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Toyota recently declared its proximity to mass manufacturing solid-state batteries, which are projected to revolutionize the electric vehicle (EV) industry. Such batteries may offer a staggering double the range of present electric cars.

The Japanese automaker has presented specifications that vehicles equipped with these batteries could possibly cover 745 miles on a mere 10-minute charge. If all goes as planned, these cars may hit the roads by 2027 or 2028.

The Promise of Solid-State Batteries

Solid-state batteries are being hailed as a game-changing technology with the potential to accelerate the transition of EVs into the mainstream. The standard driving range for electric vehicles fluctuates between models but usually caps around 300 miles. In contrast, Toyota’s new technology promises more than double this range.

However, these batteries are not without their challenges. According to Toyota, the assembly process is particularly tricky, where precise and swift stacking of cathode and anode cells is pivotal.

The revelation about Toyota’s advancements in solid-state battery technology was initially reported by the Financial Times. A Toyota engineer commented, “In terms of the stacking speed, we are almost there. We are going to roll out bigger volumes and check the quality.”

Collaborative Efforts and CEO Insights

Earlier this October, Koji Sato, Toyota’s CEO, unveiled the company’s collaboration with the prominent Japanese oil refiner, Idemitsu Kosan, to bring this project to fruition. “With repeated efforts involving trial and error, we have succeeded in developing a material that is more stable and less prone to crack,” Sato announced in Tokyo. He further emphasized the essential collaboration between the automobile and energy sectors, stating, “The future of mobility lies in the tie-up between the auto and energy sectors, including this innovation hailing from Japan.”

Addressing the Current EV Market

The announcement is timely, as EV sales in the U.S. have seen a recent decline. Auto industry analysts believe that the elevated price tag and restricted range of EVs are primary deterrents for American consumers.

Electric vehicles’ current average range stands close to 300 miles, as per a Bloomberg analysis from earlier this year. In comparison, 2021 model-year gasoline vehicles had a median range of about 405 miles, according to U.S. Department of Energy data.

The widely used liquid lithium-ion batteries have been the epicenter of criticism due to limited recyclability, dependency on lithium mining, and fire risks. Solid-state batteries, in contrast, present advantages like swifter charging times, superior capacity, extended lifespan, and potentially reducing EVs’ carbon footprint by nearly 25%.

Toyota has expressed that despite the inherent production challenges of solid-state batteries, they’ve achieved a pivotal technological stride, enabling mass production at comparable rates to conventional EV batteries.

With this venture, Toyota aims to reclaim its competitive edge against market giants like Tesla and formidable Chinese competitors like BYD. Yet, Sato admits initial production will be limited, stating, “I think the most important thing at the moment is to put out [the solid-state batteries] into the world, and we will consider expansion in volume from there.”

Other leading car manufacturers, including Nissan and Ford, are also deeply invested in solid-state battery research, hinting at an exciting future for the EV industry.

Now, for our fellow Muslim brothers and sisters, the answer to your most awaited question: is Toyota stock halal for us to invest in?

Halal Compliance of Toyota Stock

Toyota is a name that resonates globally in the automotive industry. Recognized for its quality, efficiency, and innovation, Toyota has cemented its position as a leading automobile manufacturer. However, when it comes to financial investment, particularly in the Islamic finance sector, companies are scrutinized based on Shariah compliance principles. This section provides a closer look at Toyota’s standing in relation to these principles.

Criteria for Shariah Compliance According to AAOIFI:

  1. Business Activity:
    • The source of a company’s income is pivotal in Shariah compliance assessment. To be deemed compliant, the combined value of revenue from Non-Halal and Doubtful sources should not surpass 5% of the total revenue.
  2. Interest-bearing Debt Relative to Market Capitalization:
    • Debt is another critical factor in determining compliance. A company’s interest-bearing debt, regardless of whether it is short-term or long-term, should not exceed 30% of its market capitalization.
  3. Interest-bearing Securities Relative to Market Capitalization:
    • A company’s holdings in interest-bearing securities and assets, whether short or long-term, must be kept below 30% of its market capitalization to adhere to Shariah principles.

Toyota’s Shariah Compliance Assessment:

  1. Business Activity:
    • Non-Halal Percentage: 7.94% (majority comes from financial services revenue)
      • As per the first criterion, Toyota does not comply since its non-halal business activity exceeds the 5% threshold.
  2. Interest-bearing Debt:
    • Debt Percentage: 101.55%
      • Toyota’s interest-bearing debt surpasses the 30% limit by a substantial margin, making it non-compliant as per the second criterion.
  3. Interest-bearing Securities and Assets:
    • Securities and Assets Percentage: 145.53%
      • Similarly, Toyota’s holdings in interest-bearing securities and assets far exceed the 30% limit, rendering it non-compliant as per the third criterion.

Given the figures provided, Toyota does not meet the required thresholds for Shariah compliance on any of the three primary criteria.

Consequently, from an Islamic finance perspective, Toyota is considered NOT HALAL.

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