Vindication

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As it turns out, Toyota’s multi-pathway approach to carbon neutrality is the correct answer

WHO’S LAUGHING NOW?

At the outset of the battery electric vehicle (BEV) “revolution,” that tipping point when more brands decided they would be striving toward rolling out fully electric powertrains sooner than later, global auto leader Toyota — through its then-president and CEO Akio Toyoda in particular — had faced stinging rebuke for not being on board the BEV train.

Even as the rest of the auto industry looked upon full electrification as the silver bullet to greenhouse gas emissions (GHGs) — emitted primarily through the burning of fossil fuels — while addressing transportation needs of people and goods, Mr. Toyoda and Toyota have maintained consistently that carbon is the enemy. Furthermore, carbon neutrality — a state of net zero carbon where actions that redound in emissions are matched by ones to reduce to offset them — is a more realistic, viable dream to aspire to for our planet, according to Mr. Toyoda.

Back in 2022, at the Queen Sirikit National Convention Center in Thailand, the leader doubled down on his viewpoint, declaring that Toyota will not espouse a “one-size-fits-all approach to (its) products and powertrains.” He insisted that people “need to be realistic about when society will be able to fully adopt battery electric vehicles and when… infrastructure can support them at scale.” The executive was in town primarily to celebrate the 60^th anniversary of the founding of Toyota Motor Thailand Company (TMT) — the manufacturing and distribution subsidiary of the Japan-headquartered car maker.

Mr. Toyoda (now chairman of Toyota Motor Corp.) crucially added then, “Just like the fully autonomous cars that we were all supposed to be driving by now, I think BEVs are just going to take longer to become mainstream than the media would like us to believe. And frankly, BEVs are not the only way to achieve the world’s carbon-neutrality goals. Personally, I would rather pursue every option, not just one — options such as emission-free synthetic fuels and hydrogen. I still believe hydrogen is as promising a technology for our future as BEVs.”

So it was quite understandable for Toyota Motor Asia Executive Vice-President Pras Ganesh to gloat a bit as he recently addressed a delegation of media practitioners (which included this writer) and content creators from Southeast Asian markets. A sizeable country contingent was flown to Tokyo upon the invitation of Toyota Motor Philippines Corp. (TMP) to experience the biennial Japan Mobility Show (JMS), but there was plenty of time for Toyota executives to also talk about the firm’s intentions — particularly in our part of the world — on the sidelines.

“Since that particular time, a lot has changed,” he began. “If you start looking at the announcements of almost all the other automotive companies, most… especially the traditional (ones), have all changed their approach. Many of them have also started talking about abandoning a BEV-only approach, (and are tackling) the need to introduce more hybrids, and the need for more time to make the transition. They have also in some ways admitted that they have to move away from the initial plan for a single technology.”

As many brands veritably kick the BEV can further down the road, Toyota remains engaged to the “fundamental focus” first elucidated in JMS 2023. Mr. Ganesh stated that it’s still “about how Toyota (wants) to tackle carbon neutrality.” Echoing the words of Mr. Toyoda, he stressed that carbon, not a particular powertrain, is the enemy. The playbook for the group of auto marques is about reducing the emission of carbon through its mobility products — and at scale.

The executive explained, “If you think about speed and scale, the most important thing is to find a solution that meets the needs of all customers. That was the reason why we heavily focused on what we call multiple pathways. We actually need all technologies. We need low-carbon ICEs (internal combustion engines), hybrid electric vehicles, plug-in hybrid electric vehicles, battery electric vehicles, fuel cell electric vehicles. We need all of these for different purposes, and we need to make sure that we introduce them and scale them in each of the markets.”

The electrification discussion, posited the executive, is a lot more nuanced than, well, flipping a switch.

AGAINST THE GRAIN
“Unfortunately, the world was quite different (then),” he recalled. “We got bashed heavily, we got criticized significantly by many people. They said Toyota’s approach of multiple pathways was inappropriate,” Mr. Ganesh rued.

Toyota was the outlier who wasn’t locked in on BEVs alone — and instead went against the grain. The company distilled the discussion and work toward carbon neutrality into three areas: emissions, economics, and customer acceptance. It should be, the executive continued, about finding the “cleanest solution based on available energy sources in the market” and, quite simply, what “the customer, government, and industries could afford.”

Speaking of governments, the Toyota executive said states have also realized that “pushing for a single technology brought with it risks and issues,” and are now thinking more inclusively by “maybe not giving that many subsidies for BEVs.” Governments now see the need to involve many technologies or powertrains in the transition. This further underscores the wisdom in ditching (for now) an exclusively full-electric path.

And, of course, customers are said to have gained, in practice at least, a much better understanding of Toyota’s multi-pathway approach. Expressed in real terms here in the country, we have seen the marked increase of hybrid vehicle sales in the country, where Toyota Motor Philippines (TMP) paces sales. As of September YTD, TMP (through the Toyota and Lexus brands) has sold a total of 13,041 xEVs (electrified vehicles) comprised of 45 BEVs and 12,996 traditional hybrids (HEVs).

