Toyota uncertain about Japan’s push for electrification
Representing the Japan Automobile Manufacturers Association, Akio Toyoda, Toyota’s president and grandson of the company’s founder, expressed his concerns over the Japanese Government’s intentions to ban the sale of ICE vehicles by 2035. A genuine concern or Japanese conservativism?
In the past, Toyota has been careful to diversify its new energy implementations and has preferred to slowly ease its customers into hybrid. Trailblazer models, such as Prius were, above all, reasonable cars that combined sustainability with practicality and affordability. If the Californian liberal elite massively decided to adopt Prius over a decade ago, it was their decision, but certainly not part of Toyota’s sales strategy.
Toyota has tried to achieve a similar “easing into” strategy with hydrogen vehicles, again by building a non-futuristic and relatively affordable Mirai. The OEM has often expressed doubts about a massive transition towards electric: in 2019, then Toyota’s R&D VP explained that the car maker was uncertain about the global capability to build sufficient battery capacity for massive electrification, adding that selling gas-electric hybrid cars would demonstrate a better environmental impact than building EVs, while also providing its customers with more practical vehicles (because of no range or charging anxieties) at more affordable prices.
Toyota’s journey until now is one of petrol to hybrid to fuel cell, at least until the Japanese Government’s radical decision to fully ignore the OEM’s strategy and push for electric. It’s therefore not surprising for Akio Toyoda to remind its government of a few loopholes in the policy.
Toyoda was unusually tough: “The more EVs we build, the worse carbon dioxide gets…When politicians are out there saying, ‘Let’s get rid of all cars using gasoline,’ do they understand this?”
He is obviously referring to battery production and disposal, as well as the complex supply chain required to build EVs, but most importantly, he’s referring to electricity production in a country that has encountered massive problems compensating for nuclear energy since Fukushima.
In addition, Toyota understands that a transition to EV and the inevitable higher pricing of EVs (at least in the short term) would not work in the many emerging markets where the brand is extremely popular (LATAM, Asia, Africa).
Toyota’s president’s comments make sense but are also anchored in a Japanese culture that doesn’t embrace radical change. He didn’t comment on the timeline either: the Government is giving OEMs 15 years to change, during which industry will have multiple opportunities to evolve the status quo and even create additional opportunities, especially important for a country looking for an economic renaissance. Akio Toyoda knows this, and his company has already budgeted $13 billion for electrification. But he would certainly have preferred that the Japanese Government would refrain from bold statements nonetheless…