Toyota Motor Corp. fell to 10th place from second last year in a ranking of automakers' ability to cope with future business risks, a Swiss business school said Tuesday, underscoring Toyota's slower shift to electric vehicles than its U.S. and Chinese rivals.
The annual ranking that measures "future readiness" for automakers was made based on such factors as innovation, business diversity and financial health, according to the International Institute for Management Development.
Toyota's fall comes at a time when a growing number of countries are tightening regulations on gasoline-powered vehicles. As demand for EVs rises as a viable option to reduce carbon footprint, competition to procure batteries and chips has also intensified.
U.S. EV giant Tesla Inc. topped the ranking, unchanged from last year, fending off pressure from Chinse rivals and continuing to grow revenue, IMD said.
Chinese automaker BYD Co. rose to second place from fifth, replacing Toyota. Its abilities to produce batteries and chips in-house are "making it completely self-sufficient," IMD said.
Other Chinese car manufacturers also saw a sharp rise in the rankings, with XPeng Inc. climbing to sixth place from twelfth and Li Auto Inc. seventh from 14th. Germany's Volkswagen AG remained in third.
Toyota, the developer of the world's first mass-produced hybrid vehicle Prius, has in recent months moved to strengthen its all-electric vehicle business under new president Koji Sato, aiming to launch a next-generation EV in 2026.
But it has also said it will stick to its strategy to continue offering a wide variety of products, including hybrid cars and fuel cell vehicles, explaining that different markets need different types of cars to better reduce carbon emissions.
"Fundamentally, even in 2023, Toyota is extremely strong in absolute terms," Howard Yu, director of the IMD Center for Future Readiness, said in an online interview.
"What I worry about is transition. (The question is) whether Toyota can scale these new capabilities ahead of the competition," he said, referring to the Japanese automaker's attempt to popularize FCVs and develop self-driving cars.
Among other Japanese automakers, Honda Motor Co. came 14th, Nissan Motor Co. 20th and Suzuki Motor Corp. 21st.