energy demand; and the AI algorithm was extended to manage entire chiller plants, creating a closed-loop control system that optimizes both chilled water consumption and the energy required for its generation, all while maintaining factory conditions.”

Tesla utilizes AI Control “primarily on systems that heat or cool critical factory production spaces and equipment.” AI Control communicates with the preexisting standard control logic of each system, and any issues can be resolved by quickly reverting back to standard control. There were none in 2024.

Tesla says that it is utilizing AI to drive impact at its factories, and it has proven to be a valuable tool in reducing energy consumption at one of its facilities.

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Tesla analysts believe Musk and Trump feud will pass

Tesla CEO Elon Musk and U.S. President Donald Trump’s feud shall pass, several bulls say.

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The White House, Public domain, via Wikimedia Commons
President Donald J. Trump purchases a Tesla on the South Lawn, Tuesday, March 11, 2025. (Official White House Photo by Molly Riley)

Tesla analysts are breaking down the current feud between CEO Elon Musk and U.S. President Donald Trump, as the two continue to disagree on the “Big Beautiful Bill” and its impact on the country’s national debt.

Musk, who headed the Department of Government Efficiency (DOGE) under the Trump Administration, left his post in May. Soon thereafter, he and President Trump entered a very public and verbal disagreement, where things turned sour. They reconciled to an extent, and things seemed to be in the past.

However, the second disagreement between the two started on Monday, as Musk continued to push back on the “Big Beautiful Bill” that the Trump administration is attempting to sign into law. It would, by Musk’s estimation, increase spending and reverse the work DOGE did to trim the deficit.

President Trump has hinted that DOGE could be “the monster” that “eats Elon,” threatening to end the subsidies that SpaceX and Tesla receive. Musk has not been opposed to ending government subsidies for companies, including his own, as long as they are all abolished.

How Tesla could benefit from the ‘Big Beautiful Bill’ that axes EV subsidies

Despite this contentious back-and-forth between the two, analysts are sharing their opinions now, and a few of the more bullish Tesla observers are convinced that this feud will pass, Trump and Musk will resolve their differences as they have before, and things will return to normal.

ARK Invest’s Cathie Wood said this morning that the feud between Musk and Trump is another example of “this too shall pass:”

Additionally, Wedbush’s Dan Ives, in a note to investors this morning, said that the situation “will settle:”

“We believe this situation will settle and at the end of the day Musk needs Trump and Trump needs Musk given the AI Arms Race going on between the US and China. The jabs between Musk and Trump will continue as the Budget rolls through Congress but Tesla investors want Musk to focus on driving Tesla and stop this political angle…which has turned into a life of its own in a roller coaster ride since the November elections.”

Tesla shares are down about 5 percent at 3:10 p.m. on the East Coast.

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