Feb 19, 2007 (From the CalCars-News archive)
The February 18 New York Times Magazine includes a very long story on Toyota's emerging domination of the world automotive market. It's accompanied by colorful cartoon graphics of super-hero drivers and mighty cars. The story begins with a mention of the Chevy Volt. Toward the end it positions PHEVs as the logical extension of Toyota's development and a response to global warming. The author frequently returns to the obvious contradiction between Toyota's commitment to the inaptly named Tundra and its green positioning, and basically concludes that Toyota will design and build whatever sells best.
We've posted a few excerpts. Several points jump out:
- The author takes as received truth that PHEV batteries aren't ready.
- Toyota's Bill Reinert confirms that its Hybrid Synergy Drive cars were designed to accommodate PHEVs in the future, saying, "This company is not stupid."
- One environmental spokesperson quoted assumes that non-gasoline cars will remain an insignificant niche for the foreseeable future. He therefore focuses strategically on making today's cars more efficient. While no one would see that as a bad idea, his perspective is in contrast to an emerging group of analysts, policymakers and people within the automotive industry (including GM's leadership) who see the trend to electrify transportation as the necessary future for the majority of cars, and coming sooner than anyone would have expected only a few years ago.
The New York Times Magazine Cover Story
February 18, 2007
From 0 to 60 to World Domination
By JON GERTNER
For most of the January morning, the reporters at the Detroit auto show crisscrossed the COBO convention center like a herd of livestock, moving at least once every hour to feed - sometimes literally, since Lexus offered fresh fruit. All the world's car companies were unveiling this year's models. Often, the back-to-back corporate announcements required everyone to scurry clear across the exhibit floor to get a seat at the next press conference. It was hard not to lose yourself in the scenery, however, as you passed by a dazzling showroom exhibit of Maseratis, for instance, or encountered some gleaming Infinitis. The event was a place untroubled by thoughts of traffic jams, long commutes or gas prices. It was also a place where C.E.O.'s like Rick Wagoner of General Motors showed off electric cars like the Chevy Volt that cannot yet be produced - at least until battery technology improves - but that can nonetheless be driven slowly across a stage toward a cluster of photographers.
Certainly the most obvious example of Toyota's long view is the Prius hybrid. [President of Toyota Motor North America Jim] Press said he believes that every automobile in the U.S. will eventually be a hybrid. I asked how soon. Not in five years, he replied, "but I think at some point in the not-too-distant future." I asked whether Toyota developed and marketed the technology years ahead of the other major automakers because it possessed better technical skills. Press instead framed the issue as a matter of philosophy. Ten years ago, he said, at about the same time the Prius made its debut, Ford rolled out the huge S.U.V. franchise. "Both of us had the same tea leaves, the same research," he said. "One of us bet on hybrid, one of us bet on big S.U.V.'s." In his view, the wisdom of making big S.U.V.'s - Press left unacknowledged that Toyota eventually brought out its own line of S.U.V.'s - seemed dubious: "First of all, long term, is fuel going to get cheaper or more expensive? Is oil going to become more plentiful or less plentiful? Is the air going to become cleaner or more polluted? And so, do you do something proactive and innovative, to be in tune with where society is going? Or do you hold on to where it has been, and then don't let go, to the bitter end?" It was never a matter of altruism, he seemed to be saying, but an example of how corporations survive in society. "What's the right thing to do to sustain the ability to sell more cars and trucks?" he asked. The Prius was not about a fast return on investment. It was about a slow and long-lasting one.
The Tundra is hardly green like the Prius, yet it, too, illustrates Toyota's characteristic patience and belief that it should serve every kind of customer. The biggest-selling vehicle in the United States is not the Camry (448,445 sold last year) or the Accord (354,441) but Ford F-Series trucks (796,039). Not far behind in sales are the full-size trucks from Chevrolet. These are among the most lucrative consumer products around, yielding anywhere from $6,000 to $10,000 in profit for every unit sold. "To the American automakers, that's their bread and butter," Jeff Liker, from the University of Michigan, explains. "They break even on passenger cars, lose money on small cars. But all their profits come from large S.U.V.'s and trucks. For the American auto companies, this is the last hill that they dominate." Several auto analysts pointed out to me that G.M. and Ford trucks not only have an extremely loyal customer base; they're also widely regarded as extremely well built and engineered (often in contrast to their passenger cars). When I asked Jim Press how long the company had been thinking about creating a full-size truck, he said it had been a priority dating to the early 1990s, when Toyota failed with its first big truck, the T100. The company failed again in 2000 when its first (and smaller) Tundra came out; only 124,508 units were sold last year.
6. Getting the Carbon Out of Cars
Toyota's president, Katsuaki Watanabe, who like all of the company's top executives is based in Japan, recently declared that his dream for Toyota is to build a car that does not hurt anyone and cleans the air when it's running. This is not quite as fantastical as it sounds. Several automakers are developing cars with sensors that literally prevent them from crashing (though not from being crashed into). And in the heavy intersections in Tokyo where air quality is poor, Takahiro Fujimoto told me, part of Watanabe's vision is already real: "The emission gas of some advanced cars is in fact cleaner than the intake air." The most vexing challenge, though, is what fuel cars will run on in a future where oil is too scarce or tailpipe emissions too dangerous on account of global warming. About 10 percent of global carbon emissions come from cars, S.U.V.'s and pickup trucks. Many automakers, Toyota included, now trumpet their vehicles as "clean," but this label, while by no means unimportant, refers to engine technology that reduces smog-forming emissions like nitrogen oxides or unburned hydrocarbons. But every gallon of gas burned still produces more than 19 pounds of CO2.
