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Lexus CEO Presents His Anti-EV Case
17 H BY VANJA KLJAIC 192
A prudent business decision or just another case of the blind leading the blind?
There are more pessimistic predictions about the future of electric vehicles coming from Lexus Boss, Yoshihiro Sawa.
In his most recent interview with AutoCar, Sawa cautioned carmakers against putting too much emphasis on fully electric powertrains. He warns that such business decisions might be bad for business, as such powertrain systems simply can’t satisfy the needs of all drivers. While we find this hard to believe, Sawa is, after all, the head of a major luxury carmaker and his words need to be heard.
More from Lexus
However, it’s interesting to see that both Lexus and Toyota (its parent company) are yet to fully dive into the field of battery-powered vehicles. After all, it was Toyota that ventured into the field of hybrid powertrains as the first among the world’s biggest carmakers.
But unfortunately, in recent years, the Japanese carmaker seemingly did little to venture into the field of fully-electric powered vehicles and powertrains. Hence, it’s no wonder that Sawa, in his interview with Autocar, warns about the environmental impact of such cars.
“Our philosophy is to provide freedom of movement, so we have to develop technology on all fronts. We understand that electric is very necessary, but we can also see that full EV will not suit everyone. You can’t make an electric Land Cruiser work, for instance, and there are people in remote parts of the world whose lives depend on that car. EVs currently require a long charging time and batteries that have an environmental impact at manufacture and degrade as they get older. And then, when battery cells need replacing, we have to consider plans for future use and recycling. It’s a much more complex issue than the current rhetoric perhaps suggests. I prefer to approach the future in a more honest way.”
This approach was demonstrated to the public earlier last year, thanks to the Lexus LF-1 concept. The vehicle allows the manufacturer to utilize electric, fuel-cell, hybrid and petrol powertrains. But, creating just a prototype in 2018, with no real goal set for a production reveal, might simply be a case of burying your head in the sand.
With Tesla, several Chinese manufacturers and even old school players like Porsche, Mercedes-Benz, and Jaguar, all infusing loads of R&D money into the battery-powered vehicles (with actual production models set to hit the showrooms in the next 2-4 years), it’s becoming more and more evident that Lexus may already be falling behind.
Truth be told, the interview that Lexus Boss, Yoshihiro Sawa gave to the publication reveals some worrying details about the future of the brand. It’s becoming more and more evident that the current Lexus leadership is going against the grain, shunning away from both full electrification and autonomous driving. Whether that’s a prudent business decision or just another case of the blind leading the blind still remains to be seen.
You can read the entire interview for AutoCar, right here.
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192 Comments on "Lexus CEO Presents His Anti-EV Case"
“A prune business decision…”
Trying to parse that; was “prune” perhaps supposed to be “prudent” ???
@staff: Note two occurrences of this phrase in the article.
#GrammarNazi
Changed.
You might have gotten one changed but not the second
It’s a nice way of saying idiotic
Damn typo! Nice catch though! 🙂
Maybe he meant to say “a business decision similar to the results of eating prunes”, referring to the laxative effect of eating prunes and the semblance to this business decision?
#CrappyJoke — no laughing required
i’m fairly certain Japan can support sun and wind. But would that mean butting heads with the old guard, which appears to be a no-no there.
Japan;s industry was one of the founders and early adopters of solar energy, they export solar panels, but they do not get much energy from it at home, they import coal and natural gas, and despite obstacles use nuclear power.
Their plan for 20230 is lng 27% oil 1% coal 26% renewables 24%,but they have opposition to restarting nuclear plants, some are not fit for restart, and new plant construction you’d think would not b feasible, so their coal use while currently very high will undoubtedly increase. In the last 2 years 8 new plants have come online and over 10 years 30 new coal plants are scheduled to start burning coal.
I don’t buy their excuse that they don’t have enough land for solar, and they will start off shore wind,I’m betting they will deploy even more wind and solar while also increasing coal and natural gas.
It’s natural gas, more tan anything else. My view.
LNG was $14, before Japan aimed to be a hub. Now it’s $5/mmbtu, and can be used in place of nukes/coal, just as it is the primary feedstock in H2 production (the cheapest way to make the stuff, barring a value on pollution).
This morning, I heard Sony is aiming to supersede SLR cameras and that future Prime Minister meetings will ban the shutter-noise cameras make. Reminds me of how countries manage their leading industries in directions they want. Is Toyota really different?
It’s a lot easier to transport Hydrogen (with a much higher energy density than current and near future battery) to remote locations than electricity. I doubt he’s talking about permanent stations either, rather “stations” built on the back of lorries, such as many petrol/gas “stations” are in remote areas now.
Personally don’t think that’s a good excuse not to electrify non off road Lexus vehicles though, but presumably they have a business case for it – perhaps they’d rather spend more money on one technology than split the funding/brainpower.
That said, in remote areas a range extender is not going to help, because once the battery is used up it’ll never be recharged from the grid, with the battery and electric motor just charged by the ICE inside the vehicle almost exclusively – basically a mild hybrid. Alternatively the battery will be charged up by the diesel generators powering any base camp there may be.
He has some good points, but also some bad ones.
I’m not sure hydrogen is an easier way to transport electricity. Pretty sure the Sun shines all over the Earth, and with solar panels you can capture it at the source.
Your examples are also extreme case scenarios, as not everyone lives on an island in the middle of the ocean, or remote wilderness places where there is no reliable power source. And again, solar panels can be set up anywhere the Sun shines. And you can also power batteries so they can store the energy to use at night or on cloudy days.
Hydrogen fuel cells may still have some niche uses. But Toyota/Lexus insisting that they be used for light duty passenger transport is definitely them completely missing the point about people using less gas in their everyday lives. And unless they foot the bill to build up a hydrogen filling network worldwide, like how Tesla is doing their Superchargers, their pro-hydrogen argument makes less and less sense every year.
It’s tough enough to build charging stations, expecting future revenue. How is a hydrogen filling station investor supposed to front 2 million (for one location)?
