Toyota's Electrified Vehicle Strategy: Sales of 5.5 million units and 1 million ZEV vehicles by 2030
Investment of 1.5 trillion yen by 2030 in battery R&D and manufacture
This report gives an overview of Toyota's vehicle electrification strategy.
Small mobility vehicle Concept-i Ride
On December 18, 2017, Toyota announced its mid- to long-term plan aiming for sales of over 5.5 million electric vehicles by 2030, and a ZEV (EV + FCV = zero emission vehicle) sales target of over 1 million units. By around 2025, Toyota plans to only sell HV, PHV, EV, and FCV models globally, and plans to discontinue the production of all vehicles powered only by internal combustion engines.
A few days before Toyota's announcement, on December 13 Panasonic announced that they will cooperate with Toyota on a joint automotive prismatic battery business. Batteries are crucial to the future of electrified vehicle development. The announcement of the agreement with Panasonic to develop and supply batteries coincides with Toyota's official announcement of their plans to contribute to the popularization of electrified vehicles. Between 2019 and 2030 Toyota plans to invest 1.5 trillion yen solely for the R&D and manufacturing of batteries.
The latter half of this report focuses on the "Toyota's Vision for an EV Society" presentation by Mr. Koji Toyoshima, Chief Engineer, EV Business Planning Office, of Toyota's Technology Development Management Division, which was given at the Battery Japan 2018 Technical Conference on March 1, 2018.
Recognizing the seriousness of the environmental challenges facing society, Toyota's vision involves the construction of a sustainable ecosystem in preparation for the full-scale introduction of EVs. Specifically, Toyota will develop standardized batteries to meet the needs associated with the future popularization of the vehicles. This includes the creation of a social infrastructure system to streamline battery reuse and recycling as well as working with society on the development of renewable energy sources for recharging.
Also, by utilizing standardized batteries, Toyota plans to lower the retail price of new compact EVs to be more competitive with that of ICE-powered vehicles, while significantly increasing the resale value of second-hand EVs.
Toyota Automated Driving: The Guardian and Chauffeur approaches（March 2017）
Tokyo Motor Show 2017: Toyota unveils numerous concept vehicles（November 2017）
Tokyo Motor Show 2017: Exhibits from Nissan, Honda, and Mitsubishi（December 2017）
Nissan's EV Strategy: Introduce EVs in all major vehicle segments by 2022（September 2017）
Toyota plans to sell 5.5 million electrified vehicles
In December 2017, Toyota announced plans to sell over 5.5 million electrified vehicles by 2030, including over 1 million EV and FCV (i.e. ZEV) units. By around 2025, Toyota plans to expand the adoption of electrified variants for all HV, PHV, EV, and FCV models globally, and plans to discontinue the production of all vehicles powered only by internal combustion engines.
In 1997, Toyota led the market in electrification with the release of the world's first mass-market HV, the Prius, which was aimed at achieving a sustainable society. Of the 3.23 million electrified vehicles in the global market in 2016, Toyota boasts a 43% market share at 1.4 million units. However, today, increasingly stringent Zero Emission Vehicles (ZEV) regulations and Corporate Average Fuel Economy (CAFE) regulations are being implemented around the world and Toyota must be able to respond to both. HVs have recently been excluded from the new ZEV regulations in California and China, but they still remain crucial to meeting CAFE regulations. EVs and FCVs are used to meet ZEV regulations, while HVs and PHVs are used to meet CAFE regulations.
With regard to HVs, Toyota will continue to promote diversification with models such as high power HVs, while expanding its product lineup of FCVs and PHVs in the 2020s. Toyota will decide when and how it will introduce products while considering the various emissions regulations and the needs of its customers. The automaker believes that it is necessary to diversify into electrified vehicles, and certainly its strength as an automaker with a full lineup of electrified vehicles will be of help to meet those regulations and needs.
Prior to Toyota's December 18 announcement there were two key announcements concerning collaboration on EV development.
Firstly, in September, Toyota partnered with Mazda and Denso to jointly develop basic structural technologies for EVs, and established a new company called EV C.A. Spirit Co., Ltd. In addition to EV platforms, the partnership will conduct research on the characteristics that define optimum performance for major units such as batteries, motors, inverters, etc. and then distribute the work of developing the components among the development team departments.
Secondly, on December 13 Panasonic and Toyota announced that they will collaborate on a joint automotive prismatic battery business. Batteries are the key to future of electrified vehicle development, but the specifics of that development were unclear until the announcement was made. By partnering with Panasonic on the development and sourcing procurement of batteries, Toyota was able to officially announce its plans to sell 5.5 million electrified vehicles. The companies will also cooperate in the development and production of all-solid state batteries.
|Global electrified vehicle market and Toyota share||Provide new value and seize opportunities for business expansion||Vehicle electrification milestones|
Toyota's electrification plan
|Electrification across the entire Line-up||• By 2030, global sales of electrified vehicles will exceed 5.5 million units. Targeting to achieve sales of more than 1 million units of EVs and FCVs (i.e. ZEVs).
