Thursday, December 1, 2022
HomeEconomyToyota, Prius Hybrid Pioneer, Struggles to Adopt Electrics

Toyota, Prius Hybrid Pioneer, Struggles to Adopt Electrics


- Advertisement -

Five months after Toyota started selling its first all-electric car to compete directly with Tesla, almost none of them are seen on the road.

The launch of the bZ4X sports utility vehicle was intended as a game-changer for the world’s largest automaker by sales. Its first mass-produced electric vehicle (EV) was Toyota’s response to investor criticism over its delay in embracing the industry’s transition to electric.

- Advertisement -

Instead, the long-awaited debut was marred by a humiliating global recall due to security issues and supply chain delays caused by the coronavirus pandemic. With the launch of the bZ4X recently resuming, Toyota has spent much of the year on the defensive and under scrutiny for its lobbying against rules aimed at encouraging a switch to electric vehicles.

“Toyota is not responding correctly to market calls to lead in electric vehicles. Toyota needs to demonstrate its leadership, otherwise it could not only mislead its green initiatives, but also lose investor confidence,” said Satoru Aoyama, managing director at Fitch. ratings.

- Advertisement -

For many years, Toyota has been able to easily cope in its fleet with the emission limits set by regulators in Europe, the US and China, thanks in large part to its popular Prius-led hybrid lineup.

However, tougher rules in major markets require it to sell a significant number of battery-only models over the next few years, or risk steep fines. It is also being forced to rethink its old strategy of focusing on hybrids as the least polluting answer in the transition to EVs.

In Europe, where the vast majority of Toyotas sold are hybrids, the company will have to move on to selling zero-emission models by 2035 and, in some cases, by the end of this decade.

In North America, the group’s biggest market, company president Akio Toyoda recently said meeting a proposed US target of half of EV sales by 2030 would be “very difficult.”

For now, however, the pace is good. Despite supply chain disruptions, Toyota posted a record net profit of 2.8 trillion yen ($19.7 billion) for the year ended in March, up 27% from to the previous year. Its shares are up 43% over the past five years, compared with a 10% drop at Volkswagen and a 28% drop at General Motors. The company sold 6.2 million vehicles in the year to the end of August, 28% of which were hybrids.

Japan’s biggest automaker has long argued that a quick and forced switch to electric vehicles will increase emissions due to the massive boost needed in production. Hybrids, which run on a modest battery and a small gasoline engine, provide a much cleaner interim solution, he says.

Toyota’s chief scientist Gill Pratt told a Financial Times summit this year that targeting the industry exclusively towards electric cars that rely on large batteries “is not a good idea if the goal is to keep CO2 emissions as low as possible.” around the world”, and that EVs “are not the only answer”.

To guard against the risk of being left out of a revolution and losing its decades-old reputation as a pioneer in green technology thanks to the Prius, Toyota in December pledged to invest $35 billion in switching to electric vehicles by 2030 and to manufacture 3.5 million. them by the end of the decade.

When Toyota launched the bZ4X five months later, it came with an unimpressive goal of only delivering 5,000 of them to its home market in the first year, and a very unusual business model. In Japan, the car is not being sold to consumers, but rented, which means that the vehicles will be returned to the company after the contract expires, for a maximum of ten years.

Industry executives say this subscription model should reduce the risks and costs of electric vehicles for both the automaker and the consumer, as well as extend the life of batteries and the precious metals vital to making them.

Pratt said at the FT summit that the automaker is “very concerned in the medium term that [a indústria] suffers from a lack of materials for the supply of batteries”.

“What Toyota wants is to retain the batteries,” said a former company executive. “Batteries are often close to zero after a decade, but Toyota wants to collect the ones that still have 70% to 80% of their capacity left after the first use and reuse them.”

From Toyota’s perspective, a big benefit of leasing rather than selling EVs is that it allows the company to keep more lithium and other rare earth metals in Japan, building on the lesson it learned from the Prius launch in 1997.

Old Prius models are now found everywhere from Wales to Mongolia, while used Nissan Leaf electrics have made their way to Russia and New Zealand. Nissan has also revealed plans to allow Japanese drivers to rent their EVs, rather than buy them.

Sanshiro Fukao, a senior fellow at the Itochu Research Institute, said battery retention has become a strategic imperative. “Toyota hopes that the leasing model will allow it to maintain control of the batteries and eliminate any source of external flow, as a lack of battery materials could threaten business continuity.”

For customers, another concern with EVs is whether the batteries will degrade over time and whether the EVs will retain their value when it comes time to sell and buy a new one.

These factors and the lack of charging infrastructure mean that in Japan, the world’s third-largest automotive market, electric vehicles accounted for just 1% of car sales last year, compared with 26% in Germany, 16% in China and 4.6% in the United States, according to the International Energy Agency.

“The Japanese automotive market is still heavily focused on hybrids, while the international market is rapidly migrating to electrics,” said Sandra Roling, head of transport at the NGO Climate Group. “Not participating in this shift puts Japanese industry at a serious disadvantage.”

Hiroyoshi Ninoyu, president of Toyota’s auto parts supplier Tokai Rika, said a subscription service is a way for the company to demonstrate the merits of electric vehicles to Japanese consumers, but expressed doubts that leasing takes root in a country where consumers are used to owning vehicles.

Takaki Nakanishi, a veteran automotive analyst who runs his own research group, said Toyota needs to experiment with a rental service to find a profit-generating business model for electric vehicles.

“Nobody currently enjoys the economic benefits of electric vehicles,” said Nakanishi, citing the high cost of batteries for automakers as well as the various obstacles faced by consumers buying and using electric vehicles. Ford, for example, said the Mustang Mach-E costs $25,000 more to produce than an equivalent gas-powered Edge SUV.

“That’s why Toyota wants to test a new business model that changes people’s behavior and the way the industry makes money from electric cars. But to do that test, Toyota needs batteries to come back from consumers, and a model signature allows this.”

But first Toyota needs to deliver its electric vehicles. In June, the company warned that the bZ4X’s wheels could fall off because of bolt problems. He later discovered a fault with the car’s airbags. As of this month, it will start producing the vehicles again, correcting the flaws.

“The recall was a big setback for Toyota,” said Nakanishi. “The company has a challenge when it comes to electric vehicles. It was very arrogant to think that it could easily succeed with EVs because it did with hybrids.”

Translated by Luiz Roberto M. Gonçalves

- Advertisement -

Related articles


Please enter your comment!
Please enter your name here

Stay Connected


Latest posts