More than two decades ago, Toyota rocked the world with a car that looked like a big step toward a greener future. But a lot has changed in 20 years. Toyota sold 10.
5 million cars, SUVs and trucks in 2021, the most of any automaker in the world. And this behemoth, which operates in at least 170 countries, is now facing criticism that it's not moving fast enough to reduce carbon emissions. Some have even said the company is opposing climate reduction efforts.
But we believe a one size fits all approach doesn't work,as we transition to this new future. We think, again, multiple products can meet the customers' needs where they are in different product needs, how they commute, etc. .
It's 20 years and they're no longer innovative and they're no longer sustainable in our eyes. Other large automakers, like General Motors and Volkswagen, have made big commitments to electric vehicles and have already released several models. Toyota markets only one electric vehicle, and it sold only 232 so far in the US and about 1600 globally.
Top executives have repeatedly said the hype around EVs does not match the reality. In December of 2021, Toyota said it would invest $35 billion in fully electric vehicles. However, at the same time, it outlined an equal investment in hybrids and hydrogen fuel cell vehicles.
We're committed to being carbon neutral by 2050. We're moving in that direction aggressively with many products, not just one, but with many products. So the question is, is Toyota behind everyone else or is it smart to be cautious?
In 1997, Toyota rolled out the RAV4 EV. It was an electric version of the popular RAV4 crossover. Tesla was still years away from being founded and EVs were extremely rare.
Several more EVs followed, but none went into mass production. Toyota purchased a stake in Tesla in 2010. The two companies collaborated on a second generation RAV4 EV in 2012.
But as established automakers started switching to EVs, Toyota held back in 2017. It sold all its shares in Tesla. Toyota really kind of doesn't want to dive into anything too quickly and then have to waste billions upon billions of dollars' investment.
Also, culturally, Toyota, the Japanese automakers are typically a little bit more cautious when it comes to new technologies. They want to do a lot of due diligence and they want to make sure it's the right direction for the company. Along with Ford, Toyota is one of the rare automakers that is still run by its founding family, which can contribute to a more conservative approach.
But the sentiment is widespread among leaders across the company. You famously said several years ago that you don't believe that there is a market that will accept a pure electric vehicle. Do you still believe that?
So you could have someone nonetheless. That's a question I get asked a lot. I must say up front that we are not against electric vehicles, but in order for electric vehicles to cover long distances, they currently need to be loaded with a lot of batteries that take a considerable amount of time to charge.
There's also the issue of battery life. He has a very specific viewpoint on electrification, which is that until the energy density of batteries reaches a certain point and we're not there yet, there's no way that battery electric vehicles can actually compete on a firm footing with gasoline or diesel. Toyota sells cars in markets all over the world, and those markets have different needs and constraints.
Its light vehicle brands, Toyota and Lexus, currently offer more than 130 models between them. Toyota sells Lexus branded cars in 90 countries and Toyota branded vehicles in 170. Of the nearly 8 million cars Toyota had sold worldwide for the year through October 2022, nearly 7 million were sold outside Japan.
More than 184,000 sold in Africa, 400,000 in the Middle East region and about 2 million in Asian countries other than Japan, including countries such as Pakistan and the Philippines. The electric infrastructure in at least some of these countries is not nearly as well developed as it is in other regions. Two thirds of the world's population without access to electricity live in sub-Saharan Africa.
Another 17% live in South Asia. Much of the rest are located in the ASEAN and China region, Latin America and Middle East and North Africa. Ultimately, the customers will tell us what is the best powertrain at the right timing for them.
The road may be bumpy as we move that way. Be it infrastructure, be it cost of batteries, etc. Hydrogen fuel cell vehicles are zero emission.
They run on hydrogen and they emit small amounts of water. They've garnered a lot of criticism from battery enthusiasts, but Toyota has championed the technology in both light duty passenger vehicles as well as in commercial ones. It co-developed a truck with Kenworth and demonstrated its capabilities at the Port of Los Angeles.
It has also sold 20,000 units globally of the Mirai, a hydrogen-fuel-cell-powered car. Toyota divides its alternative powertrains into two categories zero emission ones like hydrogen and battery, electric and carbon reducing ones like hybrids, which run on a combination of gasoline burning engine and battery powered electric motors. The hybrid didn't dramatically alter the driver experience.
It actually enhanced it by reducing the amount of trips to the gas station because it was more fuel efficient. When it launched the Prius in Japan in 1997, Toyota ushered in the era of the mainstream hybrid vehicle. It has sold 20 million hybrid cars around the world and 5.
4 million of them in the US to date. 25% of our current market share of our US sales is hybrid. We have hybrids from Corolla through RAV4.
100% of Sienna's 100% of Sequoias are hybrid and even the recently launched Tundra hybrid. They think that as the batteries improve, the hybrids get better and better. And we creep towards that point where the batteries are good enough that then actually it's better than a system that is hybridized.
Toyota's argument, in brief, has long been that electric vehicles are too expensive , the batteries aren't able to hold enough energy, they take too long to charge and the charging infrastructure isn't sufficient yet. The problem with this point of view is that the world has moved on, even though they are right in a way from an engineering principles perspective, there are other things that have happened in the interim: you know, manufacturing capability, mining capability, new advances in lithium-ion battery, and all of a sudden their calculation is a little off. Toyota rival Volkswagen Group said in 2021 it expects EVs to achieve cost parity with gasoline-powered cars by 2025.