Can my house fill these cars? Hydrogen is such bullsh!t. Conclusion secured.
Perhaps you should ask all the owners of those Petrol/gas stations? There are one or two around, so probably one close to you.
More seriously this is how you do business. You spend lots up front and hope for a payback over several years. In a lot of sectors the first few are lossleaders by larger companies until they reach critical mass, at which point they start making money. Others can come in later and start making money sooner.
One Hydrogen explosion and all FCVs and Hydrogen hopes goes up in smoke or must I say BOOM
In a not to distant future people will be like “Toyota Who?” Fuel cells have no future unless you haven’t done the research don’t know how inefficient end expensive it is.. Did you know the fuel cells wear out and need to be replaced after a few years and Hydrogen will be way more expensive to fill you car then gas..
The largest car manufacturer on the planet is not going to disappear any time soon because they are investing in Hydrogen as well as EV.
Eerily similar to what people were saying about Kodak 20 years ago.
And most of the arguments against hydrogen are eerily similar to the argument against EV 20 years ago (and today for some).
And Kodak aren’t a great example. Kodak concentrated on film to “power” the camera companies like Canon, Olympus and Nikon. All of which are still around and still dominant in the Digital camera market, as they were in the film camera market. Kodak are more equivalent to the likes of Shell and BP, who are already pushing into renewables to diversify.
Kodak is a better example than you think. Kodak was a pioneer in digital photography, it was the first company to design and produce digital sensors. As late as 2005, Kodak was a major player in the digital camera market, it was No. 1 digital camera seller in the US. Kodak was a lot more than just a supplier of film to other companies. What doomed Kodak was its unwillingness to let go of the film, photographic paper, and chemicals to develop photos – the margins on these products were too good to pass up.
If you ask me, that sounds a lot like Toyota – the company that was a hybrid technology pioneer, had a huge success with the Prius but was unwilling to take it further and let go of its ICE business. On top of it, Toyota is now betting on the wrong EV technology. Unless Toyota shifts its strategy, its future is not so rosy.
So you looked up Kodak and now your argument sounds a little different than your original post.
Regarding the “Gillette model” – what kind of digital cameras did Kodak make to sell film?
Except that they’re not producing any discernible EVs with that investment, which means that their market share is about to crater.
Another case is was made that Japan does not have the geography to support a future renewable electrical energy source without hydrogen.
Perhaps someone “made a case” that Japan can’t use renewable energy because of geography, but that’s bull pucky. There are plenty of uninhabited regions in the Japanese islands which could be covered in solar farms and/or wind farms, and with all the geothermal activity in the islands, it would appear to be a prime area for geothermal power.
Part of the reason that Japan has gotten so desperate for power that it has foolishly turned to the “hydrogen economy” hoax is that, following the Fukushima incident, due to public hysteria over “RADIATION!!” they’ve shut down nearly all their nuclear power plants. If human beings were rational animals, they’d turn those back on and use them for an interim period while they built a new set of next-generation, truly fail-safe nuclear power plants. If they were rational, they’d also open up about 85% of the Fukushima evacuation zone; the parts of that area where the background radiation is no higher than that of Denver, Colorado… which actually has a lower cancer rate than the U.S. national average!
https://www.technologyreview.com/s/602051/fail-safe-nuclear-power/
Japan is one of the most densely populated countries on earth. It’s also very mountainous so “uninhabited regions” are either going to be very unsuitable due to geography (too steep) or conservation/nature areas. Destroying the planet by flattening wild areas for solar is just as bad as continuing to pump out CO2.
Not that I’m against solar, we should just be concentrating on installing it on pre existing built up locations (on existing roofs, as covers for carparks etc), not the countryside/protected locations.
We need a sustainable future in general, changing one damaging activity to another will not solve that.
I will tell Sawa-San a secret for free:
The fuel in the tank of his ICE car degrades a lot faster than a Tesla battery.
What does this mean exactly? Are you trying to say that gasoline will lose its chemical properties to power the car?
Please explain.
He’s likely referring to octane degradation. With 87 octane, the process of degradation starts in as little as 3 months. It’s why the first gen Volts were recommended to use 91 or higher (due to the long periods between running the generator).
Ok, thanks, the Volt example makes a lot of sense.
Aha. Truth to the “don’t want to mix the old gas with the new gas” line from an old Corvette ad.
John said:
“[Octane degradation is] why the first gen Volts were recommended to use 91 or higher. . .”
I’m not buying it. What changed on the 2nd gen Volt that allows it to use 87 octane regular gasoline? The 2nd gen Volt has a much higher AER than the 1st gen, and a more efficient ICE with a higher MPG rating in range extender mode than the 1st gen. Therefore, the gasoline in the tank of a Volt would sit much longer in a 2nd gen Volt than in a 1st gen Volt, yet the maintenance mode on a 2nd gen doesn’t run more often or longer than on a 1st gen Volt.
Reality doesn’t care if you believe it or not. It works the same either way.
The 1st generation Volt needed premium gasoline; the 2nd generation doesn’t. Fact, not “belief” or “opinion”.
As a 7.5-year owner of the 1 gen Volt, I can tell you the gas tank is sealed (likely to prevent the gas from going stale.) Opening the gas cap requires first venting the tank, a process that usually takes 1-2 seconds, and occurs when the gas door open button is pressed. If the gas wasn’t consumed after 12 months, the engine would run to empty the tank. Adding a couple gallons of new gas would prevent the engine from running due to old gas. Also, if the engine has not run for 30 days, it will run for about 5 minutes the next time the car is on to maintain lubrication in the engine. In seven years I only had that happen once.
87 and 91 octane, is that a US thing? Here in Europe you can’t buy gasoline with less than 95 octane.
Yes.
Different measurement scale
Yeah their 87 is like our 95 and the 91 is closer to 98/99. They often have Super which is closer to 100/102 and E85 is way more available over there.
On a side note, octane rating isn’t all that great, but it’s a standardized test which works. Two 98 octanes don’t necessarily have the same characteristics and resistance to detonation etc.
