What's going on?

Toyota said on Wednesday it�s expecting to make half a million fewer cars than planned this quarter, as the electric vehicle (EV) novice struggles to leave the good old days behind.

What does this mean?

It�s hard to be a carmaker these days: the chip shortage and rising cost of materials is still hindering production, and Toyota � which reported its quarterly results on Wednesday � is feeling the pain. The company reported a 6% drop in profit last quarter compared to the same time in 2020 � which, in fairness, was better than analysts were expecting.

But that�s where the good news ends: Toyota reckons chips will be in short supply for a while still, and admitted that it might hurt production in the future. In fact, the company reckons it�ll make as many as 480,000 fewer cars than planned this quarter. It�ll cut costs to offset some of that shortfall, sure, but�its profit outlook for its full financial year still missed expectations.

Why should I care?

Zooming in: Toyota�s late to the party.
Even with this drop-off in production, Toyota still managed to sell 10% more cars in 2021 than it did in 2020, earning it the title of the world�s biggest carmaker for the second-straight year. But it might struggle to hold onto that accolade: the company�s been slow to develop EVs, which last year made up just 1% of Toyota�s total sales even as sales of EVs themselves doubled in size. But it�s finally taking note: the carmaker announced in December that it�s planning to invest $35 billion into battery-powered EVs.

The bigger picture: Fool Europe once�
The chip shortage is crippling Japanese and European carmakers alike, which might be why the European Union (EU) announced this week that it�s planning to invest $50 billion into its chip industry by 2030 � part of a plan to quadruple chip production and double its share of the market in the same timeframe.