Toyota and Subaru decline in shares due to “embarrassing” recalls of the first electric cars

TOKYO (Reuters) – Shares of Toyota Motor Corporation (7203.T) fell after it recalled some of its first mass-electrified electric vehicles launched two months ago due to the risk of wheel slippage, a setback for it. Ambitions to electrify their model range.

Toyota, the world’s largest automaker by sales, said Thursday it will recall 2,700 BZ4X SUVs globally.

Subaru Corp (7270.T), in which Toyota holds nearly 20%, said it is recalling about 2,600 units of the Solterra, a connected model.

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Solterra, Subaru’s first all-electric vehicle, was jointly developed with Toyota and shares key components with the bZ4X.

The recall adds to problems at Toyota, which has had to cut production frequently this year due to global chip shortages and other supply issues, and is facing pressure from investors over its slow-moving embrace of battery electric vehicles (BEVs).

“It’s embarrassing,” said Christopher Richter, an analyst at CLSA. “People have waited so long for Toyota to get a battery electric car off a huge market…and a few weeks after it came on the market, there’s a recall.”

But, he added, it was “not a condemnation of the new electric vehicle system,” because the problem was simple mechanical and it was unlikely that it would be expensive to fix.

The Japanese safety regulator said sharp turns and sudden braking could cause the axle bolt to loosen, increasing the risk of a wheel slipping off the vehicle. She added that she was not aware of any accidents caused by the defect.

A Japanese Transportation Ministry official, who declined to be named due to the sensitivity of the matter, said the problem was discovered after people in the United States drove cars.

Toyota reports that one car, in particular, was handled rough. “We don’t know who the driver was, but the driver drove very hard,” the official said, adding that Toyota had found the problem, which affected a few cars.

Toyota and Subaru spokespeople said the companies haven’t decided yet when they can fix the problem and go ahead with it, because the cause has yet to be determined.

Toyota said Thursday that not all cars of that model have been recalled, but it declined to say how many cars it has built overall.

Shares of Subaru, which fell about 5% on Friday, closed down 2.8%. Toyota shares closed down 0.7%.

A favorite among environmentalists for its popular Prius hybrid model, Toyota has been criticized for not acting fast enough to phase out gasoline-powered cars and for putting pressure on climate policy.

The company has repeatedly countered criticism, arguing that a variety of engines must be offered to suit different markets and customers. Read more

Reuters reported on Friday that Japan changed a key policy document to show that its support for hybrid cars was on par with hybrid cars after a lawmaker cited Toyota’s chief as saying automakers cannot support a government that has rejected technology promoted by the Prius. Read more

Gasoline-electric hybrids are still more popular in Toyota’s domestic market than electric cars, which accounted for just 1% of passenger cars sold in Japan last year, based on industry data.

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Reporting by the Tokyo office; Editing by Sam Holmes and Bradley Perrett

Our Standards: Thomson Reuters Trust Principles.

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