Yes, all plug in hybrid computers are correctly programmed to run the engine before the fuel goes stale. The problem is that it oxidizes with exposure to air unless sealed (impractical) or unless additives are used. Rule of thumb is about four weeks so PHEV owners should keep this in mind and if running most of the time on electricity, keep the gas tank almost empty
Most PHEVs use pressurized gas tanks and the fuel is good for a year or more. Volt keeps average age at no more than 1 year.
Well, thank goodness the engineers at GM and makers of other PHEVs didn’t agree with your assessment that sealed gas tanks are “impractical”, and went ahead and put them into the Volt and other PHEVs.
Maybe you should ask the Petro chem co.s why they recommend to put Fuel conditioner /Stabilizers in your Gas Lawnmower.
Just admit it Lexus, your buyers are elderly, and you don’t want new technology to frighten them away 😁.
It’s more the case of the Lexus executives being elderly and frighten of change.
People say that about Cadillac. I often wonder if BoltEV came out as Cadillac, it could’ve enfused young blood into otherwise geriatric brand.
The problem with Cadillac cars is that they are priced way higher than anything comparable. Remember the Cadillac ELR? It died a slow death because it was overpriced. It did nothing to infuse new blood into the brand.
Read my comment again. BoltEV, not ELR.
Yes, I’ve read your comment and I know you mentioned Bolt EV.
My point was that Cadillacs were overpriced Chevys with higher quality interior. If GM had produced a Caddi-Bolt EV that cost $75k, nobody would have bought it and it would have converted no youngsters into Cadillac faithful.
Yes, I remember DeNysschen and his view of the world.
I never seriously considered ELR because it was a PHEV and had an unreasonable price tag. I believe they were initially around $75k and then they were discounted to around $65k.
I don’t believe Gen 1 Volt was ever close to $60k. How in the world were you able get the price of a new ELR within $4k of a Volt?
” Caddi-Bolt EV that cost $75k, ”
I mean Caddi-Bolt at $38K that it is now. It’d serve as entry level Caddi. As far as MSRP goes, that’s $12K premium over comparable gasser, so it would seem overpriced at first glance. Then they can load up on options to hit $75K like Tesla is doing (bigger battery, dual motor, performance option, etc).
Cadillac will continue to kill off its sedans. In the US, the only buyers seem to be fleet purchases. The ATS is gone, along with a few others (CTS, is it still around or not?):
https://autoweek.com/article/car-news/cadillac-killing-ats-cts-and-xts-sedans-favor-crossovers-come-2019
Since the nameplates make no sense to me (is there a pattern?) and this detailed article is equally vague, I would say that a lack of leadership over Cadillac is the promise of their ultimate demise:
https://www.cnbc.com/2018/03/23/cadillac-is-reinventing-its-lineup-after-years-of-lost-us-market-share.html
I would not be surprised if GM nixes Cadillac. They are way, way behind Buick and buyers aren’t interested in nuances between the two nameplates.
Best I could find about their sales data in the US was a Google Cache:
http://webcache.googleusercontent.com/search?q=cache:2Wcn07PRiKkJ:cadillacsociety.com/2018/07/03/cadillac-sales-q2-2018-united-states/+&cd=4&hl=en&ct=clnk&gl=us
Cadillac enjoys a premium price to carry the badge, but it’s the same parts, fit, and finish of the Buick.
As lost as Lexus sounds with their anti-EV FUD, Cadillac sounds worse.
BoltEV — “I often wonder if BoltEV came out as Cadillac, it could’ve enfused young blood into otherwise geriatric brand.”
Like Buick in China when Buick was considered a brand for upwardly mobile successful Chinese yuppies
Exactly. Let them have the 20% of the market that never experiences the ultra-smooth performance and ride characteristics of an EV. Let them continue to use dirty gas stations in the rain, instead of charging in your own garage. Let them get into a cold car in winter.
The 80/20 rule. Some people can’t learn.
Auch, this kind of nails it. 🙂
Yes, EV’s are coming and they’ll be coming to Lexus despite what he says, they’ll at least have hybrids as the technology is too compelling to ignore. One point is ,is that as time passes the tech becomes cheaper.
While I gave you a thumbs up, I would like to point out that my wife and I resent the implication that all “elderly” people shy away from new tech. (Although I would first pinpoint the definition of “elderly.”) I love new tech and constantly upgrade to the newest tech. This, from an old guy looking to retire in a few years.
In a way, I would agree that by stating some of the complexities of battery disposal, Mr. Sawa is honestly acknowledging that Lexus (and perhaps Toyota as a whole) wants to continue simply as car manufacturers, and realizes that to responsibly make electric cars requires investment in other areas as well. While Tesla has made a name for itself by embracing the entire ecosystem surrounding its vehicles, it is reasonable to guess most auto manufacturers would like to avoid that extra work. The challenge will occur as more traditional auto makers begin embracing the ecosystem idea, as Volkswagon group has begun to do (albeit reluctantly).
The automotive market is undergoing the biggest shift in its recent history. Unless Toyota and Lexus change their strategy, they will be left behind by other manufacturers and will eventually go out of business.
Exactly. They will “enjoy” an 80% drop in stock value, along with customers losses of 80% minimum, and a reduction of models sold. So be it.
Yes exactly, the taxes on fossil fuel cars are on the rise year on year especially in Europe not to mention more & more stringent emission limits over the coming years.
Yup. They can continue to be a market leader in gasmobiles, just as Eastman Kodak continued being a market leader in selling film cameras and film, during the digital camera revolution.
How did that work out for Kodak, again? What? Went bankrupt in 2012, you say? Well, I guess not so good, then. 😉
This is absolutely true. GM made kick ass EV with SparkEV and decent one with BoltEV (on sale), but they are highly lacking compared to Tesla due to infrastructure. I suspect Sawa’s concern is that those externalities are going to be very difficult since they are brand new venture for just-cars company, especially for a company that makes cars similar in price to Tesla.
