How Toyota, a laggard in electric cars, got back in the fight

The breakfast at Toyota’s annual dealer meeting in Las Vegas last fall was an exclusive, invitation-only affair, with attendees told to cover their cellphone cameras with red stickers.

Stephen Ciccone, Toyota’s top lobbyist, spoke. He said the industry is facing an existential crisis — not because of the economy or fuel prices, but because of tighter tailpipe pollution restrictions proposed in the United States. The rules were “bad for the country, bad for consumers and bad for the auto industry,” he said, according to a memo he later distributed to Toyota dealers and was reviewed by The New York Times.

“For more than two years, Toyota and our dealer partners have stood alone in the fight against unrealistic BEV mandates,” he wrote, using the acronym for battery-electric vehicles. “We have received a lot of hits from environmentalists, the media and some politicians. But we have not – and will not – back down.”

On Wednesday, the Environmental Protection Agency finalized tailpipe emissions rules that will require automakers to meet stringent new average emissions limits. The rules are among the most important aimed at combating climate change in United States history.

But the rules relaxed key elements of an earlier, stricter proposal. In particular, the final rules favored hybrid cars, cars that run on both gasoline and electricity, giving a bigger role to a market that Toyota dominates.

It looked like Toyota had come out on top.

Toyota, once a leader in clean cars, has stepped up its role as a voice of warning against too-rapid electrification of the auto industry, using its lobbying and PR power to oppose a rapid change it says experts is crucial in the fight against climate change.

That’s a significant change for an automaker that pioneered hybrid technology in the late 1990s and gave the world the Prius, a high-mileage vehicle embraced by early adopters of cleaner cars.

But in recent years, Toyota has been betting on a continued role for hybrid and gasoline cars, as well as hydrogen-powered, non-battery vehicles, seemingly leaving Toyota in hot water as electric car sales began to rise rapidly.

In a statement on Friday, Toyota said it has long maintained that “the best way to reduce CO2 emissions as much as possible as quickly as possible is by offering consumers a variety of choices to meet their needs.”

Toyota sided with President Donald J. Trump in 2019 against an effort by California to impose stricter rules on auto emissions. And it has opposed policies around the world to force automakers to switch to selling electric vehicles.

Toyota also stood out among its fellow automakers for starkly opposing exhaust rules proposed by the Biden administration last year that would require automakers to meet stringent new average emissions limits for their product lines. For example, Ford tried to delay some of its compliance dates even though it had largely agreed to the overall numbers.

Toyota absolutely objected. The rules were “arbitrary and capricious,” based on “error-filled data sets” and would impose “significant costs” on gasoline vehicles, the automaker said in comments on the proposed rules. Battery supply chains, vehicle charging infrastructure and car buyers were not yet ready for electric vehicles, the company said.

In January, Toyota Chairman Akio Toyoda said he believed that electric vehicles would at best reach a 30 percent market share, with the rest of the market taken up by hybrids, hydrogen fuel cell cars and gasoline vehicles.

“When we think of Toyota, people think it’s technologically great and green — and they deserve that,” said Margo T. Oge, former director of the EPA’s Office of Transportation Air Quality, who has advised both automakers and environmental groups about clean cars. policy. But lately, she says, Toyota has been using “all kinds of strategies to slow down.”

Toyota said it had been steadily calling on the EPA to provide more flexibility to comply with regulations. And it said its argument prevailed, noting that several companies have recently announced plans to offer more hybrid cars instead of electric cars. “It appears that the industry has moved toward the position that Toyota has consistently held,” the report said.

It also called the EPA’s final rules “aggressive” and said significant challenges remain in complying with them.

In spreading its message, Toyota leveraged the power of dealers, both through Mr. Ciccone’s outreach to Toyota dealers and in other ways. The company’s dealers, for example, played a role in drumming up support for a separate letter-writing campaign aimed at urging the Biden administration to be cautious about electric vehicles, according to two people with knowledge of that effort. Toyota dealers in at least two states distributed the letter at dealer meetings, they said.

