Otis Singleton
Despite being the world's largest automaker, Toyota has been conspicuously slow to develop and sell electric vehicles (EVs). The company has long favoured hybrid and hydrogen fuel-cell vehicles, citing their environmental benefits, affordability, and practicality for customers. However, with competitors racing to introduce EVs and consumer demand increasing, Toyota has recently signalled a shift in strategy, committing to introduce more battery-electric vehicles (BEVs) to the market.
| Characteristics | Values |
|---|---|
| Focus on hydrogen | Toyota has invested more in hydrogen tech than in developing EVs |
| Grid resilience concerns | Integrating a large number of EVs into the grid can cause fluctuations in charging patterns and strain the grid |
| Battery production | Japan doesn't have the resources required for mass battery production |
| Demand | Toyota has suggested it will build more EVs if demand increases |
| Hybrids | Toyota believes hybrids are a better bridge between internal-combustion vehicles and hydrogen fuel-cell vehicles |
| Environmental impact | Toyota's gas-electric hybrid cars have a more positive environmental impact than selling fewer EVs |
| Battery sourcing | Toyota has found that nickel-metal hydride cells are cheaper than lithium-ion units and less susceptible to degradation |
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What You'll Learn
Toyota's focus on hydrogen and hybrid vehicles
Toyota's emphasis on hydrogen is influenced by Japan's expertise in hydrogen technology and its desire for resource independence. Japan lacks the resources for mass battery production, which would require reliance on other countries. Therefore, investing in hydrogen fuel-cell vehicles presents a more geopolitically viable option for the company and the country.
Additionally, Toyota's hybrid vehicles provide customers with practical and affordable options. These cars alleviate range and charging anxieties associated with pure electric vehicles, offering higher fuel economy and lower running costs. The company's nickel-metal hydride battery technology, used in some models, is also cheaper than lithium-ion alternatives.
While Toyota has historically been less aggressive in pursuing electric vehicles, the company is not anti-EV. It has acknowledged the growing demand for electrification and has committed to introducing more battery-electric vehicles (BEVs) to meet consumer needs. By 2025, Toyota aims for 50% of its total US sales to be electrified, and by 2030, it projects that 70% of its vehicles will be electrified, with BEVs making up 15% of its lineup.
Toyota's strategy reflects a nuanced approach to the automotive industry's transition towards electrification. The company is leveraging its resources, capital, and manufacturing scale to offer a diverse range of options, including hybrids, plug-in hybrids, efficient gas engines, and hydrogen fuel-cell vehicles, gradually increasing its focus on BEVs as the market evolves.
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Geopolitical issues with battery production
The demand for battery raw materials has surged in recent years, primarily due to the expansion of electric vehicles (EVs) and the increasing need for energy storage solutions. This has led to rising costs, production delays, and geopolitical challenges.
One of the critical geopolitical issues is the concentration of raw material production in specific countries, leading to potential supply chain vulnerabilities. China currently dominates the global supply of graphite, producing nearly 50% of synthetic graphite and 70% of flake graphite. China also has significant processing capabilities for graphite, lithium, cobalt, and nickel. This makes battery manufacturers highly dependent on China's supply chain, which can be affected by the country's trade policies, export restrictions, and geopolitical risks.
Another geopolitical issue is the concentration of cobalt production in the Democratic Republic of Congo (DRC), which presents ethical and geopolitical challenges. The type of labour used in cobalt production in the DRC has been a concern for many companies, and some have sent representatives to the country to ensure decent production standards.
To address these geopolitical challenges, companies have been advised to diversify their supply chains by establishing battery plants in other regions, such as North America, Europe, and other Asian countries like India and Indonesia. The United States, for example, is taking steps to boost domestic battery production and reduce reliance on China through initiatives like the Inflation Reduction Act (IRA), which provides funding for clean energy initiatives, including domestic mining and battery manufacturing.
Additionally, international shipping tensions, such as those in the Middle East, can impact the transportation of batteries and EV components. Geopolitical tensions with Russia, a major nickel producer, have also made it challenging for Western companies to rely on Russian nickel, further complicating the supply chain dynamics.
To navigate these complexities, a multifaceted approach is necessary, including diversification, recycling, innovation, and robust policy support. By addressing these geopolitical issues, companies can ensure a more stable and sustainable supply of batteries and EV components, mitigating the risks associated with concentrated supply chains and international tensions.
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Grid resilience concerns
Toyota has been criticised for its lack of electric vehicles (EVs) and its focus on hybrid cars. However, Toyota has stated that it is not anti-EV and will build more EVs if there is sufficient demand. In fact, Toyota has found that its customers are more open to the idea of hybrid cars than fully electric ones. This is because hybrids alleviate "range or charging anxieties" and are more affordable.
