About two decades ago, Toyota’s Prius hybrid made the Japanese automaker a favorite among environmentalists and eco-conscious consumers. Back then, the Prius was among the cleanest and most fuel-efficient vehicles ever made. But as the auto industry moves to a battery-powered future, the Japanese automaker is still hesitant to invest in electric vehicles.
Car manufacturers such as General Motors, Volkswagen and others have committed to investing billions of dollars in recent years to develop electric vehicles that do not require gas engines like the Prius. Meanwhile, Toyota has lagged behind, only recently announcing similar investments, while at the same time continuing to invest in a portfolio of “electrified” vehicles – from traditional hybrids like the Prius to the recently launched bZ4X electric crossover.
“The fact is: hybrid is not a green technology todayThe hybrid Rios runs on a combustion engine that emits pollutants, which are found in every gas-powered car,” Catherine Garcia, director of the Sierra Club’s “Clean Transportation for All” campaign, a long-standing environmental organization in the US, wrote in the post. Last week, the environmental group Greenpeace ranked Toyota at the bottom of a list of 10 automakers making the greatest efforts to abandon the use of pollutants, citing slow progress in its supply chain and sales of zero-emission vehicles, such as electric vehicles, which amounted to less than 1% of all its sales.
Toyota Prius. The company’s flagship hybrid / Photo: Reuters, Wei ta
Not everyone is treated the same
Toyota executives, while increasing investments in electric vehicles, justify the company’s hesitant strategy by claiming that not all regions of the world will adopt electric vehicles at the same rate, due to the high cost of the vehicles and a lack of infrastructure. “As much as people want to talk about electric vehicles, the market is not mature enough and ready enough,” said Jack Hollis, senior vice president of sales at Toyota North America, last month during a virtual meeting of the Automotive Press Association. Toyota executives believe that different markets in the world will adopt electric vehicles at varying rates, mainly depending on the available energy, the infrastructure and the raw materials needed to produce batteries.
In December, Toyota announced plans to invest 4 trillion yen, about $28 billion, in a lineup of 30 battery-powered electric vehicles that will be available by 2030. At the same time, as mentioned, it continues to invest in hybrids like the Prius and other potential alternatives to electric vehicles. The company recently announced it will invest up to $5.6 billion in hybrid and electric battery production in Japan and the U.S. to help with previously announced plans — an amount dwarfed by other automakers such as GM and VW.
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General Motors, for example, has set a goal of making its vehicle fleet fully electric and zero-emissions by 2035, including the Cadillac and Buick brands, by 2030. Several other automakers have announced similar commitments, or set goals for 50% or more of their vehicle stock In North America it will be electric.
Toyota, however, has set a goal of selling 3.5 million electric vehicles a year by 2030, which is more than a third of its current sales. These sales include about one million units of the Lexus luxury brand, which are planned to be sold in the European, North American and Chinese car markets. “We want to provide everyone with the way they can contribute the most to solving climate change. And we know the answer is not to treat everyone the same,” said Gil Pratt, Toyota’s chief scientist and CEO of the Toyota Research Institute, during a well-publicized event last month in Michigan.
Not the only solution
In 2021, Toyota sold 10.5 million vehicles in about 200 countries and regions, more than any other global car manufacturer. Volkswagen – the world’s second largest carmaker – 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.
Toyota believes that electric vehicles are not the only solution to achieving the company’s goal of producing non-polluting vehicles. “Looking into the distant future, I’m not investing on the assumption that electric vehicles are 100% of the market. I just don’t see it,” Jim Adler, founding director of Toyota Ventures, the automaker’s venture capital unit, told CNBC. “It will really be a mixed market.”
Beyond hybrid and plug-in electric vehicles, Toyota has invested heavily in vehicles that run on hydrogen fuel cells, including the second generation of its Mirai model. Hydrogen fuel cell vehicles operate similarly to battery electric vehicles, but are powered by electricity produced from hydrogen and oxygen, with water vapor as the only byproduct. They fill up with a nozzle almost as quickly as traditional petrol and diesel vehicles. Still, fuel cell vehicles still face the same challenges as electric vehicles: costs, missing infrastructure, and consumer behavior. Toyota said it is also looking into electronic fuels, which experts say is a climate-neutral fuel that will replace traditional fuel in non-electric vehicles.
Toyota’s hybrid strategy is cost-effective, relatively speaking, as mid-range solutions tend to come with lower price tags. For example, the 2022 Toyota Prius Hybrid starts at about $25,000. That’s about $17,000 less than the price of the automaker’s bZ4X electric crossover.
High costs and lack of resources
The reasons for this are the high costs of the batteries in very expensive electric vehicles, which continue to rise due to inflation and the demand for materials such as lithium, cobalt and nickel, which are needed to manufacture the battery cells. According to the consulting company AlixPartners, the costs of raw materials for electric vehicles more than doubled during the Corona epidemic.
In addition, Toyota claims that there simply aren’t enough resources to start a move to move to 100% electric vehicles. “Over the next 10 years or so, there will be massive lithium supply bottlenecks around the world,” Gil Pratt said. “Just look at the number of mines that need to be passed. There will also be a bottleneck in the supply of nickel for batteries, because of the number of refineries that do not meet the demand that is rising so quickly.” Experts estimate that there is not enough significant production of nickel, cobalt and manganese sulfide to reach the automakers’ goals regarding electric vehicles in the US by 2030.