At least GM announced dedicated chargers for ridesharing and self driving cars to kick things off and venture into new territory. Guys at Toyota are unimaginative and afraid to get into new innovations, simply sticking J1772 into their existing line (eg. Prius Prime)
Uuummm, so do you think that Toyota, rather than making EVs in an irresponsible fashion, should continue to destroy the environment (irresponsibly) with ICE vehicles? 😉
I think that Toyota’s position means they want to continue making profits and are not willing to risk investing their company’s future on an EV ecosystem before they can guarantee it will be profitable. That position in itself carries different risks that Toyota will fall behind and lose market share by being overly diversified and failing to capitalize on EVs when they could. Most companies are making the EV transition for economic, rather than environmental, reasons.
Right on target. In most companies, the bean counters will decide what the future direction is. This is usually driven by short-term gains and, as you mentioned, it might produce undesired long-term effects.
I think several companies we all could name, notably including Toyota, are betting that they can leap into EVs in a relatively short (by car company standards) time frame and not suffer a major financial hit. This is why I’ve contended for a long time that these companies likely have some very interesting (to us plugheads) R&D projects going on, “just in case”. A Prius EV? The return of the Fit EV or the intro of an HRV EV?
This is a highly risky tactic, as they’re potentially giving away early leadership in EVs for the sake of short term corporate and dealership profits on ICE vehicles. It also assumes that they won’t get priced out on a Big Battery Breakthrough. Imagine if one of their competitors or a battery company with an exclusive deal with a competitor cooked up a BBB that allowed for highly durable, mass-production friendly batteries at, say, $50/kWh, and then either refused to license the technology or only did so at a painfully high cost. If I were the CEO of a car company, that’s one of the scenarios that would make sleeping difficult.
Sure, there are risks to transitioning to a new tech. It’s called “The Innovator’s Dilemma”.
https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
But here’s the thing: During a disruptive tech revolution, market leaders might lose market share if they transition to the new tech, especially if they do it too soon or too late. But they are guaranteed to lose market share if they wait too long; if they wait until the majority of the market has shifted to the new tech. Just like Eastman Kodak did.
And if Lexus follows the path of Eastman Kodak, then they won’t be in business 20 years from now.
It weird how nissan was one of the first (i want to write first but i’m not sure) to produce an EV but lexus (which is the same) still arguing that right now isn’t the right time for EV…
Lexus and Nissan are not the same. Lexus is Toyota. Nissan is Infiniti. However, Toyota was quick to the hybrid game with the first Prius, so the fact that they have fallen this far behind is still odd.
I think his point was that they’re both Japanese automakers. You’d expect that as a lot of employees move between the two companies* they’d end up with more similar views with each other than they do.
*Total guess on my part. I’m clueless how much this actually occurs. Same industry + same country would seem to suggest it probably happens a decent amount.
The first Prius was all about lowering mpg numbers. It so happened that part of its drive system was electric. I don’t think Toyota realized that keeping the motor and getting rid of the engine was the right solution.
I wholeheartedly disagree. The first Prius was all about raising mpg numbers. 😁
Oops, I meant lowering gas consumption and, of course, raising the mpg. My bad.
It’s okay, we knew what you meant. 🙂
I love my Toyota Avalon,it is so well made and designed, but I deeply regret not buying the hybrid,I don’t drive very far so the cost of gasoline doesn’t bother me it’s just that on a gut level I want as much electrification as possible.
On a global scale, my decision saves GHG as now a car that gets poor milage is in the hands of a consumer that uses little gas, but it doesn’t change the way I feel, and their will be millions who feel the same way.
Nissan is right there, with Lexus. Quaky Infiniti EV concepts show no hat. There isn’t a shred of doubt these touring car names were the best place for batteries, and they’ve been holding out. Now, when a Model 3 can “Out Cloud” what the LS 500 did years ago, they are in serious trouble. Denial is a river.
Hmm, time to short the ADRs?? Ford was great, in a long-short strategy with Tesla, but not-so-much now that ‘F’ is in the dumpster. I wonder what Mark Spiegel thinks? He’s gonna need new dance partners, soon.
He is set in his ways, it is up to younger leadership to get Toyota to see the promised land. I wonder if he shuns smartphones because of the lithium ion batteries?
“A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”
— Max Planck
It sounds even more impressive in German:
“Eine neue wissenschaftliche Wahrheit pflegt sich nicht in der Weise durchzusetzen, daß ihre Gegner überzeugt werden und sich als belehrt erklären, sondern vielmehr dadurch, daß ihre Gegner allmählich aussterben und daß die heranwachsende Generation von vornherein mit der Wahrheit vertraut gemacht ist.”
Max Planck, my hero!
Funny how a car maker that boldly changed their design language to “angry ‘roid rage face” could be so timid in the face of real change.
What is with the hideous Lexus front grilles? Nothing screams old school ICE than a huge front grille.
I was thinking it looks more like the old-school Cylons from the original Battlestar Galactica.
It looks like Predator’s mouth.
It looks like a whale shark swimming through krill.
“as such powertrain systems simply can’t satisfy the needs of all drivers.”
Where to begin? The spin, and weak attempts to keep ICE relevant are laughable at best. What about the remote villages of the world? So now we continue to flood the earth with ICE in order to service the most remote parts of the globe. Yeah, I’m sure that civic-minded responsibility is at the top of Lexus’ priorities..
On top of that, it’s probably easier to generate electricity using solar or wind in remote areas of the world than it is to transport gasoline there. EVs don’t care where the electricity comes from.
That only works if there’s a (semi) permanent “base camp”, whether that be a tented/container style camp set up for a few months or a ranch/farm/house somewhere AND if people only travel a relatively short distance from that location (if travelling off road then probably in the region of 50 miles, to be safe). They are big ifs in many industries/for many people and parts of the world (parts of Canada and possibly the US, South America, Africa, Russia and central Asia, Australia to name a few of the most prominent ones).
You can’t carry an extra couple of hundred miles of range with an EV, you can with ICE (a couple of 20kg Jerry cans), and you may be able to do with hydrogen (sealed tanks, but still heavier than ICE).
