Toyota cuts Denso stake to expand in EVs

Toyota Motor Corp (LON: TYT) and two of its affiliates plan on trimming their stakes in Denso Corp. Shares of globally the top-selling automaker are up 2.0% at writing.

Toyota will remain the largest shareholders of Denso

Together with Toyota Industries and Aisin – the automotive giant will unload about 256 million shares of Denso in total worth some $4.0 billion at their previous closing price.

Toyota, nonetheless, will remain the biggest shareholder of Denso that currently carries the crown of world’s second-largest maker of automotive components. According to James Hong – the Head of Mobility Research at Macquarie:

We know it’s going to free up some of the capital being locked within the Toyota balance sheet. What’s important is how they’re going to utilize this freed- up capital going forward.

Toyota shares are currently up more than 40% for the year.

Watch here: https://www.youtube.com/embed/D2UubLEdhzE?feature=oembed

Toyota may use the capital to accelerate its EV push

Toyota Motor will likely use the capital to accelerate production of electric vehicles, as per Reuters that first reported its plans of a share sale. The Japanese automaker is aiming for EVs with 1,000 kilometers of driving range (find out more).

Today’s news reiterates that Toyota wants to minimise its cross-shareholdings which many investors believe are a headwind for overall returns.  

Earlier in November, the car manufacturer said strong demand for hybrid vehicles pushed its quarterly profit up over 100% as it raised guidance for the future.

Elon Musk dismissed hybrid vehicles as a "phase" while Toyota doubled down on them. Now they’re a "smoking-hot market" as EV demand chills. https://t.co/c4esSN0zZH

— FORTUNE (@FortuneMagazine) November 27, 2023

On Wednesday, the automotive components maker also said that it will repurchase roughly half of the shares being sold to reduce the impact of the move.

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