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Toyota Chairman Says People Are Finally Seeing the Reality About EVs

TOKYO— Toyota Motor Chairman Akio Toyoda, when asked about electric-vehicle challenges including a recent lull in U.S. demand, said the industry was coming to recognize that there isn’t a single answer to reducing carbon emissions.

Toyoda, who stepped down this year as Toyota chief executive after nearly 14 years on the job, has long said the auto industry should hedge its bets by continuing to invest in hybrid gasoline-electric cars and other options beyond just electric vehicles.

As EV sales momentum lags behind in the U.S. and more buyers gravitate to hybrids, he may be enjoying an “I told you so” moment.

“There are many ways to climb the mountain that is achieving carbon neutrality,” Toyoda told a small group of reporters at the Japan Mobility Show, formerly the Tokyo Motor Show, which is opening this week for the first time in four years.

From Tesla  to Ford Motor , automakers in recent months have been issuing warnings about a sudden slowdown in consumer demand for EVs, which are generally more expensive than traditional gasoline-powered cars and need to be recharged regularly, posing challenges for some drivers.

Higher interest rates are making them more unaffordable for many buyers, and despite increasing discounts on plug-in models, unsold inventory is starting to stack up at dealerships.

The pullback in buyer interest is a worrisome sign for an industry that is sinking billions of dollars in new factories and battery-making facilities and is facing tougher regulations on tailpipe emissions globally.

In the latest sign that car companies are walking back their plans, General Motorsand Honda Motor said Wednesday that they are ditching a partnership forged a year-and-a-half agoaimed at developing a line of lower-priced EVs.

The automakers had expected to produce millions of cars fitted with GM’s Ultium batteries, a proprietary technology that the Detroit automaker has promoted as the mechanical backbone of its future EVs.

GM executives have said developing more affordable EVs is critical to broadening their appeal, and scaling up their battery technology, including through partnerships with other automakers, is one way to help reduce costs.

GM also this week abandoned a self-imposed target to build 400,000 EVs by mid-2024, citing growing uncertainty in the EV market and the need to ensure it can build these new models profitably.

Japanese automakers, most prominently Toyota, have been more vocal than their Western peers about the challenges EVs face in the near term, including high costs, resource crunches and limited charging infrastructure.

In China, the world’s largest car market by vehicle sales, Western and Japanese companies face a host of local challengers and an EV price war.

While the early stages of the EV revolution shake out, Toyota and others have been leaning on hybrid vehicles as a bridging technology and studying the operations of front-runners including Tesla and China’s BYD. Toyota’s current CEO, Koji Sato, has said the carmaker will accelerate development of parts and manufacturing methods optimized for EVs.

At the Tokyo event, Japanese automakers showcased an array of concept EVs, many of which aren’t due in showrooms until the latter half of the decade.

Toyota displayed two EV concept cars due for release after 2026, as well as an electric pickup truck and a version of its Land Cruiser expected to launch within the next few years. Honda Motor’s joint venture with Sony showed off a prototype of its Afeela EV due to be delivered in 2026.

The handful of foreign automakers at the show—including BYD, Mercedes-Benz and BMW—all showed electric models that consumers can buy today, at least in some countries.

With their slower rollouts, Japanese brands await judgment on whether they failed to catch the wave in time or correctly read the general population’s readiness to make the EV shift.

One favorable sign for Toyota: Its head of sales in North America said recently the market for hybrids is “smoking hot” and the company is trying to make as many of the vehicles as possible. Last month, Toyota had a little more than a week’s worth of Prius hybrids in stock, compared with more than two months’ supply of its electric SUV, the bZ4X.

“I have continued to say what I see as reality,” said Toyoda. Someone needs to convey to the industry what will make car buyers most happy, he said, and “if regulations are created based on ideals, it is regular users who are the ones who suffer.”

EV sales rose 49% globally in the first half of this year, down from the previous year’s 63% growth, according to market-research firm Canalys. Of all EVs, 55% were sold in China, where foreign automakers are increasingly being wedged out by local manufacturers.

In the U.S., some dealers say the first wave of buyers willing to try an EV has passed and remaining buyers are deterred by high sticker prices and the limited range of many EV models.

General Motors said last week it was delaying the opening of an electric pickup-truck factory in Michigan. The Wall Street Journal also reported that Ford Motor was considering cutting a work shift at the plant where it builds its electric F-150 Lightning pickup as demand for the truck falters.

Meanwhile, hybrid sales have taken off in the U.S., growing at a faster clip than the broader U.S. car market. That uptick has also prompted other automakers, like Ford and Nissan Motor , to shift more resources to promoting their hybrids and plug-in hybrid offerings.

Toyoda said the concept vehicles at the Japan show were the product of Japanese automakers taking time to work with battery makers and think about what is possible in EVs. He said the Japanese industry’s strength in the EV era will come from practical car making “over a long period of time and from experiences of failure.”


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