Globally. In 2021, EVs made up about 5% of the market. But they were higher in some places and outpaced expectations.
They will be between five and 10%, probably six or 7%. Growth in China and Europe have been extremely strong for electric vehicles. I would say even stronger than I expected in Europe, mostly in Germany.
There is also a new business case for EVs. The electrification of the entire vehicle works hand in hand with the computerization of the vehicle. That has allowed car companies to think of a vehicle much more as a high tech hardware device like a mobile phone.
Governments are also pushing EV adoption - in China, the European Union and the United States to name a few. Many are offering generous incentives for companies and buyers. Even if they don't make sense from an engineering standpoint yet, they certainly make sense from an economic standpoint with with incentives.
Toyota has historically had the biggest share of the California car market, the largest statewide car market in the US. Data from the California New Car Dealers Association shows Toyota lost share in the first half of 2020 to over 2021. Tesla went from less than 5% share to almost 11.
All electrified vehicles, including hybrids, plug in hybrids and fully electric vehicles with just under 30% of sales in California, as of November 2022. Fully electric vehicles alone accounted for about 15% of the market. That is triple the national all electric vehicle market share of about 5%.
When you look at a very key and profitable market, like California, for Toyota, Tesla's taking share from them there and Toyota needs to rally back with that, starting with the Lexus brand, but also with the mainstream Toyota brand. Katherine Garcia is a clean transportation activist at the Sierra Club, an environmental advocacy group based in California. Their, their goals have been mismatched, based on what we're seeing in terms of production, in terms of innovation.
And we're just really disappointed that Toyota has not stepped up and met its competitors in accelerating the transition to cleaner vehicles. Sierra Club also says Toyota, even more than other automakers, has opposed climate legislation around the world. Influence Map, a UK based, climate focused think tank, identified Toyota as one of the companies most aggressively lobbying against climate policies in 2021.
The top three were Chevron, Exxon and Toyota. And frankly, it's just extremely inappropriate for an automaker that has the means to be investing in cleaner vehicles and supporting this transition to electric vehicles to be stepping in the way of climate policies. Environmental activist group Greenpeace placed Toyota at the bottom of a list for its decarbonization efforts.
In a statement to CNBC, Toyota said to set the record straight. Toyota has never lobbied for lower emission standards nor to lower incentives for any particular technology in the US. We have consistently asked the government for fair policies that do not favor one technology over another in the pursuit of eliminating carbon emissions.
We do believe in an all electric future. We're investing $35 billion from 2021 to 2030 in battery electric vehicles. But also while we go through this transition, we're also electrifying the rest of our portfolio, increasing our hybrid volume and plug-in hybrid volume to maximize the benefit of carbon reduction.
Toyota's new $35 Billion investment, announced in December 2021, includes a plan to introduce 30 electric models by 2030. That is just under a quarter of the more than 130 models it currently makes. The plan includes about $14.
6 billion of spending on battery technology and $5. 9 billion in the US alone. It also includes a planned $3.
8 Billion battery factory in North Carolina. In April 2022, Toyota launched the bz4X, the only battery electric vehicle it sells. The launch comes about a decade after Tesla launched its flagship Model S sedan and five years after Tesla's smaller Model 3.
I think they've they've realized that they do need to pay more attention to all electric than they have in the past. While the company is making lofty promises, not everyone thinks Toyota can catch up. There is a learning curve around how to build a good EV.
You can't just out of the box be great at it. The company is gargantuan and it has a massive research and development budget. No one doubts the prowess, the technical prowess and the ability to develop technology that Toyota has.
But research and development is just one piece of the total. There's a manufacturing element to it and there's a supply chain element to it. There's these arrangements with battery suppliers.
So there's people inside your organization. There are servicing that needs to be done at the dealership. There's a lot of things that if you started earlier, you're farther ahead.
North American EVP Jack Hollis said in an interview with the Automotive Press Association in August 2022 that mainstream consumer demand for electric vehicles does not match the rhetoric around them. After 25 years on the market , hybrids have only about 6% share of new vehicles. EVs are half that.
The recent federal Bipartisan Infrastructure law set aside $7. 5 billion to build a network of 500,000 electric chargers. However, a recent report from consulting firm McKinsey and Company said that would still be a far cry from what would be needed to meet demand.
The government wants 50% EV penetration in the US by 2030. McKinsey estimates that would require 1. 2 million public chargers and 28 million private ones to sustain an EV fleet of that size.
That is about 20 times the number of chargers the US had as of April 2022. If you were to judge electric vehicle sales by the amount of articles and hype around them that are written, we would be a 90% all-electric electric vehicle society. But the reality is that electric vehicles are still a very niche player.
And we are going to have hybrids, plug-in hybrids, ICE engines with gasoline for decades to come. We still think that in ten years, 50% of new vehicle sales will be gasoline. And if you look at the global footprint, that is almost certainly going to be true because you're not going to see in Nigeria, in Iran, in Indonesia, a 50% market share for electric vehicles, period.
And those are big markets. In the meantime, industry watchers say Toyota will be working hard to manage criticism that it is not doing enough to fight carbon pollution or develop green products. If my guess is right, they will be consistently beating the message that, look, all these hybrids that we sell, we actually reduce fuel consumption by way more than all these other people trying to sell EVs.
Watch that message. That message is going to be repeated and repeated and repeated by them over the next ten years.