The full-tilt sprint to pure electric has laid bare the limitations of an admittedly still-nascent charging infrastructure. Even as BEV makers continue to improve and fine-tune their models (and increase range), the improvements cannot fully quell range anxiety. The fact of the matter is that our public charging infrastructure is far from ideal. Notwithstanding improved range, more readily available charging points are prerequisites for greater adoption.

THREE WAYS OF WORKING
Even as Toyota and its family of brands remain in lockstep with the vision to provide mobility for all and to strive toward carbon neutrality, Mr. Ganesh said that the values the company purveys are predicated on “three ways of working,” particularly in the Southeast Asian region.

First is striving to be “best in town,” a thinking that comes with a willingness and patience to play the long game. “Toyota and the Toyota group do not think short term,” he stressed. Part of that means identifying products that are suited to each market — products that, themselves, are nothing less than outputs of people, organizations, and an ecosystem that work together to deliver both good products and good customer experience. “Toyota affiliates, plants, distributors, and dealerships should always aim to be the best in town… that people in their respective towns trust the most.”

Developing supply chains can take time too, enthused Mr. Ganesh, but is essential to breed competitiveness to help Toyota survive times both good and bad.

“We try to bring in the right technology that actually meets the market needs,” he stressed. “We have also been steadily developing our R&D (research and development) capability to be able to deliver products that we can source for your markets or even beyond (them) to what we call the global south… A lot of these activities have been in Thailand, but now we’re expanding more and more development beyond it (such as in) Indonesia.”

Next, Toyota espouses the idea that customers come first — exactly why the automaker does not push a single powertrain where it may not be exactly feasible. Its vehicles are meant “for everyone and for every journey,” and Mr. Ganesh said that they don’t want to commodify these products. “Toyota believes in the emotion and passion that we can give customers,” sharply focused on specific needs — not necessarily those that are trending. It means always making ever-better cars, a famous quote from the TMC chairman himself. It also means providing an aspirational value for each vehicle made.

There’s a reason we don’t see certain models here, say, a large Tundra pickup designed for the US market made to travel long distances and bearing heavy loads and such. However, we’ll have compact urban vehicles like the Yaris Cross or family-oriented models like the Innova. “The roads help us design the vehicles… We need mobility solutions that fit our diverse lifestyles… diversity requires diverse solutions,” explained Mr. Ganesh.

Finally, there’s “start by doing,” which more specifically delves into the aforementioned drive to carbon neutrality. The fundamental thinking behind it is that there’s no time to waste: Climate change is real, global warming is real. “We have to take action to reduce carbon emissions whenever we can, wherever we can,” said Mr. Ganesh.

The mix of vehicle powertrains will change in time, hinged on managing the use of energy as optimally as possible. “When I talk about electric vehicles. I have to be able to find the most optimum renewable energy source to make that electric vehicle as clean as possible,” he declared. “When it comes to our (other powertrains), we have to be able to find the most effective, appropriate energy source and ensure that we’re able to optimize that energy source and the distance driven for us to be able to reduce our carbon footprint.”

The multiple pathways approach is therefore about broadening a way of thinking on mobility and viability of energy sources and market readiness/appetite while keeping a keen eye on carbon neutrality.

Mr. Ganesh asked, “What is the right energy source, and what is the right match between the vehicle side and the energy side?”

INTERIM WINS
For the next five to 10 years, Toyota expects the primary energy source required for mobility will still be fossil fuels. The critical element is realizing the most efficient use of these fuels. More sustainable and clean biofuels or even so-called flex-fuel engines are also on the rise in development and are being explored by Toyota as realistic answers to the energy and sustainability demand for mobility.

This is not to say, of course, that the brand is averse to BEVs. Instead, Mr. Ganesh said it’s important to think of how renewable energy can be used to recharge batteries for this powertrain. “What is the right renewable energy source in each of your markets? Is it based on solar, wind, hydro, geothermal power? What is the right, appropriate source?” Hydrogen also is another viable option as far as Toyota is concerned, particularly for the use of commercial vehicles, but the per-kilogram cost needs to go down, and it needs to be made more widely available.

The rare earths question for the manufacture of batteries also comes into serious play. “We recognize that battery supply is still limited.” He showed us a diagram demonstrating that a BEV’s (in this case a bZ4X) high-capacity (71.4 kWh) battery can provide the needs of five plug-in hybrid electric vehicles (PHEVs) or 55 Corolla Cross units or 92 Yaris Cross units. “Obviously, by utilizing the battery source as effectively as possible… we’re able to reduce CO₂ (emission). This is very much in line with our way of thinking where we feel that efficiency and scale are the most important thing when we talk about carbon neutrality.”

Toyota clearly knows what it’s talking about, and what its position is — sober and backed by hard data and on-ground experience. This is Toyota taking the reins of sustainability as the number-one automaker — with a uniquely sweeping perspective and unparalleled ability on how to tackle the issue of making the planet safer and healthier for the next generation, while providing much needed mobility for all.