Many investors and environmental groups have said that Japan’s Toyota Motor Corp. is not putting its full effort into developing pure electric vehicles, with the company keener on promoting its own hybrid technology. Critics have said that Toyota is lagging behind its competitors in developing environmentally friendly vehicles. But recently Toyota is seeking to engage with these critics of the company’s stated policies to explain more of the company’s efforts in the electric vehicle sector and change their attitudes toward the company.
Nearly a year ago, Toyota pledged to spend billions of dollars to expand its electric vehicle lineup. But some investors and environmental groups had said Toyota was not committed to developing purely electric vehicles, noting that the company remained cautious about electric vehicles in its statements and stuck to promoting its own invention of hybrid technology.
Toyota sources familiar with the matter said the company is responding by interacting more with critics and exploring ways to improve the company’s image at the environmental level. Toyota has said that hybrid vehicles are an important transition technology in the United States and many other parts of the world where charging infrastructure remains inadequate. In terms of market performance, Toyota has also sold far more hybrids than any other automaker.
Toyota’s image in environmental protection, as well as electric vehicles, has become a greater concern for company executives such as President Akio Toyoda, people familiar with the matter said. Last year, Toyota said it would invest 4 trillion yen (about $28 billion) in developing electric vehicle technology over the next decade.
The Danish fund AkademikerPension manages a total of about $19 billion in assets on behalf of academic institutions and school employees. The fund has been fighting the company for nearly two years because it believes Toyota opposes various measures to promote electric vehicles.
Earlier this year, AkademikerPension attempted to submit an application before Toyota’s shareholder meeting proposing that the company disclose more lobbying information about hybrid and fuel vehicles, AkademikerPension said, adding that Toyota rejected the proposal outright on the grounds that the foundation had submitted the application one day past the deadline.
“We’ve never experienced anything like this before,” said Anders Schelde, chief investment officer of AkademikerPension. In response, the foundation publicly posted the questions it wanted to ask online and issued a statement saying that skepticism about electric vehicles “undermines Toyota’s brand value and shareholder interests.
Toyota recently invited AkademikerPension to Japan to meet with company executives. Sheard said either himself or the foundation’s CEO plans to visit Toyota in the coming months, which will be the first time the two sides have met face-to-face.
A Toyota spokesman said, “We are committed to having an open, two-way dialogue with investors and other stakeholders to ensure that their views are reflected in our company’s management.”
Toyota has also been interacting more with the environmental group Greenpeace (Greenpeace). For the past two years, Greenpeace has ranked Toyota last in the automotive industry’s decarbonization rankings. According to Daniel Read, who works on energy and climate issues at Greenpeace, Toyota has begun reserving seats for Greenpeace at company events related to electric vehicles and recently invited representatives to attend meetings at the company in person.
Like other traditional automakers, Toyota is adjusting its car manufacturing business, which has continued for decades, to consider how to meet the challenge of focusing more on electric vehicles. Toyota aims to sell about 3.5 million electric vehicles per year by 2030, about one-third of the company’s current annual vehicle sales.
In the second quarter of this year, electric vehicles accounted for less than 1 percent of Toyota’s vehicle sales, while German Volkswagen’s electric vehicle sales, which are closest in size to Toyota’s, accounted for nearly 6 percent of the company’s total.
Toyota Chief Executive Officer Akio Toyoda has been one of the industry’s leading voices of caution about electric cars. He questions whether electric cars are as environmentally friendly as advertised and is skeptical of consumer demand for these vehicles.
Toyota said that because it will be decades before the world has the battery supply chain and charging network needed for large-scale electric vehicles, the company believes in the meantime that hybrid vehicles can reduce carbon emissions just as much. In the most recent quarter, hybrids accounted for nearly 30 percent of shipments from two major car brands, Toyota and Lexus, helping Toyota meet increasingly stringent emissions regulations in markets such as Europe.
Customer demand for hybrids also helped Toyota achieve a record operating profit of 3 trillion yen (about $21 billion) in its most recent fiscal year. Toyota’s share price has performed quite well recently, falling only 9 percent so far this year, a smaller decline compared to other automakers.
Akio Toyoda has been trying to figure out why some investors and environmental groups do not believe in Toyota’s electrification strategy. According to people familiar with the matter, Akio Toyoda has assigned a consultant to ask influential people in the U.S. and European auto industries for their opinions on what they think of Toyota’s efforts in the electric vehicle sector and to figure out why Toyota isn’t getting as much praise as other automakers. They said the feedback would go directly to Akio Toyoda.
Unlike GM and Ford, Toyota has yet to set a date for all of the company’s cars to be zero-carbon globally, a sticking point for some investors.
“The conversations have been constructive, but there’s nothing particularly alarming that they’re changing their behavior,” said Michael Garland, assistant auditor for corporate governance and responsible investment at the New York City Comptroller’s Office, which oversees the operations of the city’s public pension funds. “When measured by corporate behavior, we’ve gotten more responses from GM and Ford.”
A Toyota spokesman said the company wants to reduce carbon dioxide emissions as soon as possible and plans to offer customers several types of electric vehicles as well as cars with other powertrains.
In addition to Danish fund AkademikerPension, investors such as the Church of England Pensions Board, Swedish pension fund AP7 and Nordic asset manager Storebrand have said they are unhappy with Toyota’s lobbying activities related to environmental protection.
As of September, Akademiker, AP7 and Storebrand held more than $250 million in Toyota shares, a pittance compared to the company’s total market value of more than $200 billion. The Church of England Pensions Board did not disclose the size of the holdings.
Toyota insiders said public relations experts and others at the company have advised company executives to refrain from making negative comments about electric vehicles and to emphasize more the benefits of electric vehicles and Toyota’s substantial investment in electric vehicle technology.
Sage Advisory Services, an Austin, Texas-based investment management firm, also holds Toyota’s corporate bonds. Agency executives said they have detected a shift in the language in question.
Emma Harper, vice president of Sage Advisory, said the company had made some contacts last year about Toyota’s position on electric vehicles, and Toyota responded with its usual rhetoric, and the company’s claims about hybrids were no different than before. Harper said she could figure out the arguments herself, but it was hard for the public to understand.
Recently, she said, Toyota has “undergone a sea change, they feel the whole trend, as well as consumers, politicians and other stakeholders from the transition from fuel to electric vehicles.”