So yes, “as such powertrain systems simply can’t satisfy the needs of all drivers”, is probably a relevant statement, even though it’s not really a good excuse for not developing EV for the majority that it will satisfy, especially for the Lexus part of the business, which is less likely to be in those more remote areas.
“You can’t carry an extra couple of hundred miles of range with an EV, you can with ICE (a couple of 20kg Jerry cans), and you may be able to do with hydrogen (sealed tanks, but still heavier than ICE).”
No you carry a couple of 20kg Jerry cans and a generator. Problem solved. Next.
Maybe we could then attach the generator to the car, so we don’t have to unpack it when we need it? Congratulations, you’ve just created an ICE vehicle (or mild hybrid if you want)…
We’ve literally gone full circle.
He’s desperately holding on to the familiar. The tech is ready now to cater everybody’s needs. The price still isn’t because scared little mice like Sawa have been and still are too afraid to seriously commit to reaching economies of scale building EVs. Instead they downplay the transition to electric transportation and if they keep that up, the companies they ‘lead’ will surely collapse when ol’ oil does.
So develop EVs for the majority of vehicle owners, and have some niffty niche gas cars for travelling to wickedly remote locations, its not like one requires the other to dissapear?
You’d think that given the vehicle most impacted by the Model 3 is the Prius that Toyota/Lexus might actually fight back.
Looking at Toyota’s fiscal data… it looks like they can only afford to lose around $20B in annual revenue before they start having annual losses. Sounds like the Prius has about 1M sales per year and it generates a good deal more revenue than that, so Toyota really cannot afford to lose the Prius. When Tesla’s annual production reaches 5M, probably within 4 years of now, the Prius is going to be gone and Toyota will be solidly in the red.
Tesla are not going to produce 5 Million cars four years from now. Their current plans will see around 1.5 Million vehicles in 5 years (their current factory at 500k, the Chinese factory at 500k and the European factory at 500k). That’s assuming no delays to their timetable and no delays in the building of their two new factories.
There’s no way they plan on stopping at 500K cars per year from their current factories. Gigafactory 1 will be producing enough batteries for 1.5M vehicles per year on its own once it’s fully done. I expect Tesla will either start producing entire vehicles at Gigafactory 1, or they’ll announce plans to build a new factory in another Southwestern US state to get NA vehicle production up to 1.5 M/year.
Plus don’t forget about Gigafactory 2 in NY – it’s possible Tesla could begin producing cars there, no?
In China, the 500K number Tesla said was only for Model 3. They’ll also be producing a comparable number of Model Y there. Same deal in Europe. So they’ll be producing somewhere in the 4-5M vehicles per year range in 4 years.
Their statements only mention the Chinese factory producing up to 500,000 vehicles in 3-5 years, not just Model 3’s.
They may well be able to produce more vehicles in their current factories (over the 500,000 they say) but so far they haven’t mentioned it, and it would take several years for them to expand and outfit them to do so. So again, not possible in the four year timeframe.
You also have to remember that those batteries are going to have to be shared between their cars, their storage company and their Semis. As far as I’m aware the maximum capacity for GF1 is not going to be reached in four years either.
And then there’s the direct sales method. Shops, delivery, servicing would have to expand exponentially for those four million. It’s not just production, they need to be able to sell, deliver and maintain that many vehicles in such a short space of time. They’re currently having teething problems with a couple of hundred thousand.
I’m a big Tesla fan – I have a Model 3 — however I would be really happy if Tesla is producing 1.5M cars in 4-5 years….I just do not see a path to 4-5M …. heck, that would be 1/2 of what VW or Toyota make today….and 2X+ of BMW…….Maybe in 10 years — no way in 5.
We used to be Toyota buyers, this year we bought a Bolt, and our next vehicle will be another EV (possibly a PHEV).
This coming from a company that makes such “beautiful” cars. I am not surprised.
Would not be caught dead in that thing pictured.
The grill that expands to the ground makes me think of the buyer’s expression upon seeing the price.
It won’t take until 2025 for their sales to start to tank at Toyota. Prius sales are going to start coming down this year, and will be in a freefall next year.
Prius sales are already in a freefall. The Prime did little to slow that. They used to sell over 10K per month of just the standard Prius. Now all the prii variants combined don’t reach that
The problem for the system in Japan is the boss is always right. That’s the bottom line so you can’t argue with the boss.
Like the on high decision not to put in a liquid tms in the Leaf, until now, by Nissan another Japanese auto company.
That decision came from on high too.
It’s stupid to say that a car does not meet all people’s needs, no car does. Besides if bev can only compete in 90%
of the market, well that seems just fine. Also FCV don’t really meet the needs of 99% of the market and yet that does
not seem to be an argument for Toyota not to pursue them.
That’s the problem with stupid arguments the same premise can be used against you.
The guy hasn’t had anyone say you’re wrong in so long, he thinks he’s always right.
They’re are just trying to delay the inevitable and put some easy money in the bank….
Yep, talking his book, all the way.
People shouldn’t forget that Toyota/Lexus has far more experience with electric powertrain, batteries and control than any other car company given their 10+ million hybrids sold. And also should note the #2 plug-in car in US sales is the Prius Prime, which also has robust sales in other markets.
Don’t cry for Toyota. They may not pursue the future as fervently as Tesla, because that could come at the expense of their own current massive profits, but they are indeed prepared and continuing to prepare well for an electrified future.
Lol, they are prepared to move on with the hydrogen economy.
Give it a few years and you will find a 180º change to their strategy.
Good article. Pretty much lays it out.
