Auto supplier Toyota Boshoku forecasts a robotaxi future

Toyota City, Japan — Imagine zipping down the highway of tomorrow in a self-driving pod car. You're on a long-haul, cross-country trip; you don't have time to stop for a restaurant.

With the push of a button, the meal is ordered. Before long, a drone catches up to your speeding vehicle. It hovers near a roof portal, and in comes a boxed lunch of club sandwiches.

This vision for meals on wheels is far out, but auto suppliers are conceptualizing, developing and gearing up to produce such products and technologies. In Japan, Toyota Boshoku Corp., one of the world's biggest auto suppliers, sees innovations such as this, and dozens of others, as a road to growth.

If conventional wisdom holds, the coming age of autonomous ride-sharing and robotaxis spells big challenges for automakers and parts suppliers alike. With more people hailing rides and being chauffeured around, fewer will be buying their own cars. Vehicle sales as we know them could shift into reverse.

In response, Toyota Boshoku, the main seating and interior systems supplier for Toyota Motor Corp., is thinking unconventionally. Rather than potentially losing business in the new era, it sees big gains.

"Our challenge is, how do we get in that pie, expand our business and still be a significant player?" Richard Chung, chief branding officer and chief for interior space for Boshoku's Interior Space Visioneering Center, told Automotive News. "We want to be known as the interior space creator in the mobility world."

The strategy banks on the assumption that the future is in fleets, where vehicle interiors will get beat up faster than they do today. Moreover, there will be surging demand for swappable, mix-and-match cabin layouts. And with interiors transforming into lounges, possibilities abound.

Toyota Boshoku thinks its global revenue could quadruple with this shift, Chung said.

Toyota Boshoku's gambit highlights how suppliers are thinking outside the box to cope in an industry under siege by fast-changing trends in electrification, connectivity and autonomous driving. At risk is not only the future of the megasupplier, but the future of Toyota Motor. As Toyota Boshoku's biggest shareholder, with a 31 percent stake, Toyota Motor — the world's biggest automaker — is relying on the parts maker to help the automaker transition.

This year, Toyota Boshoku previewed its vision for the way forward in the MX221 concept vehicle at CES in Las Vegas. The ride-hailing interior space demo envisions the world in 2030. The box-shaped four-wheeler is packed with some 50 innovations for tomorrow.

"These aren't all just dreams and concepts. They are all designed with the intent of migrating to a production vehicle," said Chung.

Some of the gadgetry could even debut soon in Toyota vehicles, ahead of the autonomous era. The proposals range from ultraviolet LED sanitizer lights and air curtains for better climate control, to a microwave power system for wireless electronics throughout the cabin.

The interior uses environmentally friendly cellulose nanofiber and kenaf board, and the seating is designed around a quick-swap modular system that can be adjusted to the passenger load.

There is a motion sickness mitigation system. And, of course, there is the drone delivery idea.

"Our theme for this one was 'diversatility,' " Chung said. "Diverse users with product versatility."

The MX221 gets its name from "Mobility Experience" and for being the first, or No. 1, concept shown in 2022. It draws from the full firepower of Toyota Group, a sprawling constellation of mammoth suppliers intertwined with the Japanese auto juggernaut.

Megasupplier Denso Corp. chips in technologies for reducing thermal energy loss. Aisin Corp., Toyota's transmission, chassis and brake giant, contributes systems for cabin sanitation and component replacement timing alerts. Toyoda Gosei Co., which specializes in sealant, trim and plastics, brings know-how for cabin air quality control and emergency safety. Lock and seat belt maker Tokai Rika Co. offers technologies for future vehicle entry and safety notifications.

But Toyota Boshoku contributes the lion's share of technologies and pulls them all together for the comprehensive cabin proposal.

Consolidation and economies of scale will be key to delivering the eye-watering investments in new technologies that are needed to be competitive in the industry's changing landscape.

But Toyota Group suppliers have a built-in support network.

"Overall, being a part of Toyota Group benefits auto suppliers, especially those that invest in newer technologies for electrification and autonomous driving," said Ryohei Nishio, an associate vice president and analyst for auto suppliers at Moody's Japan. "They closely collaborate with other Toyota Group companies on areas such as business transactions, joint ventures and cross-shareholding and secondment of management. The close collaboration also allows the auto suppliers to share the burden of high spending and upfront investment needs, improving cost efficiency and R&D capability."

