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Toyota defends ‘greener’ powertrain strategy

Japanese giant says market demand should drive BEV proliferation

16 Jun 2022

TOYOTA Motor Corporation (TMC) recently hit back at critics who argue that the firm’s rollout plan of battery-electric vehicles is too conservative, by reiterating its strategy to offer a variety of powertrains to suit different markets for as long as necessary.


At its AGM in Aichi, Japan, Toyota said it would persist with technologies that have, for more than two decades, made it a market leader in greener cars. The brand says hybrids make the most sense in markets where infrastructure isn’t ready to support a faster BEV uptake; it also continues to explore the viability of hydrogen for ICE cars.


"The goal is carbon neutrality," Toyota’s chief technology officer, Masahiko Maeda told the meeting, “(however) customers need to choose”. He added that a variety of options needed to be available – the Japanese brand shouldn’t narrow those down.


Toyota has come under fire from some investors for not phasing out ICE cars and, according to Automotive News Europe, Maeda-san was responding to questions submitted by Danish pension fund and TMC shareholder AkademikerPension, which also asked TMC to refrain from lobbying to undermine the transition to BEVs.


Toyota’s hybrid system, which it has been championing since it launched the Prius in 1997, is the reason the company has one of the lowest average CO2 emissions per car of any carmaker in Europe (despite not selling all-electric vehicles until this year).


Financial Times article this week suggested that the Japanese automotive giant had “become one of the most vocal critics of a rapid transition to battery-electric vehicles and the fiercest guardian of the petrol-electric hybrid technology”.


Toyota has warned that it would stop investing in its UK factory if its hybrid tech was banned from sale there (the British government has proposed that half of new cars sold by 2028 must be BEVs) and the firm was perceived to have sided with former US president Donald Trump when he tried to roll back fuel-efficiency standards.


TMC president Akio Toyoda, who also heads Japan’s automotive industry lobby, last year questioned his country’s government’s decision to ban new ICE cars by 2035.


Toyota has questioned a dramatic shift to BEVs while the energy for powering them was still being produced through burning fossil fuel and argue that hybrids provide a greener solution amid the automotive world’s transition towards the electric era.


These lobbying efforts by Toyota have been criticised by AkademikerPension, Sweden’s largest pension fund AP7, the Nordic asset manager and the Church of England, which hold a combined $300 million shares in Toyota as of last year.


“Toyota is jeopardising its valuable brand by lobbying against much-needed climate related regulation of the auto industry,” the Financial Times quoted Anders Schelde, AkademikerPension’s chief investment officer, as saying.


“What is the science-based argument for their position, which is what we expect from companies if they are going against most expert views on the role of battery electric vehicles and the required timeline for phaseout of fossil fuel cars.”


Environmental groups and green-activist investors argue the industry cannot afford to make detours, criticising Toyota for buying time until it can reposition in BEVs.


‘’If Toyota continues with negative climate lobbying, it will alarm shareholders as such an approach undermines the inevitable transition away from polluting cars,” said Kiran Aziz, the head of responsible investments at KLP.


Toyota last year became the first carmaker in Asia to disclose its climate policy activity, but climate think-tank InfluenceMap still slapped the company with a “D” grade, arguing that it would miss its commitments to the Paris Agreement.


There is a gap between Toyota, which approaches decarbonisation in a "pragmatic" way, and environmental groups that call for immediate action, Seiji Sugiura, a senior analyst at Tokai Tokyo Research Institute told Automotive News Europe.


The positions are not diametrically opposed, he said, adding that Toyota had been working to slash greenhouse gas emissions from the vehicle production stage.


Late last year, Toyoda-san unveiled no fewer than 16 new battery-electric vehicles at Toyota's Megaweb showcase in Tokyo; they were part of an ¥8 trillion (A$98b) investment in electrified vehicles and technologies that will elevate the company’s global BEV sales target to 3.5 million vehicles annually by 2030.


TMC also plans to roll out as many as 30 carbon-reducing and carbon-neutral vehicles and technologies over the next eight years, GoAuto reported at the time.


“We are committed to ensuring that national policies, societal needs, technological advances, and the needs of our customers all point in the same direction to the greatest extent possible,” Toyota said, adding that the ultimate goal was to reduce carbon emissions and the way to achieve this differed from region to region.

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