A few other points:
– Hydrogen from methane (cheapest method) produces 5.5 kg CO2 per kg of hydrogen
– Hydrogen from electrolysis is 1/3 the efficiency of going straight to batteries
– The Fuel cell vehicle tanks expire and must be replaced (check Page 86 of the 2017 Mirai owner’s manual), unknown if the car has to be literally taken apart to replace the tanks
– A $2 million USD hydrogen station can only fuel 36 Mirai’s per day. It would take 17 times as many stations (up to $34 million) to replace a gas station that can do 600 vehicles per day
– Hydrogen fuel costs twice as much as gasoline ($90 per 500 km vs gas at $40 per 500 km) and 9 times as much as electricity ($10 per 500 km)
– Hydrogen is a fool’s errand and only compressed gas companies are governments that get them for almost free are foolish enough to take delivery of them
“Hydrogen from methane (cheapest method) produces 5.5 kg CO2 per kg of hydrogen”
If the methane was harvested (as opposed to mined), it also turns a much more severe GHG (methane) into a less severe GHG (CO2). That’s a good thing.
Now do a cost comp between mining and “harvesting” and let me know who will be paying for the difference.
There’s also the prospect of generating Hydrogen through electrolysis from any spare renewable electricity. There are obviously other storage methods, but that would mean you can use “waste” energy to generate fuel for vehicles.
If Japan had spare renewable electricity, they be building EV’s and charging them up.
But just making hydrogen out of natural gas or methane is only the first step in the supply chain for hydrogen powered vehicles; a long chain which loses energy and generates pollution at every step.
Overall, on a well-to-wheel basis, fool cell cars (FCEVs powered by compressed hydrogen) are not much less polluting than gasmobiles.
https://www.insideevsforum.com/community/index.php?threads/how-to-promote-the-hydrogen-economy-hoax.429/
Efficiency is important, but practicality trumps efficiency and cost in many instances. Hydrogen doesn’t need to be as efficient or as cheap to compete in some applications as long as the practicality makes up for the extra cost.
You can’t really compare a standard current hydrogen fuel station to an ICE station with a throughput of 600 cars. One will have 2 pumps and the other 12 at least. I’m sure we could build a hydrogen fuel station with 12 pumps to increase throughput massively, but it would be pointless now considering the number of Hydrogen fuelled cars on the road. It would also not cost 6x the price to build a hydrogen station with 12 pumps over a station with 2 pumps, so the $34m cost is also way out.
It’s just sad when a CEO is wrong and they countinue to keep doubling down. Plenty of companies that are now out of business because of that. Japanese companies especially so, and look at how irrrelevant they have become compared to what they once were.
So the biggest, most profitable car company in the world is ‘irrelevant’? I don’t think so.
It will become irrelevant if it does not change its strategy.
There’s always going to be another leader. They are hopping this delay will not cost them but i bet the next ceo will reverse course.
Sure, Sony was the biggest and most profitable electronics manufacturer in the world and look at them now. Kodak, IBM, and Blackberry were so dominant as well.
LOL, Blackberry is trying to stage a comeback. Surprise, they have a smart phone with a keyboard.
Past Crackberry addicts, will now possibly switch back, interesting times indeed.
Well, not yet. At one time, Eastman Kodak was the biggest, most profitable maker of film cameras and the film for them, too.
Give it a few years.
I really don’t understand InsideEVs’ fascination with presenting Toyota/Lexus as the anti-EV bogeyman. How can you possibly conclude from:
“Our philosophy is to provide freedom of movement, so we have to develop technology on all fronts. We understand that electric is very necessary, but we can also see that full EV will not suit everyone. You can’t make an electric Land Cruiser work, for instance, and there are people in remote parts of the world whose lives depend on that car. EVs currently require a long charging time and batteries that have an environmental impact at manufacture and degrade as they get older. And then, when battery cells need replacing, we have to consider plans for future use and recycling. It’s a much more complex issue than the current rhetoric perhaps suggests. I prefer to approach the future in a more honest way.”
that “Lexus CEO Presents His Anti-EV Case”? This is beyond ridiculous.
This is a pro-EV website, why are you surprised by its pro-EV bias?
Anyone who is not with us must be against us, hahaha!
Except Lexus ISN’T anti-EV, at least in the quote provided in the article. CEO simply said it isn’t for everyone and there are issues left to resolve. What I’ve said is entirely factual.
I’m not arguing that you are wrong. I’m just saying that you shouldn’t be surprised.
The EV revolution must go on, hahaha!
Because this isn’t by any means the first foray into the topic by Lexus/Toyota and based on all previous statements on the matter, they don’t see BEVs as viable, ideally not before fuel cells if they could have their way.
From “not suited for everyone” to not makeing any is a big difference. If they admit that ev are suitable for some then make some for them…duh! I have been a Lexus fan for a very long time and would definitely buy one.
Not making any doesn’t mean they’re not working on them. They just don’t publicize what they’re doing years before it comes out. The chance that they’re not actively working on PHEVs or EVs is near zero. And if they weren’t making any, they’d still not be “anti-EV”. Not being pro something doesn’t automatically make you against it.
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What the Lexus CEO is saying is merely a reflection of how Toyota/Lexus has been firmly resisting making a BEV. Not even a compliance car BEV. Instead, they have kept claiming that there is no market for BEVs, and that fool cell cars are the future of automobiles.
Look at what Toyota/Lexus is doing… or rather, not doing. Actions speak louder than words.
Actions like producing and selling the second leading plug-in car in the US so far in 2018, which is also sold in other markets unlike GM’s plug-ins? Like selling 1.5 million hybrids globally in 2017 (up 8.4% for all those bemoaning the Prius’s sales decline in the US https://www.wardsauto.com/engines/hybrid-sales-set-record-2017-evs-gain-ground )?
> This approach was demonstrated to the public earlier last year, thanks to the Lexus LF-1 concept. The vehicle allows the manufacturer to utilize electric, fuel-cell, hybrid and petrol powertrains. But, creating just a prototype in 2018, with no real goal set for a production reveal, might simply be a case of burying your head in the sand.
Wait, so they’ve just developed a concept of the car that Honda has been delivering to customers for over a year? Sounds like the only “freedom of movement” that Lexus will soon be providing is the freedom to move on to another automaker.
Clearly, he wanted to go electric for all its benefits, but Toyota and the Japanese government said NO….so he’s just doing what he was told to do.