What I found within Toyota is that its engineers and executives all take environmental issues seriously, but on their own terms. For many consumers, of course, Toyota's hybrid innovations established a green halo over the company. Yet the environmental community is more wary of the company's lauded progressivism than you might expect. Many environmental advocates are dismayed by Toyota's participation (as a member of the Alliance of Automobile Manufacturers) in a suit to block California's new laws curtailing greenhouse-gas emissions. And some view Toyota's strenuous efforts, especially in the U.S., to sell gas-guzzling trucks and S.U.V.'s as counterproductive. "I think the reality is that Toyota's focus on the truck market has been to make them look as American as possible, rather than be the global environmental leaders they are on the car side," Jason Mark, the former head of the vehicle program at the Union of Concerned Scientists, told me. As Mark sees it, Toyota's activities matter more than any other automaker's. "First, they'll be the biggest car company very soon," he says. "Second, they've demonstrated a knack for innovation with the Prius. And third, they've demonstrated a commitment for stewardship that I don't think one could attribute to the domestic automakers."
When I spoke with John DeCicco, an automotive specialist at Environmental Defense, a New York-based advocacy group, he said that in the near term, at least, it's better not to count on a silver bullet - a drastic changeover to hydrogen-powered vehicles, for instance. There are many reasons that this will remain a long-term goal. One is that cars, especially ones of good quality, last a long time. Another is that automakers are profit-driven public corporations, and any new technology has to be competitive in the marketplace. To see just how long that can take, consider that Toyota began developing the Prius at a time, 1991, when gas was plentiful and cheap. Today, seven years after its introduction in the U.S., it has less than 1 percent of the car market. Higher gas prices or gas taxes may alter this. But for now, environmental advocates like DeCicco urge carmakers to focus on making modest changes to popular vehicles (making S.U.V.'s lighter, for example, thereby increasing fuel efficiency), which could have a more significant environmental impact than a sophisticated new technology. When DeCicco began analyzing total greenhouse-gas emissions from each car company's American fleet, he noticed that in 2003, for instance, there was a significant change for the better in Toyota's rate. This wasn't because of its hybrids but because of its redesign of the Corolla. "When you make a small change in efficiency in a high-volume product like that," DeCicco told me, "it can have a bigger net effect in your carbon than a major change in a small-volume seller."
Still, more economical cars for the short term cannot solve the long-term problem. Toyota expects to be in business 100 years from now, one person in the company's West Coast office told me, long after oil has been depleted or rendered unusable because of its carbon content, and for that reason it has placed all its bets on hybrid technologies. Indeed, Toyota created its hybrid systems not so much with the current era in mind, but because it views hybrids as more practical and energy-efficient. Whether the future is in biodiesel, ethanol or hydrogen doesn't seem to matter; the hybrid system could be adapted to any of those fuels, says Bill Reinert, Toyota's U.S. engineer in charge of advanced vehicle planning. Reinert also told me that the current Toyota system already has the ability to accommodate the larger battery capacity of a plug-in hybrid, which would use electric power for local trips and fuel only for longer excursions. But those large batteries don't yet exist. Was that extra capacity put there on purpose? "Hell, yes," he says. "This company is not stupid."
Reinert adds that every Toyota engineer designing a new car gets an environmental-impact budget as well as a financial one. Designers must consider the total amount of carbon dioxide produced in the design, production and lifetime operation of a new vehicle. This sounds both encouraging and socially responsible. But you have to wonder too if it's really an equation for sustainability. Right now, Reinert says, there are about three-quarters of a billion cars worldwide; by 2050, if market trends continue, "we could conceivably have 2 billion or even 2.5 billion cars." Accommodating those cars will entail building new roads and new factories and spending vast amounts of energy to make shipments. All those activities will create enormous emissions on their own. So even with giant strides in clean-vehicle technology, just doubling the number of vehicles could increase the overall environmental effect by a factor of three.
To their credit, engineers at Toyota like Reinert do not soft-pedal the immensity of the challenge. And they argue, sometimes convincingly, that Toyota will be a large part of the solution. Jim Press does, too, but his is a different kind of optimism. A few days after the new Tundra made its debut, Press gave a speech to the Society of Automotive Analysts in Detroit in which he seemed confident that this would be Toyota's century. New technologies are on the way, he promised. And the demographics of the American market look good: boomers are buying more cars. Americans are living longer. And the growth rate of the U.S. population is greater than China's. Even in the face of what looks like a difficult year for car sales, the industry is on the verge of a golden era. "This is one of the few countries on earth where we have more cars per household than drivers," he said. "Isn't that great?"
At the beginning of his speech, Press joked to the audience that he was about to reveal the secret of Toyota's success. He never really did, except to look ahead with relentlessly bright expectations.