Toyota Motor Corporation

Between 2018 and 2020, Toyota did not increase the share of low-carbon vehicles (LCVs) in its sales fast enough to meet its 1.5°C pathway. The company needs to ramp up sales of LCVs very quickly and has set targets for 10% of sales in Japan, 15% in USA and 20% in Europe to be LCVs by 2030. The target for China is 35% by 2035. However, Toyota does not preferentially incentivise consumers to buy LCVs. Instead, it relies on regional consumer preferences and regulatory incentives. With an only 0.6% share of LCVs in sales in 2020, the company is far behind the 64.5% share needed by its 1.5°C pathway by 2030.

Toyota’s low-carbon transition is undermined by its cautious approach on policy engagement. It does not directly resist stronger climate legislation but, with the exception of policies to encourage a shift to a hydrogen-based economy, it is not proactively supporting stronger climate policies. Senior executives serve as vice-chairs on the Japan Automobile Manufacturers Association and the Japan Business Federation. Both associations have opposed climate legislation. Toyota should disclose details of its governance of engagement with such associations. This should outline steps to take to avoid indirect negative climate positioning.

Toyota is clearly an innovative company. It is investing in new low-carbon business models as part of its vision to become a mobility company. It launched its KINTO mobility brand in Europe in January 2020 and is working together with service providers on pilot programmes for ride sharing – including automated driving vehicles. It has developed the Toyota Smart Center (“TSC”) which links electric vehicles with homes. Its e-Palette Concept can be adapted for passenger transportation, logistics services or retail services. Toyota would demonstrate more commitment to low-carbon transition by sharing more details on its plans for such businesses.

Toyota’s vision is to evolve into a mobility company. It plans to decrease in-use emissions by 90% from 2010 levels by 2050 and to reach zero CO2 plant emissions by 2050. By 2030, 10% of sales in Japan, 15% in USA and 20% in Europe will be low-carbon vehicles (LCVs). In China, 35% of sales will be LCVs by 2035.

Manufacturing emissions will be reduced via continuous efficiency improvements and via major investments in renewables and hydrogen. A line up of 10 or more fully electric (BEV) models will be available in the first half of the 2020s and an electric option in all models by around 2025.

In February 2020, the fully remodelled hydrogen fuel cell MIRAI was launched in Japan, the United States and Europe. However, less than 1% of Toyota’s 2020 total sales were low-carbon vehicles. Approximately 30% of 2020 capital expenditure was dedicated to emissions reductions research and development.

Toyota has strengthened its hybrid line-up but the total sales mix has shifted towards sport utility vehicles. The overall in-use emissions intensity of all sold vehicles has remained at 92 grams CO2 per passenger kilometre. Its recent low-carbon business model investments include mobility-as-a-service and vehicle charging programmes.

Toyota has recently planned increases in production capacity of internal combustion engine plants in North America. Its approach of regional strategies to meet regulatory compliance and consumer preferences does not indicate a full commitment to rapid phase out of fossil fuel powered vehicles.