Will the leader of global car market – Toyota go on its own way of the technology of new energy vehicles?

By Jeff Lee / Mike Song 2022-10-21

Greenpeace made ranking of the top 10 carmakers worldwide about the efforts of decarbonization in the end of last year, and Toyota was ranked at 10th. Certainly, the other nine carmakers are also under expectation, while only three of them are passed. Toyota falls behind in the progress of developing BEVs indeed; especially the strategy of Chinese self-owned brands that skipped the phase of hybrid products to directly enter the BEVs market will significantly threaten traditional carmakers with laggard development of BEV technologies in the near future. However, if the hydrogen ICE or hydrogen fuel cell batteries that Toyota had been developed for a long time can become another mainstream in the market, then they will maintain its top-selling position for many years.

Toyota had once been one of the first carmakers that develops BEVs, and then they moved to hybrid and hydrogen fuel cell vehicles to became the leader of these two new energy technologies that even German major carmakers with strong R&D resources can’t compete with them in hybrid cars. However, after Tesla upsurge the wave of BEVs in recent years, then BEV became the mainstream of new energy vehicles that major carmakers concur, Toyota always kept sitting on the fence and even doubted at the attitude of Japanese government that wants to catch up with advanced countries on the timetable of zero-emission last year. They challenged the decision of Japanese government for the production of BEVs leading to unemployment issues; However, after a few months, Toyota’s CEO Akio Toyoda proposed the development strategy and sales target of BEVs over the next 10 years that will invest half of the R&D resources on BEVs. Is the future development direction of the top carmaker in the world – Toyota had been confirmed yet? Not exactly! Firstly, in the Q1~Q3 this year, the market scale of EVs (BEV, PHEV) in China increased rapidly, and nearly reached record high sales month by month that the market penetration rate had reached 1/4 out of the whole car market currently. The market share of ICE cars of major joint-venture brands keeps dropping, and the product competitiveness of their BEVs almost can’t compete with Chinese self-owned brands except Tesla. Secondly, European governments and carmakers are all working on the development and popularization of BEVs, even German carmakers with the best technologies of ICE cars are forced to turn to pursue automotive new technologies that they are not specialized in. Moreover, the California government enacts the timing of zero-emission to 2035, while other states are yet to make decisions. This will also motivate other states to enact the timetable one by one, as the federal government of USA had already begun the deployment of public charging stations. This is currently happening in the top 3 markets around the world, which indicates the trend of electrification is faster than the timing predicted by major research institutes in the past few years. In this situation, even Toyota CEO gave his support on the California 2035 goal of zero-emission in August, he finally can’t help speaking a few “heartfelt” words to dealers in USA in the end of September…

  • Either California or USA nationwide, BEV sales target to be achieved at 50% of new cars sales and 100% in 2035 will be difficult to reach. (It could be also related to Japan or worldwide actually.)
  • As a world-class major carmaker, Toyota must consider that there are still 1 billion people lack of reliable electricity supply around the world, where it will be impossible to promote BEVs.
  • Governments of various countries should not limit the options of solutions for achieving the goal of carbon neutrality (which means BEVs isn’t the only way to achieve carbon neutrality).
  • To view from the advancement of technology, Akio Toyoda assumed that the plug-in hybrid cars of Toyota can be the short-term countermeasure, and their hydrogen combustion technologies can be the long-term one towards the goal of zero-emission.
  • Toyota should be a “department store” that provides various powertrains instead of telling consumers that there is only one powertrain but no other options.

From this talk, Toyota sent a message to retailers that they will go on different way from major carmakers of Europe and USA, and it also shown Toyota will obviously lose some market shares in advanced countries after 2030, 2035, but they might keep tapping into markets of other regions by their product portfolio with diversified powertrain lineup. This will be the biggest uncertain factor of whether Toyota can keep being the top-selling brand, and it might be getting clear from 2025.