Has Toyota got it right!

Apparently there’s a shift to electric powered vehicles (EV)!  Everyone’s doing it!  Or maybe it is a European thing, not a global movement.  We hear more about this happening in Europe than the United States.

Consumers apparently think that by purchasing and driving an electric vehicle, they are helping to reduce their carbon foot-print.  In reality is it not just a ‘feel-good’ factor, rather than what is actually happening right now and arguably in the future?

This is why I agree with David Linklater’s excellent article on Stuff (reprinted below) and reprinted in their Drive newspaper insert, titled ‘Why Toyota doesn’t really sell electric vehicles‘.

Toyota’s approach is significantly different to the other two top car manufacturers VW and Nissan-Renault – ‘its volume-selling petrol-electric hybrid technology (which saves about 30 per cent in fuel consumption compared with conventional petrol power) is doing more to address climate change than the brand could achieve with a much smaller number of costly plug-in vehicles’.

VW have declared that the German carmaker will develop their final generation of combustion engine technology in 2026.  Media reports say that their strategic shift to battery-driven (not hybrid) is in the wake of the damaging diesel-emissions cheating scandal of 2015.

Personally I don’t get the full EV electric vehicle thing.  I don’t believe it is sustainable now and there is not a convincing argument that it will be sustainable in the future.

While electric vehicles are all very fine on the face of it, is it not shifting the carbon foot-print to electricity produces?

If we look at the European Union, in 2016 almost half the net electricity generated came from combustible fuels (coal, oil and natural gas). More than 25% came from nuclear power stations.

Key renewable energy , just over 25%, came from hydro (12.1%), wind turbine (9.7%) and solar power (3.5%).

Renewable energy targets include 36.4% in 2020 and 51.6% in 2030.  How are these targets going to be met?  I doubt that there will be more hydro available so then it is dependent on wind turbine and solar power.  Nuclear power stations are slowly being phased out.

On the face of it. VW’s strategy appears to be flawed and a real gamble.  One would think that as an investor, Toyota have got their strategy right and you would put your money on their hybrid technology as being more sustainable.  Let’s be clear, it is diverse strategies and decisions made now that can determine whether a company will be around in 30 years time.  My money is on EV being a transitional technology.

Why Toyota doesn’t really sell electric vehicles

Everybody’s talking about electric vehicles (EVs) in New Zealand at the moment and it seems like almost every major carmaker is focused on EV power in some way.

NZ is theoretically the ideal environment for EVs, with over 80 per cent renewable electricity.

So you might think it strange that Toyota, NZ’s number one car brand and a pioneer of alternative eco-power with its hybrid engines, doesn’t have any pure EVs and only one plug-in of any kind: the rather niche Prius Prime.

In fact, contrast Toyota’s global approach with Volkswagen Group and the Renault-Nissan Alliance (together they are the world’s three largest passenger-car producers).

VW and Renault-Nissan see EVs as pillars of their future success. But plug-ins hardly register at Toyota in a global sense – either now or in the short-term future.

None of this is strange at all says Alistair Davis, chief executive and managing director of Toyota NZ.

Toyota argues its volume-selling petrol-electric hybrid technology (which saves about 30 per cent in fuel consumption compared with conventional petrol power) is doing more to address climate change than the brand could achieve with a much smaller number of costly plug-in vehicles.

“We don’t sell EVs of any kind to any extent around the world,” says Davis. “We’ve been a bit resistant to going back into EVs – you’ll remember we used to be into them heavily in the 1990s with the EV RAV, which was pushed strongly in California.

“Part of it is that we haven’t got the cost structure right to be effective in making a real difference to climate change.

“The reason for EVs is principally to do with carbon footprints and climate change. But the only countries selling large volumes of EVs have heavy government subsidies… and basing a business on government incentive is slightly risky.

“There’s also the problematic issue that there’s not much point producing EVs if the electricity comes from burning coal. All you’re doing is moving the fossil fuel problem from the car to the electricity company.”

Davis acknowledges that NZ is uniquely suited to EVs with its renewable electricity, but also reminds that we’re an exception rather than the global rule. And while local power is 80 per cent renewable, it’s only 50-60 per cent carbon free: hydro and wind qualify, geothermal does not.

Davis argues hybrids still allow more people to make more of a collective difference to climate change right here and now, because the automotive industry is still a long way off making EVs truly affordable and practical.

“Some of the spending that big car companies have put into EVs is just astronomical. They’re all searching for how to get energy density into batteries to get [good] range, but nobody’s really got a breakthrough.

“Remember that 80-90 million cars are sold each year and only one million of them are EVs. The costs of development are being spread over a tiny number of vehicles. When we get millions being sold, then we’ll have economies of scale.”

Davis says that the 14,000 electrified vehicles Toyota has sold new in NZ over the past decade save about 12,000 metric tonnes of CO2 each year.

“Most of those 14,000 vehicles are still on the road. If you assume a hybrid will last about 20 years – an EV will be a little bit less because of the batteries – then the carpark we already have is going to save about 250,000 tonnes of CO2 over that time.

“It’s a big contribution towards CO2 reduction. It’s going to take pure-electric cars some time to match that.”

Toyota NZ has seen a surge in sales of hybrid models in the last year: Toyota/Lexus totalled 2090 in 2018, up 50 per cent over the previous year. It also sold 690 used-import hybrids: mostly Aqua (known as Prius C in NZ), but also the regular Prius, both conventional and previous-generation PHV (Plug-in Hybrid Vehicle) models.

Hybrid power has spread from Prius and Camry to a greater variety of Corolla models and has now reached the RAV4 SUV for the first time – where it is expected to account for at least half of sales.

Toyota says its entire model lineup will be hybridised by 2025.

Toyota hasn’t totally shunned the concept of plug-in cars. It’s been in a joint venture with Mazda (another company that’s not super-keen on EVs) since 2017 to develop a shared plug-in platform, which will result in a variety of EVs (both pure-electric and hybrid) for suitable markets – perhaps as early as this year.

You could also argue that Toyota has simply leapfrogged the plug-in revolution in favour of hydrogen power. It claims to have spent a decade developing the Mirai sedan (just as it did the original Prius), which is still an electric car but runs on hydrogen. No plug required and it has similar refuelling time and range to a conventional petrol car.

Mirai is still a relatively exclusive, hand-built model only available in select markets where hydrogen refuelling infrastructure exists. But over 5000 have been sold in the United States, Japan and Europe.

It’s likely Kiwis will get a chance to see Mirai in action soon. It’s possible Toyota NZ will demonstrate a handful of the vehicles on local roads by the end of this year – possibly with a hydrogen tanker to refuel them.