Why Is Toyota Electric Car Plan Behind Others?

Toyota Is the Largest Car Manufacturer But We Don’t See Toyota Electric Car

Toyota has hit a winning streak for two consecutive years against Volkswagen. In 2021, Volkswagen sold 8,882,000 vehicles globally, while Toyota sold 9,562,288 vehicles globally from January to November 2021. The combined sales of Hyundai and Kia were 6,668,037 the same year. Being the world’s largest automaker, however, Toyota electric car sales are lagging.

In the electric car space, Tesla is the absolute leader. Looking at the sales number for H1 2021, Tesla delivered 386,000 units. Volkswagen followed Tesla with 332,000 units sold, then comes GM with 227,000 units. On the other hand, Toyota did not make the list of the most-sold electric vehicles.

Here’s how many electric vehicles Toyota sold for from January to November in 2021:

Toyota Was Once A Pioneer of Vehicle Electrification

Despite today’s struggles, Toyota was an early eco pioneer with the launch of Prius. Toyota launched this world’s first mass-production hybrid car as early as in 1997. Since then, Prius led the industry on the road to electrification and fuel-efficiency, selling more then 6 million units globally. It is the best-selling hybrid vehicle as of 2021.

In fact, the first three rows of the table above are the units sold of hybrid cars (HEV: hybrid electric vehicle, MHEV: mild hybrid electric vehicle, PHEV: plug-in hybrid electric vehicle). Summing them up gives 2,373,960, which accounts almost 25% of Toyota’s sales of the same period 2021.

However, when it comes to battery-electric vehicles (BEV), Toyota is not even in the race. Its otherwise biggest competitor Volkswagen sold 452,900 BEVs in 2021, while Toyota only sold 12,408 BEVs from January to November the same year. The BEV king Tesla sold 936,172 vehicles.

Carbon-Reducing: Toyota Increased Hybrid Range Instead of EVs

Why is the eco pioneer no longer leading electrification of the automotive industry? To answer this question, it might be helpful to look at EVs from different perspectives: Are all-electric vehicles the only solution for carbon neutral in the automotive industry? Even if that is the case, is it practical to shift to all-electric vehicles drastically all of the sudden?

Toyota’s President Akio Toyoda made remarks in a media briefing held on 14th December, 2021:

We are living in a diversified world and in an era in which it is hard to predict the future. Therefore, it is difficult to make everyone happy with a one-size-fits-all option.

The development of passenger all-electric vehicles started becoming a thing around early 2000s. Tesla’s Roadstar, Mitsubishi i-MiEV, and Nissan Leaf were among the first passenger electric vehicles hitting the road. However, there were several hurdles to the uptake of all-electric vehicles: lack of charging infrastructure, difficulty of mass production of batteries, safety concerns over battery fire due to early technology, etc.

Toyota, on the other hand, strengthened its hybrid range from only Prius to 44 models globally. As a result, Toyota sold more than 15 million hybrids by 2020, meeting their target.

While the world has been debating all-electric cars, Toyota has put more than 15 million hybrids on the road,

said Didier Leroy, EVP of Toyota Motor Corporation.

Carbon-Neutral: Toyota Bet Big on Hydrogen Instead of EVs

In carbon-neutral transformation process, Toyota needed to consider Japanese employment status as one of the biggest contributors to the Japanese economy. According to Akio, the President of Toyota, following the BEV-only path for carbon neutral goal would eliminate one million jobs in Japan.

What makes this extreme assumption persuasive is Japan’s unique energy dilemma. As a catastrophe-prone country, Japan heavily relies on thermal power for stable energy supply. Even though the country has nuclear power plants which could steadily supply energy without greenhouse gas emission, societal attitude towards nuclear energy is rather negative especially after the 2011 Fukushima Disaster. Therefore, it would be inevitable to shift the energy-consuming production of BEVs overseas to meet the carbon neutral target by BEVs.

However, Toyota stressed: “BEVs are not the only path towards carbon neutrality.” It started development of fuel cell electric vehicles (FCEV) installed with a hydrogen-powered engine in the early 1990s. In 2014, Toyota launched Mirai, one of the world’s first hydrogen fuel cell electric vehicles.

Despite Toyota’s ambition, FCEVs have not taken off as expected: as of 2021 November, Toyota sold only 17,664 FCEVs. Simply put, it breaks the bank—its suggested retail price is from $49,500, compared to Prius from $24,625. Additionally, lack of infrastructure discourages FCEVs. As of 2020, there were 1.3 million publicly accessible chargers for BEVs globally, while only about 540 hydrogen fueling stations were available worldwide.

Is Toyota Out of the Electrification Game?

As the automotive industry increasingly shifts to BEVs, not having prominent BEV range would be a big blow for the company. Where is Toyota heading for now?

We can find the clue as to Toyota’s future from Akio’s remarks in the same media briefing. A journalist asked Akio, “Do you like BEVs or not?” Then Akio answered:

If I had to make an answer, I was not interested in Toyota’s past BEVs, but I am getting interested in the BEVs that we are now developing for the future.

Furthermore, Toyota announced an investment of enormous ¥ 8 trillion or approximately $70 billion in electrification from 2022 to 2030, of which ¥4 trillion will be in BEVs including ¥2 trillion for batteries.

Although Toyota will be unlikely to focus only on BEVs, it sets a clear goal for BEVs: it aims to sell 3.5 million BEVs per year globally by 2030. And it will announce rollout of 30 BEV models by 2030.

While keeping other options such as hybrid and hydrogen, Toyota plans to boost its BEVs production. Why don’t they just focus on all-electric options? Here’s why:

Energy plays a critical role in achieving carbon neutrality. At present, the energy situation varies greatly from region to region. That is exactly why Toyota is committed to providing a diversified range of carbon-neutral options to meet whatever might be the needs and situations in every country and region.

So, who do you think will lead the vehicle electrification in coming years?