• All new vehicle models will be electrified by around 2025, and vehicles powered by only internal combustion engines will be discontinued.
|EV and FCV||• Toyota will accelerate its introduction of EVs in China starting in 2020 and will expand the introduction of more than 10 models globally in the early 2020s. The EVs will be introduced sequentially in Japan, India, the U.S., and then Europe.
• The product lineup of FCV passenger cars and commercial vehicles will be expanded in the 2020s.
|HV and PHV||• In addition to improving the performance of the Toyota Hybrid System (THS II), Toyota will introduce HV variants such as high power models and simplified hybrid systems.
• The product lineup for PHVs will be expanded in the 2020s.
Note: The 5.5 million units of electrified vehicles by 2030 is the target number for the Toyota brand alone, based on Toyota’s current worldwide sales volume of over 10 million units. If other OEMs decide to collaborate with Toyota, the actual number of electrified vehicles is likely to increase further.
Providing EV for various segments and applications
In the past, Toyota positioned EVs for short-range use primarily with compact and commuter cars due to their limited range, while HVs and PHVs were at the center of its electrified vehicle strategy for all general passenger cars, and FCVs were positioned for medium range applications. However, in consideration of changes in the global market, Toyota has decided to amend their strategy to offer electrified vehicles across its entire product portfolio, from mini passenger cars to trucks, and adopt bold strategic measures such as MaaS (Mobility as a Service) to satisfy the new emerging demands of the market.
Toyota exhibited the e-Palette EV at CES 2018, which was designed for MaaS applications, and unveiled the Lexus LF-1 Limitless concept EV variant at the Detroit Auto Show 2018. Toyota is also planning to introduce high-end electric vehicles for the global market.
|Diversification of electrified vehicles to date||Provide EVs for many segments and applications|
Investing JPY 1.5 trillion until 2030 for the R&D and manufacture of batteries
In the future, it will be especially important to strengthen the development and supply system for batteries. Toyota's electric car sales are expected to increase significantly from about 1.5 million units in 2017 to 5.5 million units by 2030. Moreover, the battery capacity of the Prius HV is currently 0.75 kWh, but Toyota believes that in the future EVs will need to have a larger capacity battery (e.g. 40 kWh) similar to the Nissan Leaf. As a result, Toyota has realized they will need to invest 1.5 trillion yen for batteries alone from 2019 to 2030 for R&D (with over 50% of that amount being earmarked for capital investment in the upgrade of facilities), and has accelerated the pace of their investment activities. Toyota says that batteries are the limiting factor in the popularization of electrified vehicles, but that they are preparing to surmount that obstacle.
In addition, the topic of electrified vehicles cannot be discussed without also considering the issues of power resources and energy shortages, so Toyota plans to also focus on improving the social infrastructure required to support vehicle electrification. The increase in the number of electrified vehicles is expected to result in a shortage of power resources and higher prices, as well as an increase in industrial waste. However, spent batteries contain valuable natural resources including rare metals such as nickel, lithium, and cobalt that can be recycled. The reuse of spent batteries also is expected to contribute to the steady supply of electricity from renewable energy sources by using the recycled material for industrial stationary power storage battery systems.
In consideration of increasingly stringent ZEV and CAFE regulations going forward, Toyota has decided to make available the results of its technology development efforts for electrified vehicle components such as batteries, inverters, and motors. In particular batteries, in light of the unprecedented volumes involved, need to receive as much attention as possible on a daily basis to advance the technology, while also exploring recycling solutions. Toyota will take the lead in driving this initiative and its policy will be to develop an open and cooperative forum in which advances in these areas of technology can take place.
|Need for a drastic change to achieve 5.5 million EVs||Some EVs are equipped with large capacity batteries||Need bold investment in R&D and manufacturing|
Toyota's vision of an EV society
The following is an outline of the speech given by Mr. Koji Toyoshima of Toyota at the Battery Japan 2018 Technical Conference. To reiterate, Toyota is not focused on just introducing EVs for the market, but its original approach to the development of environmentally-friendly vehicles is based on the premise Toyota is fully committed to contributing to the realization of a truly ecological society, in which EVs will play an important role.
In the first half of this report, Toyota referred to the need to improve the social infrastructure to sell 5.5 million electrified vehicles. Mr. Toyoshima elaborated on the details of a more concrete plan, focusing on EVs.
