Because Toyota, the world’s largest automaker, isn’t all-in on electric vehicles

About two decades ago, Toyota Motor became the carmaker of choice for US environmentalists and eco-conscious consumers with its hybrid Prius, an “electrified” vehicle that was among the cleanest and most fuel-efficient vehicles ever produced.

Amid rising gas prices, demand for the vehicle has grown and has inspired other automakers to launch 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 shifts to a battery-powered future, the Japanese automaker has fallen out of favor with some of its once pivotal supporters due, ironically, the Prius and Toyota’s hesitation to invest in fully-fledged vehicles. electrical.

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

Greenpeace last week ranked Toyota at the bottom of a study on 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 overall sales.

While automakers like General Motors, Volkswagen and others have pledged to invest billions of dollars in recent years to develop all-electric vehicles that don’t require gas engines like the Prius, Toyota has lagged behind, only 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 electric crossover bZ4X.

The strategy pitted the world’s largest automaker against many of its rivals and raised doubts about its commitment to a sustainable path for the industry, despite the company’s goals of being 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 traditional hybrid vehicles, a conservative approach to electric vehicles is noteworthy.

Toyota executives, as they ramp up investment in all-electric vehicles, argue that the company’s strategy is justified: not all areas of the world will adopt electric vehicles at the same rate due to the high cost of vehicles and lack of infrastructure. , they claim.

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

Hedging bets

In December, Toyota announced plans to invest 4 trillion yen, or approximately $ 28 billion, in a range 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 provide each person with a way they can contribute more to resolving climate change. And we know that answer is not about treating everyone equally,” said Gill Pratt, Toyota chief scientist and CEO of the Toyota Research Institute, during a speech. media event last month in Michigan.

Weeks ago, the company announced it would allocate up to $ 5.6 billion for hybrid and all-electric battery manufacturing in Japan and the United States to support its previously announced plans. It may sound like a lot, but it’s dwarfed by others like GM and VW.

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

Toyota has a goal of selling 3.5 million electric vehicles per year by 2030, which would be more than a third of its current sales. Those sales include around 1 million units of its luxury brand Lexus, which plans to offer electric vehicles exclusively in Europe, North America and China by then.

Toyota Motor Corporation cars were unveiled at a company strategy briefing on battery electric vehicles in Tokyo, Japan on December 14, 2021.

Kim Kyung-hoon | Reuters

Paul Waatti, industry analytics manager 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 large automaker.

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

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

Only one solution

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

“In the distant future, I’m not investing on the assumption that battery-powered electricity represents 100% of the market. I just don’t see it,” said Jim Adler, founding chief executive of Toyota Ventures, the capital unit. of the car manufacturer’s risk. “It will really be a mixed market.”

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

2022 Toyota Mirai hydrogen powered fuel cell electric vehicle


In addition to hybrid and plug-in 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 ones, but are powered by electricity generated from hydrogen and oxygen, with water vapor being the only byproduct. They are filled with a nozzle almost as quickly as traditional gas and diesel vehicles.

“BEVs, fuel cells, plug-in hybrids, all those reduction tools are going to happen and they’re all important,” Hollis said.

However, fuel cell vehicles face the same challenges as fully electric vehicles: costs, lack of infrastructure and consumer understanding.

Toyota said it is also looking into electronic fuels, which officials say is a climate-neutral fuel to replace gasoline in non-electric vehicles.

Costs and materials

And the options in between tend to have lower prices.

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 cheaper than the automaker’s all-electric bZ4X crossover.

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

Al Drago | Bloomberg | Getty Images

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

According to consultancy AlixPartners, raw material costs for electric vehicles more than doubled during the coronavirus pandemic.

This makes Toyota’s hybrid strategy somewhat cheap, relatively speaking. Toyota also claims that there aren’t enough minerals of this type to go around.

“In 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 nickel because the number of refineries that need to be paid for when demand increases so fast.”

The Metals Co., a Canadian-based start-up, estimates that there is significantly insufficient production of nickel, cobalt and manganese sulfate for batteries to meet U.S. electric vehicle goals by 2030.

The publicly traded mining company predicts that even if all nickel sulfate production forecasts up to 2030 from the U.S. and FTA countries go into electric vehicle production, it would deliver less than 60% of vehicle targets. electrical set by the car manufacturers during that time frame.


Leave a Reply

%d bloggers like this: