Market News

 November 24, 2016
Toyota to start mass production of electric cars as restrictions loom

 Toyota Motor Corp. will start mass production of eco-friendly but expensive electric vehicles (EVs) around 2020 in anticipation of stricter environmental regulations planned for automobiles in the United States and China, according to sources.

Although Toyota has prioritized manufacturing gas-electric hybrid cars among other green cars, the automaker will strengthen its EV strategy to respond to tighter restrictions.

"The decision means we will actively introduce all types of eco-friendly vehicles," said a senior Toyota official on Nov. 7, referring to a plan to set up a new team inside the company to consider specific steps to mass-produce electric cars.

"We have to accelerate our EV strategy as regulations are expected to be strengthened in California."

Toyota will consider releasing medium-sized electric cars comparable in size to its Corolla subcompact, as well as electric sports utility vehicles.

Earlier in November, Akira Marumoto, vice president of Mazda Motor Corp., which is working with Toyota, said the two leading automakers are "deepening talks" to include EVs in their plan to share expertise and jointly market new products.

Electric cars run on motors, using electricity in car-mounted batteries charged from outside power sources. They do not emit exhaust fumes while in motion, like fuel-cell vehicles that operate on electricity generated from hydrogen.

Against the backdrop of Toyota's latest decision to mass-produce EVs are enhanced environmental restrictions in overseas countries.

California is set to ramp up regulations on automakers that handle fewer electric cars and fuel-cell vehicles, starting in the latter half of 2017. Similar restrictions are also planned in China, the world's largest auto market where 25 million units are annually sold.

While Toyota has concentrated on hybrid cars and fuel-cell vehicles to date, another senior Toyota official said the auto giant will "not be allowed to avoid selling EVs," referring to a recent change in Toyota's eco-friendly car strategy.

According to the sources, Toyota plans to purchase batteries from other companies so that it will be able to secure large quantities of batteries for electric cars.

Rival automakers have got a head start on Toyota in the EV competition.

General Motors Co. in the United States is expected to market an electric model that can run nearly 400 kilometers on one battery charge alone by the end of the year.

Germany's Volkswagen AG plans to introduce more than 30 EV models by 2025 and to sell 2 million to 3 million units each year, according to Volkswagen CEO Matthias Mueller.

But electric cars are inferior to hybrid vehicles in terms of safety and costs of high-performance batteries as well as maximum driving distance.

According to the International Energy Agency, the global penetration rate of electric cars is around 0.1 percent.

"The EV business is not easy," said a Toyota executive.