Yet Japanese suppliers, especially those in a keiretsu group, are also chained to their main customers and that specific technology agenda, meaning they can fall behind global trends, notes Matteo Fini, vice president for automotive supply chain at IHS Markit.

In the cutting-edge fields of autonomy sensors, e-mobility hardware and connected vehicles, there are only two Japanese suppliers ranked among the top 10 worldwide, Fini says. Panasonic is in the top tier in sensors, while Panasonic and Denso are contenders in connected cars.

In mobility as a service, Japanese suppliers are held back by Japan's legislative foot-dragging on matters such as 5G network deployment and a narrow road network not well suited to the technology.

"The situation for them is not ideal," Fini said. "The advantage in these areas comes from your location and how much development goes on in the main countries you operate in."

The company was founded as textile maker Toyoda Boshoku Corp. in 1918 by Sakichi Toyoda, great-grandfather of Toyota Motor President Akio Toyoda. It changed the "d" in its corporate name to a "t" in 2004. Today, it ranks No. 27 on Automotive News' list of the top 100 global suppliers, with global sales of $9.33 billion in 2021.

Its new business plan counts on meeting growing demand for ride-hailing and robotaxi fleets. The strategy is partially modeled on the airline business. A carrier's jetliners last many years, but the seats and interiors of those planes are constantly refurbished or upgraded.

Think of a plane's upgrade for plusher seats, semiprivate premium-class pods, newly outfitted video displays or even nicer lavatories. Boshoku has been supplying interiors to the airline industry for years. In aerospace, Chung notes, a plane stays in operation for 25 years — getting a new interior every six years or so. Toyota Boshoku wants to transfer that model to fleets on the ground.

Ride-hailing and robotaxis will account for nearly 40 percent of the mobility market by 2030, when Level 3 and Level 4 automated driving become commonplace, Toyota Boshoku predicts. Owned or leased vehicles, by contrast, should make up about 30 percent of the market.

By 2050, it forecasts an even more dramatic shift, with Level 5 robotaxis making up 80 percent.

The outlook is a complete flip from the spread today. Ride-hailing accounts for a little more than 10 percent now, while robotaxis are still in development. Private vehicles hold almost 80 percent.

But futuristic fleet operators are already planning their first moves. Chinese ride-hailing giant Didi eyes 1 million robotaxis in 2030. In Texas, Toyota Motor and Aurora Innovation Inc. are testing an autonomous ride-hailing fleet.

Meanwhile, Cruise and Waymo have won permits to launch commercial autonomous vehicle services in California. Cruise said the approval makes it the first company offering a "driverless" commercial ride-hailing service — seen as a crucial step toward a future of robotaxis.

All this movement will spur automakers to make vehicles to fill those fleets. Those such as Kia Corp. are making such purpose-built vehicles a pillar of their future expansion plans.

"The economic model is shifting toward that," Chung said. "We are convinced that consumers will look for products or services that will give them more time saving, more convenience, more space, more privacy, more well-being and a better user experience."

By Chung's estimates, today's human taxi driver averages 35,000 miles a year, on eight-hour shifts. Level 4 autonomous robotaxis, however, could operate 20 hours a day, racking up as many as 87,000 miles a year — or about 522,000 miles over the robotaxi's anticipated six-year life span.

That equates to a lot of wear and tear. Says Chung: "They will probably need to change the interiors often because they will be used and abused."

Toyota Boshoku plans to drive volume by selling different sets of interiors for each vehicle, such as economy, economy plus, premium and bespoke. This will allow the operator to reconfigure the pod to the customer needs of the day.

That volume would come on top of regular maintenance and replacement of parts.

Simply put, Boshoku sees a brighter future in pod cars, thanks to rapid turnover.

"Today, over the lifetime of a vehicle, you're just stuck with one set and just use it until the end of the life cycle. In this case, you can have different retrofits," Chung said.

"For us, revenue will increase because for every car, we're going to sell at least four different modules plus the replacements," Chung said. "We want to create new demand."

Being tethered to Toyota Motor has its benefits in a guaranteed revenue stream.

But Toyota Boshoku gets a lopsided 90 percent of its revenue from Toyota. It wagers that if it can take the lead in interiors for future mobility, it can expand its customer base beyond Toyota Motor to other automakers and fleet purveyors.

A diversified sales base won't just benefit Toyota Boshoku; it will help Toyota Motor by giving it a stronger supplier network.

"We want to be a company that grows even further, even with new customers or new segments," Chung said. "We want to be a company that determines its own destiny."