Japanese automakers Toyota and Honda have said they plan to cut costs to free up cash for electric cars.
In order to free up cash for the development of electric cars and ride-sharing services, Toyota and Honda have pledged cost reduction.
Reuters reports that both automakers said that higher costs to develop new technologies like connected cars, has been ramping up pressure to generate savings wherever possible.
Toyota CFO Koji Kobayashi told Reuters reporters that mounting investment required for new technologies and other R&D costs was making cost-cutting efforts more challenging and that they ‘need to work to find new ways to reduce costs this week.’
Honda CEO Takahiro Hachigo said that they would cut the number of car model variations to a third of current offerings by 2025 in order to try and reduce global production costs by 10%. This would help to redirect those servings towards advancing research and development.
According to Reuters competition due to ride-sharing technology and the race to develop self-driving cars may have caused rapid and costly disruption to the auto industry.
Toyota President Akio Toyoda said, ‘From here on will be an age in which the difference between victory and defeat will be decided by the last one mile, which will be our contact point with customers.’
‘Merely depending on the business model of the past will not lead to the future,’ concluded Toyoda.