Every automaker is rushing into electric vehicles, except Toyota. Why?
Transportation is a major contributor to greenhouse gas emissions. Both America and Europe have incentivized the switch from internal combustion engine power to battery electrics drive in passenger cars and trucks. Tesla began the movement a decade ago, and today every major automaker has announced major investments in EV production, with one exception: Toyota. Regarded by many as the world’s leading automaker and a pioneer in the development of hybrids, many expected Toyota to take that expertise and use it to make a play for EV leadership. Is Toyota lagging in EV development, or does the firm have a longer-term strategy in play? Jim Anderton discusses the issues.
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Transcript of this week’s show:
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Everyone knows what this is: a Tesla Model Three. It’s the best-selling electric vehicle in the Western world, along with the mechanically similar Model Y.
We all know that Tesla restarted the electric vehicle market, after more than a century, with the Model S. But for almost a decade, the industry as a whole didn’t regard the upstart company as a threat.
Many still don’t, but with global warming now a hot button political issue, the auto industry is moving out of the realm of consumer goods as a free market. Governments are responding to the environmental movement, and everyone wants to get off fossil fuels. Add the war in Ukraine, and the subsequent impact on European fuel supplies this winter, and the issue of reliance on fossil fuels is in sharp focus.
In the automotive industry, however, there is a stark reality that even Tesla can’t get around: the most expensive part of electric vehicles, the battery, puts a severe constraint on the consumer uptake of electric vehicles. Electric vehicles are significantly more expensive than equivalent gasoline powered models, and the driving range of electric vehicles can’t match that of internal combustion engine cars. Charging is slow, and charging stations are not as ubiquitous as gasoline filling stations.
We’ve all heard these arguments, and so has the Biden Administration, which has responded with renewed subsidies for consumers to buy electric vehicles. Incentives to build electric vehicles are there, too, and every major automaker except one is diving headlong into electric vehicle production.
That one, ironically, is Toyota.
It’s ironic because Toyota was the first to put battery electric drive trains in mass production cars, with the Prius in 1997. That car launched the hybrid revolution, and every major automaker today builds them. So, if Toyota started the electrification of cars and light trucks, why have they resisted the switch to full electric power?
Well, they have their reasons. One is that with current battery technology, electric vehicles are expensive—very expensive, and with rising interest rates we expect to see downward pressure on MSRP, something which will be difficult for pure EV makers to cope with.
Another reason is infrastructure. In the Western world, something like half the population lives in cities. Charging infrastructure is nowhere near extensive enough to cope with widespread electrification, and charging times are too long to allow a few chargers to serve a vast fleet the way gasoline filling stations do.
Batteries are the weak spot. Too expensive, too low in energy density, too slow to charge and too heavy. Toyota has a billion-dollar joint venture with Panasonic to develop a new generation of solid-state batteries, which promise faster charge times, although the cost is unknown as no one is mass-producing electric vehicle sized solid-state units yet.
Meanwhile, Toyota has announced a range of electric vehicles to satisfy government mandates and a buying public that wants to believe that EV technology is ready for prime time. But it seems to me that the engineering reality shows that Toyota is correct to hold back. There are major compromises in owning an electric vehicle, and with current technology they are still far too expensive. Unless those things change, a decade from now the world’s fleet will still be powered by fossil fuels.