Toyota has also expressed concerns about grid resilience. Integrating a large number of EVs into the grid can cause fluctuations in charging patterns, potentially straining the grid and leading to blackouts. Upgrading the grid to accommodate these fluctuations will require significant investments. While some parts of Europe and Asia have more advanced grids due to higher EV consumer demand, they are still not sufficient to support a widespread transition to electric vehicles.
Toyota's focus on hybrids is also influenced by its commitment to hydrogen fuel-cell technology. Japan, where Toyota is based, does not have the resources required for mass battery production and would need to rely on other countries, which is a geopolitical issue. In contrast, Japan has mastered hydrogen technology and believes in its potential, despite the current lack of widespread adoption.
Toyota has also suggested that it has found a breakthrough in solid-state battery technology, which could revolutionize the EV industry. However, details about this technology remain scarce.
In summary, while Toyota has been criticised for its lack of EVs, the company maintains that it is committed to exploring EV options and addressing the challenges associated with grid resilience and battery technology.
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Lack of consumer demand
Toyota has stated that it is not anti-EV, but its focus has been more on hydrogen and hybrids. The company has suggested that it will build more EVs if consumer demand exists. In 2019, Toyota executives stated that there was "no demand" for EVs from their US customers.
Toyota's strategy has been to offer a range of choices, including efficient new gas engines, hybrids, plug-in hybrids, and hydrogen fuel-cell vehicles. The company believes that hybrids provide a better bridge between internal-combustion vehicles and hydrogen fuel-cell vehicles. This strategy has paid off, particularly with customers who are not yet ready to switch to fully electric vehicles.
While Toyota has not been proactive in developing EVs, the company is not completely opposed to the technology. It has indicated plans for electrics, which would involve collaborations with other automakers such as Mazda. Additionally, Toyota has made some investments in EV technology, such as its collaboration with Tesla on the Toyota RAV4 EV in the 1990s.
Toyota's approach seems to be driven by a desire to provide practical and affordable vehicles to its customers. The company also considers the environmental impact of its products, believing that selling more gas-electric hybrid cars generates a more positive impact than selling fewer EVs. This stance is supported by the fact that EVs require batteries, which have their own environmental and production costs.
However, consumer demand for EVs is growing, and Toyota is responding to this shift in the market. The company has set targets for electrification, aiming for 50% of its total US sales to be electrified in some way by 2025. By 2030, Toyota expects 70% of its vehicles to be electrified, with battery-electric models making up 15% of its lineup. This reflects a global trend towards electrification, with other automakers also investing in EV technology and infrastructure.
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Toyota's plans for future electric vehicles
Toyota has been hesitant to embrace electric vehicles (EVs) fully, instead focusing on hydrogen technology and hybrids. However, the company has shared its vision for future mobility, which includes a range of electrified vehicles, including battery EVs, plug-in hybrids, fuel cell electric vehicles, and hybrid electric vehicles.
Toyota's former CEO, Akio Toyoda, believed that battery electric vehicles (BEVs) were not the final answer to the automotive industry's sustainability goals. He proposed a multi-pathway approach that doesn't rely solely on BEVs but also utilizes other models such as internal combustion engines, hybrids, and hydrogen drivetrains. According to Toyoda, these other models would account for 70% of the market, while BEVs would remain at 30%.
Toyota's current CEO, Koji Sato, has advanced the company's electrification strategy while still prioritizing hydrogen and hybrid vehicles. The company aims to increase the number of plug-in hybrid vehicle options, positioning them as "practical Battery EVs" and expanding sales of hybrid vehicles. In 2026, Toyota plans to release its next-generation BEVs, which will offer increased driving range, improved design, and enhanced driving performance.
Toyota is also investing in the development of fuel cell electric vehicles (FCEVs), leveraging the lightweight energy source of hydrogen to increase cruising ranges without the weight and space constraints of BEVs. Additionally, Toyota is working towards carbon neutrality by 2035 in West Europe, with plans for 100% CO2 reduction in all new vehicle sales. The company has already reached milestones in hybrid electric vehicle sales, passing 15 million global sales in 2020.
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Frequently asked questions
Toyota has long said that it believes hybrids are a better bridge between internal-combustion vehicles and hydrogen fuel-cell vehicles. The company has focused on hydrogen technology and hybrids over pure EVs, with the view that carbon, not the combustion engine, is the true enemy.
Yes, in the 1990s, Toyota released the Toyota RAV4 EV, a collaboration with Tesla. However, this vehicle was impractical for everyday drivers due to its low speed and short range.
Yes, Toyota has stated that it is "not anti-BEV" and will be rolling out more BEVs. By 2025, the company plans to release 15 dedicated battery-electric models as part of its bZ (Beyond Zero) electric-vehicle sub-brand.
