In this article, I cover a presentation given by Lexus executives to me and other journalists last week and their answers to a question that calls them into question about the weaknesses I saw in their plan.
Last week I was invited to spend 3 days in Plan, Texas, learning about the latest new vehicles coming from Lexus and Toyota, driving many of them, giving great access to both marketing and production managers, and giving good food, probably hoping to covered their products in the most favorable light. This is a continuation of an article on the Lexus RX / RZ I wrote last week. For more information on the fully electric RZ, check out this recent press release.
During the first presentation, they talked about their investments to become a carbon-neutral company. This includes:
- An investment of $ 1.29 billion in a new battery factory in North Carolina, which should open in 2025, will create at least 1,750 new jobs.
- An additional $ 90 million investment for two existing plants – one in West Virginia, to increase production of hybrid differentials, and one in Tennessee to increase production of hybrid and gearboxes.
- A $ 383 million investment for four factories to support the production of four-cylinder engines, including options for hybrid electric vehicles. Those 4 factories are in Alabama, Kentucky, Missouri and Tennessee.
- Secured a partnership with the 100% renewable energy EVgo charging network, with more than 800 fast chargers and thousands of charging stations serving over 68 urban areas in 35 countries for those buying a Toyota EV.
In addition to their carbon neutrality plan, they naturally mentioned the progress they have made in other areas.
They talked and I experienced their new Lexus multimedia system. This new interface is a big improvement over their previous generation of smaller screens which had to be controlled using a touchpad which I found to be confusing. I also found that their voice recognition is easy to use and quite accurate. Since I drive Tesla every day, I am often a bit confused when I return to the car with traditional controls, but I find this new interface quite easy to learn and easy to use. I had to drive about 100 miles with him in the 3 days I was there.
Did you know that 23 children and 59 pets died last year in the U.S. because they were left in a hot car? Toyota hopes to reduce this in future vehicles. It is not for sale today, but they have described their proof of a concept called cabin awareness. This proof of concept was created by members of their team using proprietary millimeter-wave radar technology integrated into the vehicle’s cabin to detect the life form that remained in the vehicle.
Whether a child is in a car seat or legroom or even in the trunk, they can pick it up if a living being is detected after the driver gets out of the vehicle and may have a number of warnings that can alert other people to this potential danger. A warning light is signaled on the instrument panel first, and then the siren and emergency lights flash. After all the early warning signs, the owner will then receive alerts on the phone via the Toyota app as well as text messages. Now, if all this fails to rectify the situation, they can remotely start the vehicle cooling system and contact emergency services via the integrated SOS function.
Last year, they also unveiled a privacy portal now available in the Toyota and Lexus app. This is the first time I’ve heard of such a simple way to control your data. It gives its customers full access to understand how Toyota uses vehicle data and provides benefits and safety improvements during the driving experience. But it also allows users to have more limited control over what they want to share and what they don’t want. So, in short, not everything is included or complete – the customer is given complete control over what they want to share. They want to be different when it comes to privacy in the industry and to provide control and choice around personal and vehicle data.
A difficult question for Lexus management
Out of 131 journalists at the event, I am sure I asked the most difficult question. Several journalists came to me after the event and thanked me for the good question.
Question: I am delighted to see an increase in the number of electric and hybrid vehicles in your new introductions, but I am concerned that these are compliant cars or small quantities. Are they available in 50 countries? Can you give us an idea of the volume in them because many times something exciting like RAV4 Prime appears, but no one can get it?
Answer 1: “That is a good question. Every OEM has the same concerns. You have a limited number of batteries. What is the goal in the industry? Is it to bring more EVs and introduce more supplements? Is carbon neutrality the goal and what is the best way to achieve carbon neutrality? I read your stuff, so I know where you come from. We want it to be 50 states. We want everyone to participate in the direction and intention to become carbon neutral. Every single competitor in this industry devises a different way to try to solve this. You’ve heard from us, whether it’s Toyota or Lexus, our goal would be to keep listening to the market, to deliver powertrains that meet the needs of every type of people in every type of market. All the way to hybrids, accessories, fuel cell technology, electric batteries. We believe this is what consumers are looking for – not just choices, but the different needs they have. We will not give exact figures today, but I will tell you that this is our goal and our intention is carbon neutrality. What we promised in 2017, before anyone talked – when we had a plan to become carbon neutral where we went for a 90% reduction. We are still on that path. We will fulfill the promises we made to the world. We will continue to do so. We will continue to see how many people we can bring to it in any country or any part of North America. ”
Answer 2: Another CEO added: “From a brand perspective, electrification is a fundamental component of our marketing and brand strategy. We want to talk about the proliferation of the model, the fact that there are more ratings, the fact that we have more electrification, the fact that it is not only about better efficiency, but also about fun driving. You know that the top-of-the-line torque at zero speed that comes with an electric motor and combining that with an efficient petrol engine is part of that Lexus signature and the fun that comes with the Lexus line. ”
[Editor’s note: I think the executives answered Paul’s questions largely by not answering them. There is no real indication that its electric models will be high-volume, mass-market vehicles. Also, the note about limited battery supplies implies that Lexus has not gone ahead as a leader and secured very large volumes of battery raw materials or battery cells or packs in order to be able to produce mass-market models. Instead, it appears to be a convenient excuse that helps Lexus to not do what it didn’t want to do anyway. That’s my reading, at least, but I’m sure also the reading many people here will have. —Zach Shahan]
After talking to some other executives about their electrification plans, two things became clear to me. First, they know their customers and know that most of their customers are not yet ready for electric cars; and second, to do a lot to help the climate, only in a different way from Tesla.
Now, after spending 12 years trying to persuade my friends to buy electric cars (sometimes successfully, but many times not), I agree that most American customers are not ready unless you both have a premium product and do not promote it. There’s a lot of propaganda against EVs, and Toyota and Lexus haven’t always helped. Because of this and all the infrastructure challenges, and even the political challenge that some don’t want to buy an electric car because it will signal to their friends that they are progressive (which is a very bad label for half the country), Toyota and Lexus seem to be trying to meet climate goals and promises without alienating half of their customers. In the truck market, this even means de-emphasizing the hybrid technology used to give their vehicles instant torque and high fuel economy, as hybrids are not associated with the macho image that is so important to that market.
For those who are not ready to get involved – me too do it We want Toyota and Lexus to do more to promote accessories (PHEV and BEV) – Toyota and Lexus really lead the industry with almost 4 times more hybrids than the rest of the industry. Their release for the first quarter shows 25.8% of hybrids compared to the 7.1% figure I get from sharing 236,430 hybrid sales with 3.3 million vehicle sales in the US. To read Toyota’s side of the story, check out the North American Environment Report, which highlights many of their achievements and goals, including 55 hybrid models and sales of over 2 million a year (both global numbers). With hybrid vehicles being about 30% more efficient (my estimate), this saves a lot of fuel, pollution and carbon emissions without the need for any behavior change or charging infrastructure.
Discovery: I am a shareholder of Tesla [TSLA]BYD [BYDDY]Nio [NIO]XPeng [XPEV]and Hertz [HTZ]. But I am not offering any investment advice here.
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