Subaru joins forces with Toyota for 3 electric SUVs, profits surge

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Subaru Electrifies Lineup with Toyota’s Help, Announces Soaring Profits

Subaru is hitting the gas pedal on electric vehicles (EVs) by teaming up with Toyota to develop three new electric SUVs by 2026. This strategic partnership aims to minimize risks in a rapidly evolving EV market while capitalizing on Subaru’s recent financial success.

Electric SUVs on the Horizon

While the Subaru Solterra, co-developed with Toyota, currently represents their sole EV offering, a significant expansion is on the horizon. Subaru plans to introduce three new electric SUVs by the end of 2026, followed by four more by 2028. To expedite development and reduce costs, the first three EVs will leverage Toyota’s expertise, similar to the Solterra’s relationship with the Toyota bZ4X.

However, Subaru acknowledges the potential for future in-house EV development depending on market demand.

Production Sharing and Flexibility

The upcoming electric SUVs will be produced strategically across continents. One will be built at Subaru’s Yajima plant in Japan, while another will be manufactured in the US by Toyota, making it eligible for valuable federal EV tax credits. This US-built model could be the rumored three-row electric crossover expected to roll off the production line in Kentucky by 2025, sporting both Toyota and Subaru badges.

Subaru CEO Atsushi Osaki emphasizes the benefits of collaboration: “Through this approach of joint development, joint production and joint supply, we will ensure flexibility in the areas of development and production while mitigating risks with Toyota Motor Corp. at a time when it is difficult to clearly predict future trends.”

Beyond EVs: Continued Focus on Hybrids

Subaru recognizes the importance of a diversified powertrain strategy. While EVs are a key focus, the company plans to introduce the next generation of its e-Boxer hybrid powertrain in fall 2024 for the Japanese market, followed by the US in 2026.

“We have steered toward EVs,” Osaki acknowledges, “but we find it important to sell internal combustion products at the same time. So, we already have plans to expand our hybrid product lineup.”

Forester Soars, Legacy Says Goodbye

The surging popularity of SUVs continues to reshape Subaru’s lineup. The iconic Legacy sedan has reached the end of its road after a successful 36-year run. Meanwhile, the Forester SUV is experiencing a sales boom, witnessing a 60% increase in the US during the first quarter of 2024 (48,546 units). This surge prompted Subaru to ramp up production capacity for the Forester at its Indiana plant.

Financial Windfall: Profits and Sales Rise

Subaru’s fiscal year ending March 2024 painted a bright financial picture. Operating profit soared by 75% year-over-year to a record-breaking 468.2 billion yen ($3.09 billion), surpassing 2016’s performance. Net income nearly doubled to 385.1 billion yen ($2.55 billion), and revenue jumped 25% to 4.70 trillion yen ($31.06 billion).

Global vehicle deliveries reached 976,000 units, reflecting a 15% increase. Sales in the US, Subaru’s most significant market, rose by 17% to 695,000 units, while Europe saw a 17% increase to 27,000 units. Beyond volume, a strategic sales mix focused on more profitable models further bolstered profits.

Subaru Teams Up With Toyota For 3 New Electric SUVs By 2026 | Carscoops

  • Subaru’s lineup will expand with 3 new EVs by 2026, and 4 more by 2028
  • First 3 new EVs will be developed by Toyota to reduce R&D costs amid EV slowdown
  • Subaru will also build next-gen e-Boxer hybrid powertrain in the fall of 2024

Favorable Exchange Rates Boost Exports

Favorable foreign exchange rates played a crucial role in Subaru’s financial performance. The Japanese yen’s 14% depreciation against the US dollar significantly benefitted the export-dependent automaker, making their vehicles more competitive internationally.

Looking Ahead: Cautious Optimism

While Subaru forecasts a slight increase in global sales to 980,000 units for the upcoming fiscal year, including 700,000 units in the US, operating and net income are expected to decline by 15% and 22% respectively. This projection factors in a potential yen recovery and increased R&D investments to fuel future growth.

Subaru’s strategic partnership with Toyota for electric vehicle development, coupled with their strong financial performance, positions the company for a smooth transition into the electric era while maintaining a focus on customer preferences for both EVs and hybrids.


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