Why Toyota – the world’s largest automaker – isn’t quite on electric vehicles

About two decades ago, Toyota Motor became the favorite automaker of American environmentalists and environmentally conscious consumers with its hybrid Prius, an “electrified” vehicle that was among the cleanest and most fuel-efficient vehicles around. never produced.

Amid rising gas prices, demand for the vehicle has grown and inspired other automakers to roll out a litany of hybrid models. Prius vehicles, including a plug-in hybrid electric model, remain among the most fuel-efficient gas-powered cars in America.

But as the auto industry transitions to a battery-powered future, the Japanese automaker has fallen out of favor with some of its former supporters due, ironically, to Prius and Toyota’s reluctance to invest in vehicles. all electric.

“The fact is that a hybrid today is not green technology. The Prius hybrid runs on a polluting combustion engine found in any gas-powered car,” wrote Katherine García, director of the Sierra Club’s Clean Transportation for All campaign. recent blog post.

Greenpeace last week ranked Toyota at the bottom of a study of the decarbonization efforts of 10 automakers, citing slow progress in its supply chain and sales of zero-emission vehicles such as electric vehicles that totaled less than 1% of its total sales.

While automakers like General Motors, Volkswagen AG and others have pledged billions of dollars in recent years to develop fully electric vehicles that don’t require gasoline engines like the Prius, Toyota has been stepping up to the plate. delay, only more recently announcing similar investments. It also continues to invest in a portfolio of “electrified” vehicles – ranging from traditional hybrids like the Prius to its recently launched but disappointing bZ4X electric crossover.

The strategy pitted the world’s biggest automaker against many of its rivals and raised questions about its commitment to following a sustainable path for the industry, despite the company’s goals to be carbon neutral by 2050.

Toyota is not alone in such plans. Stellantis, Ford and other Japanese automakers are similarly investing in electrified hybrid models. But in the hands of the patriarch of mainstream hybrid vehicles, a conservative approach to electric vehicles is remarkable.

Toyota executives, while increasing investment in all-electric vehicles, argue that the company’s strategy is justified – not all regions of the world will adopt electric vehicles at the same rate due to the high cost of vehicles as well than the lack of infrastructure, they say.

“As far as people want to talk about electric vehicles, the market is not mature enough and ready enough…to the level where we would need mass movement,” said Jack Hollis, executive vice president of sales at Toyota Motor North. America last month at a virtual meeting of the Automotive Press Association.

Hedging bets

In December, Toyota announced plans to invest 4 trillion yen, or about $35 billion, in a line of 30 battery-electric vehicles by 2030.. At the same time, it continues to invest in hybrids like the Prius and other potential alternatives to battery electric vehicles.

“We want to offer everyone the way they can contribute the most to solving climate change. And we know that answer is not to treat everyone the same,” said Gill Pratt, Toyota Chief Scientist and CEO of Toyota Research. Institute, at a media event last month in Michigan.

A few weeks ago, the company announced that it would spend up to $5.6 billion on hybrid and all-electric battery production in Japan and the United States to support its previously announced plans. That might sound like a lot, but it’s overshadowed by others like GM and VW.

GM, for example, has set a goal of exclusively offering zero-emission electric vehicles by 2035, including its Cadillac and Buick brands by 2030. Several other automakers have made similar vows or signed up. set goals for 50% or more of their vehicles sold in North America to be all-electric vehicles.

Toyota aims to sell 3.5 million electric vehicles a year by 2030, which would represent more than a third of its current sales. Those sales include about 1 million units of its luxury brand Lexus, which plans to exclusively offer electric vehicles in Europe, North America and China by then.

Toyota Motor Corporation cars are seen during a briefing on the company’s battery electric vehicle strategies in Tokyo, Japan, December 14, 2021.

Kim Kyung-hoon | Reuters

Paul Waatti, head of industry analysis at AutoPacific, believes Toyota is “definitely on the conservative side” when it comes to electric vehicles, but that’s not necessarily a bad thing for such a big automaker.

“I think they are hedging their bets,” he said. “From a global perspective, many markets are moving at different rates. The United States is slower than Europe and China in adopting electric vehicles, but there are other markets where there is no “There’s no infrastructure. Taking a varied approach to powertrains makes sense for an automaker world.”

In 2021, Toyota sold 10.5 million vehicles in around 200 countries and regions, more than any other global automaker, including those of subsidiaries Daihatsu Motors and Hino Motors. Volkswagen – the world’s second-largest automaker – sold 8.9 million vehicles in 153 countries, and GM and its joint ventures sold 6.3 million vehicles, mostly in North America and Asia.

One solution

Toyota believes all-electric vehicles are one solution, not the solution, for the company’s goal of becoming carbon neutral.

“In the distant future, I don’t invest assuming battery electrics are 100% of the market. I just don’t see it,” said Jim Adler, founding managing director of Toyota Ventures, the equity unit- car manufacturer’s risk. “It really will be a mixed market.”

Toyota executives expect different regions of the world to adopt electric vehicles at varying rates, largely depending on the available energy, infrastructure and raw materials needed for the batteries to power the vehicles.

2022 Toyota Mirai Hydrogen Fuel Cell Electric Vehicle


Beyond plug-in hybrids and electric vehicles, Toyota has invested heavily in hydrogen fuel cell electric vehicles, including a second generation of its Mirai.

Hydrogen fuel cell vehicles operate much like battery electric vehicles, but are powered by electricity generated from hydrogen and oxygen, with water vapor being the only by-product. They are filled with a nozzle almost as quickly as traditional gasoline and diesel vehicles.

“BEV, fuel cell, plug-in hybrids, all of these reduction tools are going to happen, and they’re all important,” Hollis said.

Yet fuel cell vehicles face the same challenges as all-electric vehicles: cost, lack of infrastructure, and consumer understanding.

Toyota said it is also studying e-fuels, which officials say are a climate-neutral fuel to replace gasoline in non-electric vehicles.

Costs and materials

And options in between tend to be cheaper.

For example, a 2022 Toyota Prius hybrid with an EPA rating of up to 56 mpg combined starts at around $25,000. That’s about $17,000 less than the automaker’s all-electric bZ4X crossover.

A 2023 Toyota bZ4X electric vehicle (EV) at the Washington Auto Show in Washington, DC on Friday, January 21, 2022.

Al-Draco | Bloomberg | Getty Images

Electric vehicle batteries are extremely expensive and prices continue to rise due to inflation and demand for materials such as lithium, cobalt and nickel needed to produce the battery cells.

Raw material costs for electric vehicles have more than doubled during the coronavirus pandemic, according to consultancy AlixPartners.

That makes Toyota’s hybrid strategy somewhat economical — relatively speaking. Toyota also argues that there just aren’t enough of these minerals for everyone.

“Over the next 10 years or so, there will be huge bottlenecks in lithium supply around the world,” Pratt said. “Just look at the number of mines that need to be built. There will also be a bottleneck in battery-grade nickel because the number of refineries that need to be paid for when demand is growing so rapidly.”

The Metals Co., a start-up in Canada, estimates that production of battery-grade nickel, cobalt and manganese sulfate is grossly insufficient to meet U.S. EV targets by 2030.

The listed mining company predicts that even if all nickel sulphate production planned through 2030 by the United States and free trade agreement countries were devoted to the production of electric vehicles, it would supply less 60% of the EV targets set by car manufacturers during this period.

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