Twin Transition Strategies in the Automotive Industry: The Case of Toyota Motor de México in the Era of Electromobility and Chinese Leadership

Keywords:

Abstract:

Introduction

The transformation of the global automotive industry is shaped by the convergence of two key processes: digitalization and the transition to electromobility, commonly referred to as the twin transition (Chen et al., 2023). In this context, China has established itself as a leader in battery and electric vehicle (EV) production, while traditional manufacturers such as Toyota have adopted differentiated strategies to remain competitive in this evolving landscape (IEA, 2023; BloombergNEF, 2023).

This paper analyzes the implementation of the twin transition strategy at Toyota Motor de México (TMM), highlighting its integration of digital technologies, its focus on lean manufacturing, and its hybrid approach to electromobility. This strategy is contrasted with China’s large-scale EV production model and its dominance in the battery value chain, assessing how these different approaches impact the global competitiveness of the automotive industry.

Methodological Approach

This study employs a mixed-method approach that combines:

 Literature and document review, including corporate reports (Toyota Global Environmental Report 2023), studies on twin transition, and analyses of electromobility policies (Coletti et al., 2024; Zechiel et al., 2024).

 In-depth interviews conducted in January 2025 with TMM executives, including the subsidiary’s president and key figures in technological innovation, electromobility, and human resources.

 Comparative strategy analysis, evaluating the differences between Toyota’s approach and China’s model in digital transformation and EV production.

Findings

a) Toyota’s Hybrid Transition Strategy

Toyota has opted for a gradual transition to electromobility, maintaining a strong presence in the hybrid vehicle segment before fully adopting EVs (Toyota Motor Corporation, 2023; van der Vooren et al., 2013). Unlike Chinese manufacturers, who prioritize large-scale EV production supported by government policies and economies of scale, Toyota has diversified its portfolio with investments in hydrogen fuel cells, solid-state batteries, and digitalized production processes.

This strategy aims to mitigate technological and regulatory risks, avoiding reliance on a single technology and ensuring flexibility in response to global demand shifts (Nishihara, 2010). In Mexico, TMM has adopted a gradual approach to production electrification, aligning with regional market conditions and charging infrastructure capabilities.

b) Digitalization and Lean Manufacturing at TMM

A key element of Toyota’s strategy is the integration of digital tools into its production processes. TMM has implemented:

Digital twins to simulate and optimize assembly lines (Dou et al., 2024; Zafar et al., 2024).

Industrial Internet of Things (IIoT) to monitor plant performance in real time and improve energy efficiency.

Artificial intelligence and data analytics for failure prediction and preventive maintenance.

This digitalization aligns with Toyota’s lean manufacturing principles, facilitating the integration of emerging technologies without disrupting operational stability (Liker & Meier, 2006). Unlike China’s highly automated approach, Toyota maintains a balance between automation and process optimization, ensuring active worker participation.

c) Impact on Work Organization

The twin transition has restructured TMM’s workforce. The development of digital skills and training in new technologies has been essential in ensuring workforce adaptability to production changes (Shim & Steers, 2012). Retraining programs have helped bridge skill gaps in electronics, software, and data analytics, which are critical in the electromobility era (Aoki & Staeblein, 2018).

In terms of supply chain management, Toyota has strengthened strategic alliances to secure access to critical materials and reduce dependence on Chinese suppliers. This contrasts with China’s centralized battery production, which gives its manufacturers significant competitive advantages (IEA, 2023).

Theoretical and Practical Implications

a) Implications for Automotive Industry Theory

This study contributes to the literature on digital transformation and sustainability in the automotive industry, illustrating how different global actors adapt twin transition strategies. While China pursues a vertically integrated approach, Toyota adopts a hybrid strategy with incremental improvements, suggesting that multiple pathways exist to achieve sustainability and digitalization in the sector.

b) Relevance for Industrial Policy and Business Management

The findings have key implications for:

Electromobility policies: Toyota’s experience suggests that a hybrid approach can facilitate the transition to EVs in markets where charging infrastructure is still developing.

Manufacturing management: The combination of digitalization and lean manufacturing can serve as a model for companies seeking to optimize production without full automation.

Global competitiveness: Supply chain decentralization and workforce training emerge as critical strategies for competing in an industry dominated by China’s supremacy in electromobility.

Concluding remarks

The transformation of the automotive industry is being driven by the convergence of digitalization and electromobility. The case of Toyota Motor de México demonstrates that through a hybrid strategy—combining hybrid vehicles, digitalization, and effective human capital management—it is possible to remain competitive in a market where China leads in EV and battery production.

The results suggest that traditional manufacturers can maintain competitiveness if they strategically integrate the twin transition, balancing automation with operational optimization. This analysis provides valuable insights for policymakers and industry leaders, offering a framework for adaptation in an evolving sector.

Keywords: Twin transition, Electromobility, Digital transformation, Lean manufacturing, Automotive industry, Toyota Motor de México.

Acknowledgments

We acknowledge funding from the DGAPA-PAPIIT Program at UNAM through project IN305525 "Impact of Electromobility on the Auto Parts Sector: Opportunities and Challenges."