Toyota, Subaru shares fall on ’embarrassing’ recall of first EVs

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© Reuters. FILE PHOTO: The Toyota logo is displayed on its booth during the Shanghai Auto Show media day in Shanghai, China, April 19, 2021.Reuters/Aly Song/File Photo/File Photo

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By Maki Shiraki and Satoshi Sugiyama

TOKYO (Reuters) – Toyota Auto (NYSE: ) shares fell after recalling its first mass-produced all-electric vehicles it unveiled two months ago, citing the risk of loose wheels, hampering its ambitions to electrify its model range.

Toyota, the world’s largest automaker by sales, said on Thursday it was recalling 2,700 bZ4X SUVs globally.

Subaru (OTC: ) Corp, in which Toyota owns nearly 20%, also said it would recall about 2,600 Solterra models.

The Solterra is Subaru’s first all-electric vehicle, co-developed with Toyota, with major components shared with the bZ4X.

The recall compounded problems for Toyota, which has been forced to cut production frequently this year due to a global chip shortage and other supply issues, and has faced investor pressure for its slow adoption of battery-electric vehicles (BEVs).

“It’s embarrassing,” said CLSA analyst Christopher Richter. “People have been waiting a long time for Toyota to launch a mass-market battery electric vehicle … and the recall happened just weeks after they brought it to market.”

But he added that “this is not an indictment of the new electric vehicle system” because the problem is a simple mechanical one and repairs are unlikely to be expensive.

Japan’s safety regulator said sharp turns and sudden braking could cause hub bolts to loosen, increasing the risk of wheels falling off. It said it was not aware that the flaw would cause any accidents.

An official from Japan’s transport ministry said the problem was discovered after Americans drove the cars. The official declined to be named due to the sensitivity of the matter.

Toyota has reported that one car in particular was handled roughly. “We don’t know who the driver was, but the driver drove the car hard,” the official said, adding that Toyota had identified the problem, which affected only a few vehicles.

Spokesmen for Toyota and Subaru said the companies have not yet decided how soon to fix the problem and go ahead with the rollout, for an undetermined cause.

Toyota said on Thursday that not every vehicle of the model needed a recall, but declined to say how many in total were produced.

Subaru shares, which fell nearly 5 percent on Friday, closed down 2.8 percent. Toyota shares closed down 0.7 percent.

Toyota, once beloved by environmentalists for its popular hybrid Prius model, has come under fire for failing to move quickly to phase out gasoline-powered cars and lobbying on climate policy.

The company has repeatedly countered criticism, arguing that it is necessary to offer a variety of powertrains to suit different markets and customers.

TOKYO (Reuters) – Japan changed a key policy document to signal its commitment to hybrid vehicles after a lawmaker quoted the Toyota chief as saying the automaker could not support the government’s refusal to reject technology promoted by the Prius, Reuters reported on Friday. Support is comparable to support for BEVs.

Gasoline-electric hybrids remain more popular than electric vehicles in Toyota’s home market, which accounted for just 1 percent of Japanese passenger car sales last year, according to industry data.

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