Toyota recognizes California's mandate that bans the sale of new gasoline-powered cars by 2035

By Jeff Lee 2022-09-12

Toyota committed itself to the development of BEV (battery electric vehicle) technology in its early years but later switched to hybrid and FCEV (fuel cell electric vehicle) technologies. Thanks to its product lineup and strong dealer channels, Toyota has ranked first in global sales for several successive years and is the number one automaker in terms of brand value. It will not be easy to remain at the pinnacle in the era of electric vehicles. Toyota is currently behind Tesla, Chinese self-owned brands, and even German brands in technology readiness levels of BEVs, but I think it is only a matter of time before Toyota capitalizes on its abundant resources to catch up with or even overtake those brands. However, the challenges of the future auto technology do not stop here. Only by overcoming the biggest technical obstacle of autonomous driving will Toyota be able to keep its throne in global sales.

The government of California has recently passed a mandate to ban the sale of new gasoline-powered cars by 2035. California regards the three new energy vehicles, BEVs, PHEVs, and FCEVs, as the future of automobiles and has set targets at several stages for the total new vehicle sales of these three types of vehicles to reach: 35% by 2026, 51% by 2028, 68% by 2030, and 100% by 2035. Toyota, which effected a seismic shift in its policy on R&D for new energy vehicles at the end of last year (it will have spent half of its R&D expenditures on developing BEVs by 2030), has recognized the foregoing net zero timeline set by California. We can read a few things between the lines in the seemingly uneventful news report...

  • In 2019, GM, FCA (Fiat Chrysler Automobiles N.V., which had not yet merged with PSA to form Stellantis), and Toyota supported then-President Trump's proposal for federal unified auto emissions standards, while Ford, BMW, Honda, and Volkswagen supported California's stricter standards. California had always been at the forefront of vehicle emission standards nationwide and even worldwide, and this time, the California Air Resources Board finally passed the Advanced Clean Cars II (ACC II) rule after three years of hard work. Although falling behind many European countries, California is the first state in the U.S. to affirm the goal of banning the sale of new gasoline-powered cars. GM accepted the California carbon emissions regulations earlier this year, and now Toyota has followed suit. It means that compelled by the trend, even the world's top automakers are shifting their R&D focus from hybrids to BEVs.
  • Toyota's truck unit, Hino Motors, has recently appeared in the news for a similar incident in the U.S. market to Dieselgate, the Volkswagen emissions issue in 2015. In addition to handling the incident immediately and resolutely, Toyota agreed to the net zero timeline set by California, a move that demonstrates its "uncompromising" commitment to carbon neutrality.
  • California's ban on the sale of new gasoline-powered cars is scheduled for 2035, no earlier than European regulations. Meanwhile, in China, another key market for Toyota, although the government has not explicitly stated a timetable, sales of EVs (BEVs and PHEVs) have already exceeded a quarter of the total Chinese market, and the figures are increasing month by month. Such a market atmosphere in fact imposes greater time pressure on automakers than the enactment of a decree. So overall, Toyota's agreement to California's net zero schedule will not affect its established development plan for BEV products.
  • Lexus will sell only BEVs in Europe, the U.S., and China starting in 2030, while Toyota and Lexus will have BEVs account for one-third of their global sales in 2030. Based on the projections, if the sale of new gasoline-powered cars is banned in California or elsewhere in the U.S. in 2035, but BEVs, PHEVs, and FCEVs are available as new energy models for sale, Toyota can still secure market share according to its plan.

After California, the largest state in the U.S. auto market, passed the rule that bans the sale of new gasoline-powered cars by 2035, many states will no doubt follow suit. Whether the federal government enacts a law to that effect no longer matters. The global direction towards the era of electric vehicles has been further confirmed, and progress will be made even faster. Toyota was the last major automaker to endorse the California regulation, yet it means that the global auto industry has reached a consensus to ban the sale of new gasoline-powered vehicles by 2035. I'm categorically reminded again of the "goal" (not a mandatory law) announced by the National Development Council this March for Taiwan's passenger cars to be 100% new energy vehicles by 2040. Taiwan's auto industry needs to be aligned with the world, and Taiwan's consumer market should be in sync with the U.S. and advanced countries in Europe. Government officials, isn't it time you all sat down for some proper deliberation?