Battery degradation is much less than it was in the early days and Tesla models is showing just how long a battery pack can last even with consistent Supercharging. And with over 90% of EV owners charging in their garage overnight, how is the charging time even a concern for over 90% of the ‘fueling’ needs. Now compare that with having to drive to a hydrogen fueling station every time you need energy and paying more than double what electricity costs….if it’s available.
And really…what to do with the reclaimed battery packs? recycle, reuse at energy storage for commercial uses and to support the grid. Toyota is talking as if none of these issues have already been addressed. And that is because I think Toyota and the Japanese government have an interest in the hydrogen supply chain since electricity can be free from the sun, the future shows no profit to be made there.
Yes,solar power is free, therefore we should not subside it, and it is already by far the biggest share of electric generation anywhere. See how stupid that sounds? Tesla’s are free ,they are made with solar power.
What is true is that solar panels are dropping in price and that we should continue to heavily subsidies them because of the many benefits they provide, here in Nevada ,the local utility has announced a number of new utility scale PV projects, our climate is,perfect for it.
I wonder what Canute’s speech to the ocean looked like?
Looks aside, I can reliably say that the speech was a “breeze”!
Once affordable solid state battery technology starts to EVentually emerge, in the automotive sector, this CEO speech will be an interesting historical footnote, in what remains of The Lexus Legacy.
Come on Toyota, why don’t you generate electricity with a kerosene boiler or better yet it can just burn wood for zero range anxiety as long as you have an axe. For the duration that you have been talking about fuel cells and solid state batteries, Nissan has had a funky looking little car zipping around using the shunned technology. Granted, it’s not been without issue but it’s there and it’s real. Please give us the product and let us decide if it “satisfies the needs” or not.
” but we can also see that full EV will not suit everyone”
Well, he’s right. Studies have shown that a short range BEV will only satisfy the daily needs of about 90% of drivers……./sarcasm.
Yeah, seriously. A Lexus will only satisfy the daily needs of 10% of drivers, because the rest can’t afford them. So what?
thankfully, low MPC EVs of any type are not selling that well.
Those are disasters.
So batteries are a huge environmental problem, so BEVs are too, but hybrids are perfectly fine? OK.
Also note that every hydrogen fuel cell car includes a large battery.
FCEV will need a battery that is maybe 10 or 20% the size of a full electric car.
then those will not last long.
Cost of replacing them will be 10 to 20% of the cost of replacing BEV batteries.
Prius hybrid traction batteries have been very durable so far, don’t know why a fuel cell variant would be any different.
Let them keep their head in the sand as Tesla eats their lunch. Now with more than 70,000 EV miles under my belt I am more confident than ever Electric cars are the future.
Lexus should look for a new CEO.
“Toyota… the old GM”
Their trajectory is looking a lot like GM from the 90s. Do people actually want to buy any of their cars? Or do they just buy them because they are Toyota?
To be fair, Toyota has earned an excellent reputation for reliability and for dependable quality control in their build quality. That’s why some people will only buy a Toyota.
But if Toyota/Lexus foolishly continues to refuse to make BEVs… that trend won’t last many more years. The Stanley Steamer’s build quality was arguably much better than that of the Ford Model T, by a wide margin. Did that stop people from buying the Model T, or keep them buying the Stanley Steamer? Of course not!
I’m confused. He actually states “so we have to develop technology on all fronts. We understand that electric is very necessary”, so why is that anti-EV? That statement suggest that they are actually still going to produce BEV’s at some point.
If Toyota can design a platform that can handle BEV, Fuel Cell, Hybrid and ICE propulsion without significant compromise sounds like the ideal approach for Toyota to me. It covers every market and every eventuality.
His points on battery disposal are perfectly legitimate.
There’s a reason why Toyota is the largest manufacturer in the world, and likely a reason why he leads it. He probably knows how to run a business, especially a car manufacturer, better than we do. That’s why we are on here talking about him and he is over there running a company.
Although it’s sad to see such a large company say they’re not more focused on EV’s, they’re actually just being honest about what they see. This article is completely biased against Toyota with no intention of taking anything he says seriously.
Toyota hasn’t produced an all-electric model since the ultra-limited supply of RAV4 EVs, if I’m not mistaken. I’m fine with not judging by his words. His actions make it clear that Toyota is anti-EV.
You’re presuming they’re anti-EV just because they’re not committing to EV’s. There’s a huge difference between not being pro-EV and being anti-EV. The quote “so we have to develop technology on all fronts” kind of suggest’s that they’re developing EV technology, not to forget that Fuel Cell vehicles are a form of EV.
Lexus is a subdivision of Toyota. Toyota has a serious groupthink problem with hydrogen fuel cell vehicles. The (literally) old Japanese management are on the wrong path and the loyal people below them follow obediently.
Eventually they’ll realize the disaster and they do have a side program of EVs so they can switch relatively quickly when they realize their mistake.
But as an American, I’m fine with our auto biz getting a nice technological advantage over the Japanese stuck in a groupthink trap. The same largely applies for Honda.
Precisely right! The hydrogen fuel cell is baked into the Japanese car business. Who knows, they might make it work in Japan for a while as their car business is isolated and protected domestically.
The rest of the world will move on with BEVs.
The FCV program is a demo program, they do not mass produce them, they are still developing new tech, even if you do make FCV’s they still have batteries and there is no reason they can’t make both.
There is some crossover between fuel cell EV tech and battery EV tech, a fact a lot of people seem oblivious to. If the fuel cell technology fails to deliver what they want (which looks fairly likely at the moment) they’ll have BEV tech to fall back on. It’s not as if they’ve only just turned up to the electrification table.
After their nuclear problems, Japan doesn’t seem very interested in the electric future.
Japan is a country without natural resources, most of their energy are imported. After the nuclear disaster, they were going to shut down all the nuclear plants. They are having hard time to find enough electric power, so going EV is just to make their problem worse.
The land of the rising sun should go Solar & wind. 🙂 batteries can keep them going at night. seems like a no brainier.
Actually, they are adding lots of AE, but are apparently going to re-start their nukes.
