Toyota commits $70-billion investment, about half of it to shift into EVs by 2030

• Toyota aims to increase global sales of electric vehicles by 3.5 million units a year by 2030

• In the COP26 summit, the company declined to sign a pledge for electric vehicles by 2040

Japanese carmaker Toyota Motor Corp on Tuesday committed 8 trillion yen which is around $70 billion, to electrify its automobiles by 2030, half of it to develop a fully electric lineup, to tap on a growing market for zero-emission cars.

Chief Executive Akio Toyoda said the company aims to sell 3.5 million battery electric vehicles (BEV), or around a third of its current vehicle sales, by the end of the decade.

The announcement follows as traditional automobile companies increasingly take on Tesla Inc, which has become the most valuable carmaker this year.

In October, Tesla hit a market capitalization of $1 trillion, surpassing the combined value of Toyota, VW, Daimler, GM, and Ford.

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Pursuing both hybrids and EVs

Speaking at a press conference in Tokyo, the CEO said the company would offer 30 new fully electric models, called the “bz series,” short for “beyond zero,” by 2030, including sport-utility vehicles, pickup trucks, and sportscars.

He also announced the company’s luxury brand, Lexus, will become fully electric by the end of the decade for the U.S., European and Chinese markets and by 2035, globally.

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Toyoda also said that the company will still pursue a multi-pronged, carbon-reduction strategy that includes hybrid cars and hydrogen-powered vehicles.

“We want to leave all people with a choice, and rather than where or what we will focus on, we will wait a little longer until we understand where the market is going,” Toyoda said.

The new commitments show Toyota, the second-largest carmaker globally in terms of market cap,  intends to compete seriously with Tesla, Volkswagen, and other global rivals as the car industry shifts away from internal combustion engines (ICE) to electric vehicles.

Investment for future

Among the 8 trillion yen, the company said it would pour half into research and development of BEVs and another half into hybrid and fuel-cell cars.

Most of Toyota’s current electric vehicle sales are hybrid electric cars powered by a combination of combustion engines along with battery-operated electric motors.

The company sells just a few thousand battery electric vehicles each year, which makes up only a fraction of its current sales.

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“In this diversified and unchartered era, it is important to flexibly change the types and quantities of products produced while keeping an eye on the market trends,” Toyoda said.

The carmaker also raised its initial investment in battery research and development from 1.5 trillion yen ($13.2 billion) to 2 trillion yen ($17.6 billion), which it announced earlier this year.

Earlier this month, Toyota said it will build a $1.3 billion EV battery plant near Greensboro, North Carolina, that will employ at least 1,750 people and start production in 2025.

Commitment obligation

In the COP 26 summit held in November, six major carmakers, including GM and Ford, signed a pledge to phase out fossil fuel cars by the next two decades.

However, Toyota then declined to commit, arguing that not all parts of the world would be ready to transition to green cars by 2040.

ALSO READ: COP26: Long way ahead for zero-emission vehicles despite national leaders’ pledge for EV push

Asked why Toyota decided to upgrade its targets, the CEO said that new energy policies and stricter emissions regulations announced by nations at the COP26 summit prompted the automaker to update its targets.

“As policies became clear, we thought about our own policies and came up with this new figure,” Toyoda said. “Instead of predicting the future, we want to be ready for any change."