Why is Toyota Not Betting on EV but on Hydrogen Fueled Cars?

It appears Toyota is intentionally positioning itself as an advocate for hydrogen fuel cell technology over battery-electric vehicles (EVs). This strategic move was likely aimed at suggesting that battery-electric cars might not be the future of automobiles. By exclusively focusing on hydrogen, Toyota is encouraging consumers to adopt a "wait and see" mentality, leading to continued purchases of traditional internal combustion engine (ICE) vehicles.

Investment in Hybrid Technology and ROI Concerns

Toyota has devoted a substantial amount of resources to their hybrid technology, a move that aligns with their financial interests. Their Prius model is a testament to the groundbreaking nature of their hybrid system. However, while Toyota aims to realize its return on investment (ROI) from hybrid vehicles, they have concluded that hydrogen fuel cells may be more viable. The board of directors, which is predominantly anti-EV, has clearly influenced the company's strategic direction.

There are speculations that when Toyota finally pivots to EVs, it might emerge as a significant player in the market. However, past examples from legacy auto manufacturers—such as disappointing market performances with underspecified and overpriced electric vehicles—suggest that such a transition might be considerably challenging. Furthermore, Toyota's substantial debt burden leaves limited financial flexibility, making the switch to EVs increasingly difficult to justify.

Toyota’s Stance on Battery Vehicle Limitations

Toyota recognizes that battery vehicles should account for no more than 25% of vehicles on the road worldwide due to unsustainable mining practices and the economic inefficiency of carrying heavy battery packs. Germany's recent decision to end subsidies for wealthier individuals purchasing EVs underscores this point, indicating a shift towards more sustainable vehicle policies.

Decades of Denigrating EVs and Delay Tactics

For over a decade, Toyota has actively criticized EVs, often portraying charging as time-consuming. They market their self-charging hybrid ads and spread misinformation about the availability of battery materials and the environmental impact of EVs. Moreover, their delaying tactic with solid-state batteries has been rampant; since 2015, they have claimed that their EVs would use solid-state batteries within a couple of years, a timeline that still has not materialized. This comparison to Tesla, which has already released Model 3, Y, and Cybertruck, highlights Toyota's lag in technological advancement.

Their hybrid technology, while a successful business move, is seen as a sunk cost. Toyota's leadership sees the hybrid as a viable long-term solution, despite the underlying luck and lack of strategic foresight that initially brought them to this market. There is little acknowledgment of the potential of EVs, and they continue to focus on hydrogen fuel cell technology.

Hydrogen as a Less Sustainable Option

While Toyota promotes hydrogen as a solution, they have not fully paved the way for its adoption. This is evident from their limited investment in hydrogen stations. Notably, leading electric vehicle (EV) innovator Tesla, in its early years, outperformed hydrogen stations in terms of the number of superchargers installed. In contrast, Toyota's hydrogen car, the Mirai, has faced significant challenges in achieving widespread adoption.

A theory suggests that automakers, including Toyota, initially promoted hydrogen in an attempt to evade stricter emissions regulations by ensuring that EVs and hydrogen cars would fail in the market. If this plan was successful, it would have allowed them to revert to the status quo. However, the unexpected rise of Tesla in the EV market thwarted these efforts. The dismantling of early EV cooling systems and suboptimal performance of some hybrid models further supports this hypothesis.

Conclusion

The debate over Toyota's strategic choice between EVs and hydrogen fuel cell technology is complex and multifaceted. While they have historically benighted the potential of EVs, their continued investment in hydrogen could be seen as a strategic move rather than a genuine belief in the technology's superiority. As the automotive industry evolves, it remains to be seen whether Toyota will shift its focus to EVs in line with current market trends.