Toyota’s ambitious transition plan

Despite fierce competition, Toyota retains its crown as the world’s largest car manufacturer – selling cars through brands including Daihatsu, Hino, Lexus, and the flagship Toyota brand. It anticipates sales of 8.8 million cars in 2023, still maintaining a significant lead over its nearest rivals VW and Hyundai Kia. Founded 88 years ago, Toyota recently celebrated the production of its 300 millionth car.

Toyota’s philosophy, deeply rooted in Japanese culture, revolves around creating a harmonious balance between its global presence and its commitment to societal good. Its mission, “producing happiness for all,” and vision, “creating mobility for all,” reflect the guiding principles laid down by its patrician founder, Sakichi Toyoda. These principles emphasize duty, innovation, practicality, a warm workplace environment, and a deep respect for spiritual matters.

So, given the company’s stated beliefs, it’s perhaps not surprising that it is taking a serious approach to the issue of climate change.  After all, with its scale and history, it can’t escape the fact that it has been a major contributor to pumping CO2 and other greenhouse gases into the atmosphere.

In 2022, the company produced 575.73 million tons of CO2 equivalent – roughly equal to Australia’s annual emissions or 1% of all global emissions according to the Emissions Database for Global Atmospheric Research (EDGAR). Notably, emissions from Toyota’s own operations account for less than 1% of this figure (5.24 million tons), with the majority stemming from the use of its vehicles.

What’s Toyota’s plan?

Facing the pressing need for environmental sustainability, Toyota has set a bold goal: achieving carbon neutrality by 2050. This ambition aligns with the increasing global focus on reducing carbon emissions and combating climate change. 

Toyota’s Environmental Challenge 2050, announced in 2015, outlines six key initiatives to achieve their objective:

• New Vehicle Zero CO2 Emissions: Toyota aims for a 90% reduction in CO2 emissions from new vehicles by 2050.
• Life Cycle Zero CO2 Emissions: The company targets zero emissions throughout the lifecycle of its vehicles.
• Plant Zero CO2 Emissions: Toyota is working on eliminating CO2 emissions from its production plants, emphasizing renewable energy use.
• Minimizing and Optimizing Water Usage: Toyota strives to reduce and optimize water use in its operations, including re-using rainwater and purifying wastewater.
• Establishing a Recycling-based Society and Systems: The company is focused on creating systems that prioritize recycling, akin to repurposing in fashion. They want to make more new cars from old.
• Establishing a Future Society in Harmony With Nature: Toyota fosters a society that coexists harmoniously with nature, involving forest creation around their factories, conservation partnerships, and educational initiatives for young people.

Central to Toyota’s strategy are the use of carbon-neutral fuels such as synthetic and e-fuels, biofuels and hydrogen, alongside electric vehicles (EVs).  Their electrified vehicles comprise a mix of fully-electric battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and hybrids.

The company has made significant progress in electrified vehicles, with 23.15 million units sold cumulatively as of March 31, 2023, moving towards a goal of at least 30 million by 2025. This effort has already led to a reduction of 176 million tons in CO2 emissions. 

By 2030, Toyota plans to produce 3.5 million EVs annually, with a significant portion on a new battery electric vehicle (BEV) platform. This includes the launch of the Lexus RZ450e, the bZ series, and the establishment of a dedicated BEV development organization.

Despite launching the first hybrid electric vehicle, the celebrated Prius, as long ago as 1997, the company has faced criticism for a relatively slow transition to electrification, and Akio Toyoda who left his role as CEO earlier this year was a known EV skeptic. 

However, we can expect their focus on EVs to ramp up quite considerably now under the stewardship of new CEO Koji Sato and the company is investing heavily in battery technology to overtake the competition.  A new battery roadmap provides the tantalising prospect of more than 800km driving range and rapid recharging time of 20 minutes or less from 10% to 80% using a DC fast charger. This will be delivered by a Performance lithium-ion battery in Toyota BEVs from 2026.

Toyota also remains committed to hydrogen fuel cell technology. In a recent statement, Sato emphasised the need for a “production and transport supply chain” for hydrogen, noting that without these developments, a “volume increase” in the energy’s use would not be possible. Toyota is currently working on the second generation of its hydrogen-powered Mirai sedan, which it hopes will be a more attractive option for customers. It sees great potential for hydrogen fuel cell technology to play a major role.  This does actually differentiate Toyota from most of its rivals, who have thrown their weight firmly behind battery electric vehicles.

Toyota’s EV journey is not without challenges. Key obstacles, also faced by other manufacturers, include establishing a robust charging infrastructure for EVs, making electric vehicles more affordable, and transitioning its supply chain towards sustainability. 

To address these, Toyota is investing in partnerships, research, and development. They are focusing on improving battery technology, collaborating with suppliers on sustainability initiatives, and developing charging infrastructure networks.

2050 may feel like a very long time in the future and it would be easy to criticise the company for a lack of urgency over their journey to net zero.  However, turning around a company as huge as Toyota is not easy and can’t be done overnight.  So it is important to recognise the progress they have already made and the ambition they are showing with their plans for the future.