Toyota's eco car approach
|The form to which Toyota aspires (Source: Toyota)|
When the first generation Prius was released, Toyota seriously tackled the issue of what it should do as a company to prepare for the 21st century. The automaker established three themes to respond to the rapid increase in fossil fuel consumption:
1. Energy conservation
2. Reduction of CO2 emissions (as a measure against global warming)
3. Prevention of air pollution
The Prius has led the industry, bringing change and evolution. The 4th generation Prius has met the fuel economy challenge of 40 km/L, which was once believed to be unachievable.
1. Reduced rolling resistance → Challenge to meet drag coefficient of Cd = 0.24,
2. Improved engine combustion → Challenge to meet 40% thermal efficiency,
3. Increased HV efficiency → Challenge to reduce size and improve efficiency.
Toyota is now trying to propose challenges such as these for the new field of EVs.
Reducing CO2 emissions using Life Cycle Assessments (LCA)
CO2 emissions occur not only while vehicles are in operation, but throughout the various stages of their life cycles. LCA is a technique to quantitatively measure the potential environmental impact to the earth and its ecosystems of all elements and resources deployed throughout the product lifecycle including the procurement of raw materials used in the production of products, manufacturing, distribution, vehicle usage, disposal, and product recycling.
The lifecycle CO2 emissions of Toyota's HV were calculated as 45% lower than that of a conventional 2L gasoline-powered ICE vehicle when nuclear power plants were in operation prior to the Great East Japan Earthquake. Mr. Toshima, who was in charge of the Prius PHV, stated that CO2 emissions for the Prius PHV were 47% lower before the disaster, but that percentage is down to 43% today because there are only a few nuclear power plants in operation in Japan.
In Japan, there are few areas of the country that are suitable for renewable energy power generation, so renewable energy sources account for less than 10% of the electricity generated; even if hydroelectricity sources are included, less than 20% of Japan's electricity needs are derived from renewable energy sources. Furthermore, from the standpoint of LCA, the reduction of CO2 by EV in operation in Japan today is viewed as inadequate because these vehicles are powered by electricity generated by fossil fuel power generation plants as well as the fact that significant amounts of CO2 are discharged in the manufacturing of batteries.
The 4th generation Prius PHV is the world's first PHV equipped with a solar charging system. The Prius PHV solar roof is capable of generating enough electricity to power a vehicle to run 5km per day (about 1,000 km per year), or on an annual basis of 10,000 km of driving provide about 10% of the PHV's power needs by solar energy.
The social image being targeted by Toyota's EV business planning office
The reason why Toyota is striving to solve environmental issues is to continue to contribute to society by generating changes in it through technology. Toyota is aiming to force societal changes that promise to achieve a sustainable ecosystem and does not intend to stop at what could be considered Game Changers only. Although the environmental performance per vehicle unit continues to improve, the situation remains challenging because the number of electric vehicles sold and in operation is increasing.
Toyota compares the social image they are trying to achieve with that of the "slow food" movement. The concept of slow food started in Italy in 1986 in opposition to the "fast food" movement. The slow food concept aims to achieve a sustainable and healthy food culture that contributes to the environment through means such as organic farming, providing healthier food to people, and supporting the local small business community.
Similarly, the sustainable mobility society that Toyota is aiming to create involves "connecting society, EVs, and people", "providing the freedom of mobility to everyone", and "contributing to the environment using LCA".
In order to spread the EV
|EV Planning concept||THE FUTURE IS SLOW||SLOW FOOD|
|Sustainable mobility society||Sustainable food culture|
|Love for society
|Connecting society, EV and people||Communication between producer and consumer|
|Love for people
|Providing the freedom of mobility to everyone||Healthy food for everyone|
|Love for earth
|Contributing to the environment using LCA||Contributes to the environment through means such as organic farming|
Using EVs to transform society
Toyota is particularly aiming to use the following EV initiatives as a means to introduce changes that will transform society:
- Creating energy (the creation of renewable energy beyond just energy conservation)
- Storing energy (energy needs to be stored because renewable energy is unstable)
- Promoting new energy business models (creating various new energy business models using EV batteries).
Also, three concepts are considered essential to the popularization of EVs: "battery sharing", "EV sharing", and "information sharing". Of these, battery sharing is considered to be the most important.
<Promotion of battery sharing using standardized batteries>
|Utilizing battery resources (Source: Toyota)|
For battery sharing, Toyota plans to develop standardized batteries that can be used to power not only Toyota vehicles, but also EVs from other automakers, as well as construction machinery, households, and industrial stationary power storage batteries. Toyota is aiming to build a social infrastructure system that will support the increased reuse and recycling of batteries and the expansion of renewable energy sources.
