Toyota Is Planning A Late Arrival To The EV Party

Posted by at 17 June 2021, at 05 : 55 AM

Toyota Is Planning A Late Arrival To The EV Party

For years, the world’s biggest auto manufacturer, Toyota, has been promising consumers and the press hydrogen-power vehicles. These, it says, will offer all of the convenience of regular gas-powered cars, but without any pesky CO2 emissions. Toyota’s vision is for a hydrogen-powered world with low CO2 and clean city air.

But the rest of the industry has other ideas. While Toyota is pushing hard with hydrogen fuel cells, it no longer feels like the wave of the future. During the technology’s development, companies like Tesla have come along and utterly transformed expectations for what the industry can achieve with lithium-ion batteries. New Toyota vehicles manufactured in 2030, therefore, will likely run on this powertrain.

Toyota, however, still believes in the power of hydrogen technology. And it believes that it can be efficient enough to compete with electricity. Furthermore, it is also sceptical that battery and electric motor technology will progress to the point where most consumers can afford it – at least for the foreseeable future.

It’s current strategy is uncharacteristically laid back. Toyota is essentially going to move in tandem with technology and consumer demand, reacting when it sees fit. Given this reality, it says, it won’t be moving to electric vehicles any time soon. It’s just not economical to do so.

Unfortunately, the Japanese automaker doesn’t appear to have any aces of its own up its sleeve. It’s much-anticipated Mirai hydrogen-powered car is still expensive and doesn’t appear to offer consumers any advantages over the regular variety.

Toyota says that it wants to sell 1 million fuel cell cars per year by 2030. But that would represent less than 2 percent of the total number of vehicles that it expects to sell by then which means that it anticipates the market is going to remain small.

Why all the pessimism? Toyota believes that the price declines in batteries and electric motors are not going to continue in the manner they have over the last 10 years. Eventually, engineering and scale economies will hit a wall they can’t get past. When that happens, consumers will have no choice but to choose regular ICE-powered vehicles, Toyota’s speciality.

In many ways, Toyota’s approach is strategic. It knows that investing now in battery technology is extremely expensive, and the payoffs are a long way in the future. And so it’s waiting, biding its time, and seeing how the market plays out. Getting to the party later coil actually delivers some advantages for Toyota. It’ll be able to utilise off-the-shelf products (without having to develop them itself). And it will be attempting to sell cars at scale for the masses, instead of targeting niche markets, like Tesla does today.

Toyota is also waiting to see what regulators do in response to the electric vehicle revolution. It’ll want to know how to retool its factories before beginning that costly and time-consuming process.

Lastly, it also wants the idea of electric cars to go mainstream before asking its customers to buy them. Only then will it make the switch to mass electric vehicle manufacture. And it ain’t gonna happen any time soon.

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