That effort culminated in a letter to President Biden in January from nearly 4,000 auto dealers in 50 states, complaining about poor sales of electric cars and urging the administration to “pump the brakes” on its push for more vehicles on batteries.

However, the letter was investigated after some dealers who appeared in it claimed they never signed up. Among them was Duncan Roberts, majority owner of the Portland dealership of Swedish automaker Polestar. “It’s embarrassing. I didn’t approve of it,” he said in an interview.

Toyota said the list was “compiled through dealer-to-dealer contact,” and that it did not believe Toyota dealers played an outsized role.

Sales of electric vehicles have slowed in recent months, but are still growing much faster than sales of vehicles that use fossil fuels. Nevertheless, the dealers’ letter provided ammunition for other enemies of stricter pollution standards.

The US fuel petrochemical manufacturerswhich represents the nation’s largest gasoline producers, urged Congress to support it a Republican-backed bill that would limit the EPA’s ability to regulate car emissions, citing the letter. During the Trump administration, the group also waged a covert campaign to rewrite clean car rules.

Toyota has said it is investing more than $17 billion in electrifying its fleet, an amount that includes investments in hybrid and electric vehicles, and has launched one electric car model in the United States. But Toyota dominates in hybrids, with roughly a 40 percent market share in the United States, giving the country an incentive to keep hybrids mainstream, analysts say. It invested heavily in technology; Early on, Toyota lost money on its Priuses for a decade before it started making a profit on hybrids in 2001.

And hybrids are selling well now as some buyers shy away from buying all-battery cars because they worry about running out of power or not being able to find convenient places to charge.

The revised EPA rules announced earlier this week “work for automakers who are investing heavily in hybrids,” said Mark Schirmer, director of Industry Insights at research firm Cox Automotive. “And Toyota is certainly leading the way.”

Toyota has also tried to turn it into a business other car manufacturers with its hybrid technologyoffering some of its patents for free in the hope that rivals will turn to Toyota for its expertise and to buy parts.

Toyota’s focus on producing hybrids, rather than fully battery-powered cars, is also better for the environment, the company says.

Mr. Ciccone, the Toyota lobbyist, laid out this reasoning in his memo to dealers: The amount of rare minerals needed to make one electric vehicle takes just one gasoline vehicle off the road. But that same amount could produce six plug-in hybrids that need an electrical outlet, or 90 hybrid cars that don’t need to be plugged into an electrical outlet, he said. And, he said, Chinese dominance in the battery supply chain was a major problem.

“It is a no-brainer” to prioritize hybrids over electric vehicles, Mr. Ciccone said in the letter.

Some experts dispute the figures. Rachel Muncrief, acting director of the International Council on Clean Transportation, a research organization, said Toyota assumed a shortage of mineral supplies. did not materialize due to improved battery technology and other changes.

Electric vehicles emit much less greenhouse gases and other pollutants, studies have shown, when taking into account their production and use throughout their lifespan. “There’s no competition,” she said.

Toyota’s math has won followers. GreenerCars, which recently assessed the emissions of 1,200 cars on sale this year, gave his highest rating to Toyota’s ‘plug-in’ hybrid Prius, meaning it can be charged from a wall socket, but can also run on its petrol engine. However, experts point out that how clean a plug-in hybrid is can vary greatly depending on how often it is driven as a petrol car or if it runs on electricity.

Some changes to the EPA’s auto pollution rule appeared to be based on new data indicating that plug-in hybrids today run more on battery power than in the past, which would make them cleaner.

Toyota had said it planned to share such data with the administration. The EPA did not immediately comment on whether Toyota’s data had influenced the final rules.

Dr. Numerous UC Davis said it was clear the auto companies were in a tough spot. “They are taking the biggest risk with this transition to electric vehicles,” he said. “So I understand their opposition, I understand why they’re nervous about it.”

Coral Davenport reported from Washington.