EV batteries that have been in use for years and no longer have enough capacity to power an EVs can still deliver sufficient performance if used as stationary storage batteries for household or industrial use. Toyota will create a system to reuse such batteries.
Toyota would like to see the lifespan of a single battery pack extended to 15 years. Toyota considers batteries with a 15 to 20 kWh capacity to be prime candidates for battery standardization. Batteries at this capacity can be equipped in small mobility solutions as well as provide energy for household use. Furthermore, by combining a series of these batteries in series and parallel, the system can be used to provide power for industrial use (~ several hundred kWh) and the electric power grid (~ several tens of MWh).
Toyota will also standardize the inspection of spent batteries. Data on the daily charge and driving patterns of EV can be gathered via the data communication module (DCM) to analyze and develop optimal solutions to prolong battery life. Toyota also plans to identify whether the batteries have been quick charged and the impact of quick charging on the degradation of battery performance.
By the standardization of processes relating to reuse and recycling (e.g. transportation, disassembly, heat treatment), Toyota plans to improve the efficiency of those processes. Currently only nickel and copper are recycled, but Toyota plans to establish rare metal extraction technology for cobalt.
Furthermore, Toyota aims to reduce the amount of CO2 emissions by using LCA to construct a society-wide mechanism to charge EV using renewable energy sources. In Japan, while although the ratio of renewable energy sources is low, Toyota believes that if it can create a stable demand of energy supply for EV charging and secure a supply of inexpensive and reliable power storage batteries, that it will be able to create an environment that fosters investment in renewable energy, thereby contributing to improving the environment. Toyota's believes that renewable energy is limitless energy.
By initiatives such as these, Toyota plans to establish new business models. Toyota may be at the forefront of leading these initiatives, but it welcomes open innovation of these technologies in cooperation and collaboration with related industries and partner companies.
Incidentally, in January 2018, Chubu Electric Power Co., Inc. and Toyota announced that the two companies will begin a verification project that entails the construction of a large-capacity storage battery system that reuses electrified vehicle batteries as well as the recycling of used batteries.
Innovation of the EV business by introducing standardized batteries
In the future, Toyota will also develop EV for high-end models, but it will mainly develop compact EVs targeting introduction in Japan and the markets of emerging countries (for example, the i-Ride introduced at the Tokyo Motor Show 2017). Even for the compact EV class of vehicles, a battery with significant capacity is required to achieve a range of 200 to 300 km so, in a manner of speaking, a standard vehicle that sells for 1.5 million yen is viewed as costing an additional 1.5 million yen to be equipped with a battery to make it an electrified vehicle. In particular for the compact vehicle segment, Toyota plans to minimize the price gap that exists between ICE-powered vehicles and EV.
Therefore, in the development of EV, Toyota is studying the standardization of battery specifications, and in parallel is addressing the subject of separating the development of vehicles and batteries. Toyota will manage the development of both separately, including the associated costs of each.
By constructing a mechanism whereby standardized batteries can be used across all EV, in the future it will be possible to replace batteries, for example in EV purchased with batteries having a range of 200km, with newer batteries available in two or three years from now having a range of 400km. Also, currently the resale price of used EV tends to be significantly lower than that of ICE-powered vehicles. By standardizing batteries it will be possible to replace the batteries on used EV, thereby improving their resale value in the used car market. EV vehicles and batteries are currently considered as a set during their development; as a result, matching vehicles with batteries has become an issue and it is difficult to replace a vehicle's battery when a more advanced battery has been developed.
Against the social background of compact mobility, market demands include providing mobility to those without access to transportation and widening the area of personal mobility. In response, Toyota wants to provide the freedom of mobility to everyone by combining small EV and automated driving technology. Toyota's i-Ride introduced at the Tokyo Motor Show 2017 was designed to be easily boarded by persons often confined to a wheelchair. And Toyota's i-Walk is a three-wheel personal mobility device that is aimed at helping the elderly get around more easily. Toyota is also studying other solutions such as unmanned EV parcel delivery service vehicles.
Equipped with sensors, cameras, and AI technology, EVs have the potential to exert a significant influence on improving traffic safety, and monitoring vehicle infrastructure and weather conditions. Also, since EV are basically "alert" to the surrounding environment for long periods of time while being recharged, they can theoretically serve as societal "watchdogs" by monitoring and responding as programmed to contribute to society (e.g. crime prevention, disaster alerts, public assistance, and mobility services to improve the flow of people and goods).
|Concept-i series i-Ride; total length 2.5 m, 2-seater
(Tokyo Motor Show 2017)
|The single-rider, three-wheel i-Walk can be a personal mobility device for the elderly
Toyota, EV, LCA, renewable energy, standardized battery
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