Japan’s automakers led by Toyota Motor are bucking the government’s official aim to rapidly switch to fully electric vehicles.
This was revealed by reports in the international press before the United Nations’ COP26 climate summit addressing the global heating crisis recently.
In February, Akio Toyoda, chairman of the powerful Japan Automobile Manufacturers Association (JAMA) as well as president of Toyota Motor, Japan’s largest car manufacturer, met with then Prime Minister Yoshihide Suga to discuss carbon neutrality.
In July, The New York Times reported that a Toyota senior executive had visited Washington a month earlier to outline Toyota’s opposition to an aggressive transition to EVs.
Last September in Tokyo, according to Nikkei Asia, JAMA hosted a press conference presided by Akio Toyoda and attended by top executives from Honda, Yamaha, and Isuzu.
At the press con, Toyoda warned against the COP26 goal of speeding up the switch to electric vehicles (EVs). Following this goal, Japan’s government aims to slash the country’s greenhouse gas emissions by 2030, end sales of new internal combustion engine (ICE) vehicles by 2035, and thereby achieve net carbon neutrality by 2050.
The Wall Street Journal reported Toyoda as saying that converting entirely to EVs could cost hundreds of billions of dollars and make cars unaffordable for average people. EVs are generally more expensive and have a more limited range per charge than Toyota’s Prius-like hybrid vehicles
Excessive hype over EVs, he said, failed to consider the carbon emitted by generating electricity and that Japan would run out of electricity in the summer if all cars were running on electric power.
An EV is more energy-intensive than an ICE vehicle because of the battery, which requires the extraction and refinement of metals like copper and nickel. Moreover, Japan’s heavy dependence on fossil fuels means that even many EVs are currently partly produced, and even powered, by burning coal.
Meanwhile, insideevs.com reported that Toyoda said going all-EV could cost Japan 5.5 million jobs and 8 million units of lost vehicle output by 2030. He warned that the overzealous green manufacturing goals pushed by Japanese authorities are unsustainable.
FAVORING HYBRIDS. While acknowledging the need for carbon neutrality, Toyoda said Japan should not focus only on EVs but rather “search for options that suit Japanese circumstances.” A sudden shift to EVs could undercut Japan’s industrial base, which is manufacturing and exporting-oriented, Toyoda added. The path to carbon neutrality should be adapted to each country’s conditions, he said, as long as the result is the same: an overall reduction in carbon emissions.
Toyoda asserted that in achieving carbon neutrality, “the enemy is carbon dioxide – not internal combustion. To reduce carbon dioxide emissions, it is necessary to have practical and sustainable initiatives that are in line with different situations in various countries and regions.”
Toyoda insisted that hybrid vehicles, an established strength of Japanese carmakers, still have significant contributions to make toward carbon neutrality, even if they are equipped with ICE. That’s because hybrids are more affordable than EVs and can penetrate markets where charging infrastructure is nonexistent or few. In addition, technical improvements are making hybrids cleaner each year. At the same time, hybrids can be used as a bridge technology toward EVs and zero emissions, helping to lessen the blow to jobs that make parts for ICE and transmissions, he pointed out.
Toyoda’s idea of eliminating carbon from fuel, instead of just switching to EVs, was supported by an expert who developed engines for Toyota during a career of more than three decades at the company. He said that carbon-neutral products such as biofuels and e-fuels (combining hydrogen with carbon dioxide captured from the atmosphere) could be used to power existing ICE cars.
He added that carmakers should consider what would be the best solution for customers and carbon neutrality by developing in all directions from efficient engine cars to hybrids, plug-in hybrids, battery electric vehicles and fuel-cell cars. However, others argue that at this time, carbon-neutral fuels and fuel-cells, or other types of powertrains, may not be realistic alternatives in terms of cost compared to EVs.
Given Japan’s economic heft and the power of its example in Asia and beyond, the world is watching how the government deals with its auto industry’s reluctance to forsake the internal combustion engine. Auto sector experts are watching whether Japan’s government and industrialists can develop a genuinely environmentally progressive growth model.
INDUSTRY’S ATTITUDE. Toyoda may represent the industry’s general attitude towards EVs. So far, Honda Motor is the only Japanese auto manufacturer to announce a complete phaseout of gasoline cars, including hybrids, and to sell only EVs and fuel cell vehicles by 2040.
In contrast, the Volkswagen Group is pouring almost $37 billion into its EV program, the most out of any manufacturer, in a bid to outsell Tesla, the king of the EV market. The VW conglomerate (VW, Audi, Porsche, Lamborghini, Bentley, Skoda, SEAT, Bugatti, Ducati) plans to manufacture one million EVs a year by 2023, and 1.5 million a year by 2025. By 2030, VW wants 50 percent of its sales in North America to be EVs.
Meanwhile, General Motors plans to exclusively offer EVs by 2035, ending production of its cars, trucks and SUVs with diesel- and gasoline-powered engines. This is part of a larger plan for GM to be carbon neutral by 2040 in its global products and operations.
Last September, Ford Motor announced a plan to lead America’s shift to EVs with a new mega campus in Tennessee and twin battery plants in Kansas that will be the largest, most advanced, most efficient auto production complex in its 118-year history. It represents Ford’s $11.4B investment to create 11,000 jobs and power a new lineup of advanced EVs.
Corollary to this, the European Union and the U.K. are set to ban new sales of gasoline cars including hybrid vehicles by 2035. The 27-country EU is also due to impose a new tax on industrial imports made with high carbon emissions.
President Joe Biden in August said he wanted half the cars sold in the U.S. by 2030 to be zero-emission vehicles. Even India says EVs will make up 30% of new car sales by 2030. China has developed cutting edge-technologies as it seeks to take a lead in EVs.
Analysts say that the Japanese car lobby for hybrid cars is already a minority view among international communities. Hybrids could be a smart interim strategy in developing countries like the Philippines where the cost of electricity is high, but the question is for how long. Investing capital in hybrids may result in dependency on technology that is not zero emission, ultimately resulting in failure to meet COP26’s decarbonization goals.
Summing up, the rapid push toward EVs by Europe, the U.S. and China, accelerated by the carbon neutrality pledges made at the COP26 climate conference, shows that international trends are running increasingly against Japan’s automakers and could lead to Japan as a market declining in size and losing relative global share.
