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A Solid-State Future Could Be A Ticket To Ride For Toyota


Due to the increasing popularity of plug-in electric vehicles, traditional automobile manufacturers have struggled for both traction and relevance. One example is Toyota (NYSE:TM).

Toyota (TM) logo on the building of a dealership during daylight
Source: josefkubes / Shutterstock.com

Although legendary for its accessible and reliable cars, what consumers and investors think about the brand seems radically different. Since the second half of 2013, TM stock really hasn’t moved that much.

Despite frustrating spells of consolidation, Toyota may be due for a longer-term resurgence. For one thing, you can never count the automaker out. While it will probably never win on outright sex appeal, the company has developed a reputation for perfection via slow and steady progress.

True, in the modern paradigm of blitzing to the finish line, Toyota’s methodical approach may be maddening to most investors. However, when it comes to truly innovative technologies, the measure-twice, cut-once approach may be tremendously beneficial for TM stock.

This is particularly the case for the underlying company’s autonomous vehicle (AV) developments. Over the past few years, more than a few EV and combustion-engine automakers have made bold claims about AVs.

Some automotive enthusiasts worried that an autonomous future would take away the pure joys of driving oneself to whatever destination. However, the reality of creating genuine AVs have taken the wind out of these earlier prognostications.

Toyota hasn’t been deterred by these setbacks, pressing on with its AV ambitions and  focusing first on the most important aspect of autonomous driving: safety. Without that component, legal hurdles would prevent any AV platform from becoming mainstreamed. As such, Toyota is experimenting with an intelligent overriding mode to prevent drivers from making dangerous maneuvers.

Should that work, it can tackle other challenges on the road to true autonomy.

Solid-State Batteries Could Change the Game for TM Stock

What I like about Toyota’s approach is that it’s a more palatable and practical strategy than competitors’. Rather than forcing autonomy suddenly, the company is giving consumers gradual tastes of the benefits of automotive intelligence. From there, you build trust, which will make pure AV platforms less of a psychological hurdle.

It’s this type of smart thinking that has astute investors quietly buying up TM stock. Another factor that bodes well for the automaker is that it’s not subject to rampant enthusiasm. You probably aren’t going to see too many wild corrections like we witnessed in the technology sector recently. Therefore, Toyota is appropriate for those looking for a solid anchor for their portfolio.

But that’s not to say that TM stock is limited to a safe but boring investment. Quite the contrary, management recognizes the growing demand for EVs. And while other manufacturers have taken the spotlight in this arena, you don’t want to discount Toyota, not when it’s possibly on the cusp of delivering the holy grail of EV, the solid-state battery.

Unlike lithium-ion battles which utilize a liquid or polymer electrolyte, a solid-state battery, as the name suggests, incorporates a solid electrolyte. One of the key benefits to the solid-state design is that it’s much denser, allowing for high-capacity batteries with a smaller footprint relative to lithium-ion batteries.

In addition, current EV batteries have shorter lifespans, requiring frequent and lengthy charges. However, Toyota claims that it has developed prototype cells that can charge from zero to full in less than 15 minutes. Such an advance could end up disrupting the EV space, as current charging takes much longer than that.

Now, that’s not to say that you should buy TM stock simply on this claim. Toyota has multiple challenges to overcome, with one of the biggest being developing solid-state batteries in mass quantities. Still, the concept is no longer science fiction, making Toyota a worthwhile name to watch.

A Still Viable Vanguard Business

While EVs are all the craze these days, it’s important to realize that their takeover of the combustion-engine car will not happen overnight. Automakers continue to churn out “regular” cars because for them, the economics continue to make sense.

In that regard, Toyota is one of the top brands for consumers, especially during this crisis. Yes, people may continue to work from home a little while longer than many anticipated. But at some point, most of us will likely return to our regular routines. And that means cars will once again rule the road.

As well, Toyota represents one of the best value propositions for consumers. For what you’re paying, you’re getting quite a lot. In addition, consumers have the confidence of reliable performance, something that many other manufacturers lack. Thus, no matter where you turn, Toyota provides solid businesses that should move the needle forward for TM stock.

On the date of publication, neither Matthew McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/moneywire/2020/09/a-solid-state-future-could-be-a-ticket-to-ride-for-toyota/.

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