When it comes to the automotive industry, most of the discussions boil down to electric vehicles and sustainability. Indeed, as environmental awareness is significantly building, car makers face a huge pressure from both regulators and from the society to cut emissions and greenhouse gases. The new challenges have emerged amid a great degree of uncertainty, as the rapidly intensifying trade disputes between the United States, Europe, China and Japan resulted in falling global car sales last year, which was particularly driven by the slump in demand in the world’s biggest market, China. Manufacturers face multiple challenges: they have to find solutions to meet the stringent regulations on emissions and at the same time maintain their sales and profitability amid a harsh geopolitical environment.
While most of the manufacturers consider the battery electric vehicles (BEVs) as the universal solution to their growing problems, the Japanese multinational automotive Toyota remains faithful to its innovative corporate philosophy and offers a potentially viable alternative to the fossil fuel passenger vehicles.
While most of the manufacturers consider the battery electric vehicles (BEVs) as the universal solution to their growing problems, the Japanese multinational automotive Toyota remains faithful to its innovative corporate philosophy and offers a potentially viable alternative to the fossil fuel passenger vehicles.
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You say electric, I say hydrogen
There is a wide consensus that the future of transportation is electric, which is also justified by industry data on vehicle sales. It is estimated that by 2040, 55% of the total globally sold vehicles are going to be equipped with an electric motor. Even though Toyota has been lagging behind the competition in terms of electric vehicles, the company leads the industry in hybrid cars (that run on two power sources) and is set to release six new electric models between 2020 and 2025. |
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However, the company is placing its faith also in hydrogen fuel for motive power. To be more precise, the technology Toyota is offering is a fuel cell system that generates power by combining hydrogen with oxygen from the outside air, a so-called fuel cell electric vehicle (FCEV). In addition to being environment friendly, as the sole by-product of creating electricity with hydrogen and oxygen is water, models of this type carry all the major advantages of any other electric vehicle, like higher torque availability.
The flagship FCEV model Toyota Mirai (in Japanese „future”) was rolled out in 2014 with around 7,500 units sold by the end of 2018. Despite the relatively unimpressive statistics, the company is hoping to „break the ice” with the new technology in order to re-embark on a growth trajectory in terms of the currently stagnating sales volumes. The second generation Mirai is set to hit the road in 2020.
The flagship FCEV model Toyota Mirai (in Japanese „future”) was rolled out in 2014 with around 7,500 units sold by the end of 2018. Despite the relatively unimpressive statistics, the company is hoping to „break the ice” with the new technology in order to re-embark on a growth trajectory in terms of the currently stagnating sales volumes. The second generation Mirai is set to hit the road in 2020.
Despite flat sales, the company last year managed to improve its operating margin as a consequence of positive foreign currency gains. Additionally, the company has adopted a cost reduction strategy in manufacturing, which had an approximate positive contribution of $1.57 billion to the profitability. Toyota is aiming to step up its research and development (R&D) expenditure from the operational savings.
2020 Olympics Tokyo- the opportunity to showcase the technology’s potential
Toyota’s „hydrogen-strategy” from a broader perspective demonstrates a national objective of Japan to reduce the country’s dependence on foreign oil and gas imports. Japan, which is poor in energy resources such as oil and gas, used to satisfy its energy demands with nuclear power, a strategy which had to be abandoned after the Fukushima tsunami caused meltdowns in 2011.
Since then, the country has been advocating a swifter transition to sustainable energy, with hydrogen constituting as the cornerstone for the energy mix of the future. Even though the country has suffered several setbacks in putting hydrogen to common use in the transportation and energy sectors, the 2020 Tokyo Olympics is dedicated to showcase the potential of the ambitions. That is where Toyota comes into play, as the company is the worldwide fleet partner of the Olympic and Paralympic Games, providing mobility products and vehicles.
2020 Olympics Tokyo- the opportunity to showcase the technology’s potential
Toyota’s „hydrogen-strategy” from a broader perspective demonstrates a national objective of Japan to reduce the country’s dependence on foreign oil and gas imports. Japan, which is poor in energy resources such as oil and gas, used to satisfy its energy demands with nuclear power, a strategy which had to be abandoned after the Fukushima tsunami caused meltdowns in 2011.
