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Toyota is finally trying to get in on the electric vehicle (EV) revolution. The Japanese automaker has been dragging its feet for years, investing its time, money, and attention to lobbying against the spread of EVs while its rivals gave up the ghost and dove in. Now, Toyota is way behind and trying to catch up with a new investment of more than $13.6 billion into EV batteries.
Toyota To Embrace The Electric Vehicle Boom
Toyota is the world’s biggest automaker, but even their colossal industry sway couldn’t slow the changing of the tides away from gas-powered engines. But they sure tried their hardest to do so. Toyota execs have downplayed or disparaged all-electric vehicles for years, and have yet to launch a single EV outside of China. Instead of focusing on battery-powered cars, Toyota has historically promoted hydrogen fuel cells and hybrids. This new investment thereby marks the end of an era for Toyota, and stands as a major victory for the EV industry.
The company is investing 1.5 trillion yen (or $13.6 billion, as previously mentioned) into battery supply and research to be carried out by 2030. Investing in a reliable battery supply chain is paramount, as the EV industry is currently plagued by a shortage and the threat that the sector will run out of batteries entirely is a very real and present danger. In fact, it’s projected to happen by just 2020 if some major changes aren’t made in the immediate term, due to the increasingly rapid adoption of EVs and skyrocketing demand for lithium-ion batteries. A Bank of America Global Research report released in July announced: “Our updated EV battery supply-demand model suggests the global EV battery supply will likely hit [a] ‘sold-out’ situation between 2025-26, with its global operating rates reaching above 85%.”
In fact, the lithium-ion battery sector is bogged down by a litany of problems that could eventually have very real and problematic geopolitical ramifications. These batteries are reliant on rare earth minerals, such as lithium and cobalt, which are finite resources only found in certain areas of the world. As it stands now, China controls up to 90% of the market for some of these essential ingredients. As the world’s hunger for EVs grow, China’s chokehold on this essential part of the supply chain only intensifies, and Beijing has already shown that it is not afraid to use that power to sway international politics and diplomacy. It has even been speculated that we are headed for a clean energy resource war if superpowers -- most notably the United States and China -- don’t play nicely.
In the meantime, companies like Toyota are snapping up as many batteries as they can get. The company’s chief technology officer Masahiko Maeda has said that Toyota’s goal is to secure a supply of 200 GWh of batteries before the end of the decade. “We are assuming that we will go beyond the 180 GWh worth of batteries that we are currently considering and will ready 200 GWh worth of batteries or more if the dissemination of BEVs is faster than expected,” he was quoted by EV news outlet Electrek. According to their reporting, “at an average of 60 kWh per battery pack, it would be enough for the annual production of more than 3 million electric cars per year.”
This is a huge change in tune for a company that has been outright antagonistic to battery-powered electric vehicles. In fact, even as Toyota moves forward with EVs, making a late bid to become competitive in a largely developed market, the company is concurrently lobbying the United States government to slow down the production and adoption of electric vehicles. Despite Toyota’s best efforts, the Biden administration is continuing to push electric vehicles as a key part of its platform and as a central tenet of the infrastructure agreement and spending bill. On Friday U.S. Democrats announced a plan to significantly expand tax credits for EVs, with especially lofty subsidies for union-made models assembled domestically in a move that favors the nation’s Big Three automakers. It’s no wonder that Toyota sent an executive to protest in the U.S. senate as it looks like they will once again fall behind in the overseas EV revolution.
By Haley Zaremba for Oilprice.com
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