” and there are people in remote parts of the world whose lives depend on that car”, vehicle i must add , as in Toyota Land Cruisers as used by ISIS/ISIL and numerous other terrorists..
And Lithium and Cobalt miners.
Toyota Land Cruisers are also used by numerous other people as well, who are doing the right thing, by trying to stop those Fundamental Islam ISIS/ISIL indoctrinated A-Holes!
I will never drive an electric vehicle. I am not a fan. I will be buying gas powered cars until they no longer offer them.
I admire your principles but completely disagree with your philosophy.
What is your biggest issue with EVs?
they don’t go VROOM. In addition, EVs are WAY TOO FAST for those ppl and cost too little.
They like their cars to be slow, expensive and make lots of noise and pollution.
Though, I do have to admit that the other day I had a Camero decide to street race me, and I took it easy on him. I was enjoying listening to it. Then I quit toying with him and punched it. He caught up later and was shocked that a tesla would beat him. As I told him, do not race for pinks. He would not be happy esp since the top cars are unbadged.
well, somebody p*55ed in your wheaties this AM.
Actually, we were having fun.
The fact is, that a car that does 0-60 and 1/4 milers quickly are a LOT of fun to drive and useful.
In addition, the tesla out handles the camaro (and spelling issue was due to phone, not me).
I grew up on 67-78 Camaro, Trans-am, Goats, etc. And we used to work on these since we were racing them in southern wisc (which a lot of ppl like to race there).
Now, ICE is near death. The fact is that shortly, we will see ppl starting to hack away at EVs and making them faster, better, etc. Right now, these are too new to have secondary markets. BUT, they will be coming. And then you will be speaking about how much fun EV cracking is vs working on ICE.
ROFL.
I suspect that there were a number of farmers that said that they would stay with horses and self plowing rather than pick up that new fangled equipment from John Deere.
What is humerous about that, is gas/diesel are only going to go up in price, not down.
The EV train has left the station and Toyota is not on it , they are still on the Hydrogen Buggy called FCV. lol
You don’t know whether Toyota is on it. They don’t (always) publicize what they are working on, only what they sell.
Another possible interpretation:
“We’re late to the game. We’re working really hard on a competitive BEV but it isn’t going to be available for sale for 2 more years, so please don’t wait for that and instead by the crap we’re selling today, so we can stay in business!”
Lexus and to a lesser extent Toyota has the most abominable grill on an auto LOOKS like a DUSTBUSTER ON STEROIDS, ugghh
Someone called it an “Angry Appliance” look. I think it describes Lexus’ design language quite well.
They need to fire him like Ford did to Mark Fields !
Cars mean freedom, if you restrict freedom people may not buy.
who is restricting freedom? Up until tesla, it was only these car makers that were doing that. Now, ppl are making rational intelligent decisions about their vehicles.
He is right about the Cruiser. There are ppl that will NEED to go for long distance off-road. I would put that number at around 1%.
But, this is why I oppose Parallel hybrids along with short MPC. These will do a LOT of damage to the electrical grid. The reason is that they will increase electricity use all around. . Parallel hybrids are jokes.
That is why I continue to back SERIES hybrids, esp on trucks, EMS, true offroads, military, etc.
I find it ironic that he used “rhetoric” and “honest” in the same sentence. Especially after just having stated a worry about “environmental impact” of battery manufacture whilst ignoring the never-ending environmental impact of an ICE.
Yeah, the title of this article puts too sharp a point on what the CEO actually said.
Lexus (and people who buy their cars), seem to like the high-quality experience they get.
Now me, I could wish that those cars had more attractive front ends, and at least 1 or 2 plug in models (I won’t buy a vehicle without a plug on it) , but it is up to them what type of vehicles they want to supply. If they think Hydrogen is the way to go, that is their decision.
Just as it was Tesla’s decision whether to come up with a second gen Roadster I could afford (like the first one), or come up with the ridiculously expensive thing they are planning – is ultimately up to them.
So just like I won’t be buying any Lexus’s I wont be buying any new Roadsters.
I wish SOME company would come up with more plug in models of cars that many people want.
Luxury high-quality experience? My lexus is 2 years old and it has problems starting up, the dealer shrugs and says nothing is wrong. Then there is that stupid clock which is near useless…
Around my area, it was full of lexuses. Now I am seeing them disapear one by one, I’ll be next.
I’ve had 2 lexuses and my plan is not buying one going forward. It isn’t just this, it is there stupid decisions in designing their cars.
“…but we can also see that full EV will not suit everyone. You can’t make an electric Land Cruiser work, for instance, and there are people in remote parts of the world whose lives depend on that car.”
Gee, I didn’t realize that it was Lexus’ ambition to compete with Land Rover. 🙄
Good luck to Lexus in fighting for market share in what is no more than a niche market.
They’ve been competing against Land Rover since the very early 50’s when the Japanese authorities asked them to produce something similar to the series 1 and Willys Jeep. They produced the first luxury off-roader 3 years before the first Range Rover was released, albeit some time after the original Road Rover project which lead to the Range Rover. Since then the Land Cruiser has directly competed with the Range Rover range.
So it’s not really their ambition, it’s what they’ve already been doing for nearly 70 years. The modern luxury SUV market is incredibly profitable, I don’t blame them. Speaking from experience the profit margins can be anything from 20% to 50%, which is massive when you consider we are talking about $100-150,000 vehicles. Why make 50 cheap cars to make $50,000 profit when you can make 2 or 3 to see the same $50,000?
I get the impression most people in the comments sections here live in big cities, rarely travel and work in offices. Prime candidates for current EV ownership, but insulated from the rest of the world and the processes involved in it.
Electric car is happening too soon is because he doesn’t have anything in the pipe line , all he has are GRILLS that look like a monsters mouth from the CREATURE FROM OUTER SPACE . lol
japan was never a innovator. they maybe good to improve someone else stuff. look asimo, in 18 years still the same. now take a look at boston dynamics.
Keep blabbering. Tesla Model-3 beat the Lexus IS by a big margin in sales.