Since then, the country has been advocating a swifter transition to sustainable energy, with hydrogen constituting as the cornerstone for the energy mix of the future. Even though the country has suffered several setbacks in putting hydrogen to common use in the transportation and energy sectors, the 2020 Tokyo Olympics is dedicated to showcase the potential of the ambitions. That is where Toyota comes into play, as the company is the worldwide fleet partner of the Olympic and Paralympic Games, providing mobility products and vehicles.
Toyota’s fleet solution for the 2020 Tokyo Olympics Games
The company is preparing for the „greenest Olympics” in Tokyo, with 90% of its deployed fleet consisting of electric vehicles. The event is going to be a watershed for the Japanese manufacturer, as it is set to put its EV capabilities to a real test and see whether it is ready to take up the gauntlet with the leading manufacturers, such as Tesla, General Motors, BYD and Nissan.
Competition is gradually increasing on the EV market, as newcomer startup firms, taking advantage of the relative simplicity of the development and manufacturing of battery-powered vehicles, would like to compete with established giants. Toyota and other Japanese players have perceived both the threat of substitutes and the opportunity to gain the upper hand. For this reason, a group of 11 Japanese companies, including Toyota, Nissan and Honda, launched a venture called Japan H2 Mobility (JHyM) to promote the fuel cell technology and to establish the infrastructure required for widespread use.
Going against the flow
The Japanese carmakers’ intention to set hydrogen combustion as an industry standard remains a particularly risky endeavour. The infrastructure for fueling stations are estimated to be triple those of gasoline and petrol, not to mention that currently the majority of the hydrogen sourced for fuel comes from traditional gas extraction, which releases fossil carbon dioxide and carbon monoxide into the atmosphere, contributing to climate change. On top of this, protectionist policies may hinder the diffusion of the technology, as it hurts the market position of foreign competitiors currently ramping up investments in battery electric vehicles. Even though there are already around 40 public hydrogen fueling stations just in California, hydrogen cars have already incurred criticism from competitors, who discredit the technology on the grounds that current extraction processes are not sustainable.
It remains to be seen whether Toyota can achieve a breakthrough with the hydrogen technology and whether the global market adopts it. One thing for sure, Toyota has set itself the ambitious aim of cutting by 2050 the global average CO2 emissions from its new vehicles by at least 90 percent compared to 2010, which puts a huge pressure on the management whether to follow the flow of battery electric technology or to drive the hydrogen vehicles forward.
Tamás Lakos
(Cover image by Maurizio Pesce-flickr https://www.flickr.com/photos/pestoverde/16243413363)
Competition is gradually increasing on the EV market, as newcomer startup firms, taking advantage of the relative simplicity of the development and manufacturing of battery-powered vehicles, would like to compete with established giants. Toyota and other Japanese players have perceived both the threat of substitutes and the opportunity to gain the upper hand. For this reason, a group of 11 Japanese companies, including Toyota, Nissan and Honda, launched a venture called Japan H2 Mobility (JHyM) to promote the fuel cell technology and to establish the infrastructure required for widespread use.
Going against the flow
The Japanese carmakers’ intention to set hydrogen combustion as an industry standard remains a particularly risky endeavour. The infrastructure for fueling stations are estimated to be triple those of gasoline and petrol, not to mention that currently the majority of the hydrogen sourced for fuel comes from traditional gas extraction, which releases fossil carbon dioxide and carbon monoxide into the atmosphere, contributing to climate change. On top of this, protectionist policies may hinder the diffusion of the technology, as it hurts the market position of foreign competitiors currently ramping up investments in battery electric vehicles. Even though there are already around 40 public hydrogen fueling stations just in California, hydrogen cars have already incurred criticism from competitors, who discredit the technology on the grounds that current extraction processes are not sustainable.
It remains to be seen whether Toyota can achieve a breakthrough with the hydrogen technology and whether the global market adopts it. One thing for sure, Toyota has set itself the ambitious aim of cutting by 2050 the global average CO2 emissions from its new vehicles by at least 90 percent compared to 2010, which puts a huge pressure on the management whether to follow the flow of battery electric technology or to drive the hydrogen vehicles forward.
Tamás Lakos
(Cover image by Maurizio Pesce-flickr https://www.flickr.com/photos/pestoverde/16243413363)