Larry Hutchinson, CEO of Toyota Canada, spoke last week at the opening of the 2020 Canadian International Auto Show in Toronto. His comments were captured by Driving.ca’s David Booth, who characterized Toyota as “the industry leader in electrification” and “the biggest, most successful, and most environmentally conscious traditional automaker.”
Hutchinson expressed Toyota’s commitment to reducing carbon emissions. But, he argues, that mandating automakers to build more BEVs and trying “to convince drivers to buy them” won’t achieve the world’s climate goals.
“Public policy needs to embrace, not discourage lower cost, potentially [more efficient] solutions using already available technology. And here’s why: Carbon reduction can only be achieved by consumers deciding to spend their own money in ways that deliver a practical return for themselves.”
The Toyota exec points to falling EV sales in Ontario, due to discontinued incentives – and in the US in 2019. (Last year was indeed bumpy for electric sales in the US, with the Model 3 dominating – and an uneven transition for the previous top-sellers, the Nissan Leaf and Chevy Bolt, which saw declining sales. Traditional automakers so far have allowed Tesla to own the electric market.)
Hutchinson’s main argument is that BEVs are too expensive and therefore require government incentives. By the way, buyers of the Toyota Prius and other hybrids received federal tax deductions from about 2005 to 2010. Toyota’s hydrogen-powered cars still get tax credits.
Hutchinson does not mention that buyers of EVs from Tesla and General Motors no longer receive a federal tax credit. And yet, Model 3 sales blew past the luxury competition. Nonetheless, he states:
“No matter how motivated the consumer, there is a price point or premium beyond which people will not opt for the cleaner product because the payback is intangible, and it often requires compromises in comfort and convenience.”
Numerous studies, like ones from Deloitte and the Union of Concerned Scientists, refute this stance. There are countless others. More importantly, the price of EVs and their batteries will continue to fall. And regarding convenience: How about easily charging at home versus driving to a gas station?
Hutchinson runs through other anti-EV arguments, such as charging infrastructure requiring “enormous up-front capital costs” and a “finite global supply of in-the-ground materials required to produce battery cells.”
Given these factors, this is Toyota’s calculus, according to Hutchinson:
“The average battery capacity in a BEV is about 60 kWh. The average battery capacity in a Toyota hybrid is 1.4 kWh. In practical terms, that means you could build 42 Priuses in place of the 60 kWh battery in one BEV.”
“Forty-two Priuses — each reducing greenhouse gas emissions by 30% — would have the impact of 12 ZEVs. So, the question is this: For the same resources — the same total number of battery cells — do you want the GHG reduction of one car? Or 12? And that’s 12 vehicles without range anxiety, government incentives, or even any infrastructure investment.”
Hutchinson said that, in Canada, when Toyota sold 300,000 hybrids, it reduced emissions by the equivalent of 90,000 ZEVs.
“I used 90% fewer finite raw materials for batteries, didn’t inconvenience any consumers, and saved the government deficits as no government incentives were needed.”
“My point is, if Canada truly wants to achieve meaningful carbon emission reductions from this sector by 2030, a single-minded focus on zero-emission vehicles is likely to cause us to miss that objective.”
The speech equates to an appeal to Canadian regulators to set a “technology-neutral” approach to vehicle emissions. In other words, let automakers figure out how to reach emission targets not only with zero-emission vehicles – which Hutchinson calls “niche vehicles” but also with “low and near-zero” emission vehicles, like the hybrids that Toyota sells.
None of these anti-EV arguments are new. Although it’s somewhat helpful to have a concise answer to the question: What is Toyota thinking when it comes to EVs?
We heard similar arguments in November when Toyota’s top US sales guy told us at the LA Auto Show that “there’s no demand” for EVs, and they are not profitable.
Frankly, our counter-arguments are also not new. We point to reports about how EVs are cleaner to charge, that EVs are cheaper to fuel all across the US, and that fossil fuels have many hidden costs not accounted for in tailpipe emissions.
And we point out that Toyota’s overall fleet efficiency is going down.
That said, Toyota can trumpet a 50% rise in sales of gas-electric hybrids in Europe last year – while there are ups and downs globally with the adoption of new technologies such as BEVs. Of course, producing more efficient gas-powered cars, in and of itself, is not a bad thing.
So Toyota holds firm to its incremental hybrid approach, even as the company fails to acknowledge the mid- to long-range goal: accelerating progress post-haste toward the end-game of a zero-emissions future.
Other auto-industry giants, notably General Motors and Volkswagen, are on board with EVs. Both have given up on conventional hybrids. But not Toyota, as long it maintains a leadership role in previous-gen gas hybrids. We can expect the Japanese automaker to continue overlooking the myriad benefits of EVs and the technology’s consumer appeal – such as quick, quiet acceleration and avoiding gas stations.
At the same time, Toyota makes the long-term zero-emissions argument for hydrogen fuel-cell cars. And the feds and California currently provide higher incentives for fuel-cell vehicles than for battery-electric vehicles. Should those perks be stopped? Without government support for fuel-cell vehicles and infrastructure, Toyota’s hydrogen cars would be even more marginalized.
One thing is for sure: Toyota has staked out its firm position in favor of hybrids and against EVs. At least, that’s the case until the EV tipping point, which gets closer by the day, finally arrives.
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