Toyota Motor Corporation (7203) Earnings Call Transcript & Summary

[Presentation] [Interpreted] Hello. I am Akio Toyoda. Thank you very much for taking time out of your busy schedule to join us today. Today, I would like to talk about Toyota's strategy for achieving carbon neutrality, particularly our strategy for battery electric vehicles, BEVs, which represent one of the most promising options. I believe that achieving carbon neutrality means realizing a world in which all people living on this planet continue to live happily. We want to help realize such a world. This has been and will continue to be Toyota's wish and our mission as a global company. For that challenge, we need to reduce CO2 emissions as much as possible as soon as possible. We are living in a diversified world and in an era in which it is hard to predict the future. Therefore, it is difficult to make everyone happy with a one-size-fits-all option. That is why Toyota wants to prepare as many options as possible for our customers around the world. We believe that all electrified vehicles can be divided into 2 categories, depending on the energy that they use. One category is that of carbon-reducing vehicles. If the energy that powers vehicles is not clean, the use of an electrified vehicle, no matter what type it might be, would not result in zero CO2 emissions. The other category is that of carbon-neutral vehicles. Vehicles in this category run on clean energy and achieve zero CO2 emissions in the whole process of their use. We at Toyota will do our utmost to realize such vehicles. Today, we would like to present to you what we have been preparing for the future. Let's start with the Toyota bZ series of our dedicated battery EVs. beyond ZERO, the Toyota bZ means going beyond zero, freedom of movement and fun to drive for all. Our goal is not only to reduce CO2 emissions and other negative impacts to zero. Our goal goes beyond those. For the bZ series, we developed a dedicated platform for battery EVs to meet the diverse needs of the global market. The first model in the lineup is the bZ4X here, which we recently announced. Currently developing it with Subaru, enabled us to pursue smoothness and maneuverability as well as the drivability of a genuine SUV. For its launch next year, we are preparing for the production of the bZ4X at Toyota's Motomachi plant right this very moment. We will soon deliver it to our customers. Furthermore, we are expanding the bZ series lineup. Please have a look at these 2 models. This midsized SUV has a beautiful silhouette that presages a new era for battery EVs. At just single glance, its styling can invite you to want to get in and go for a drive. And this is the most compact SUV in the series, a small battery EV with a comfortable interior designed with Europe and Japan in mind. The more batteries you add to extend cruising range, the bigger, heavier and more expensive a vehicle becomes. Because this SUV is a small vehicle, there is something we must be thorough and very particular about, and that is power efficiency. The important thing is to what degree we can increase a vehicle's overall energy efficiency. In other words, how much less energy a vehicle needs to run. This is exactly the technology that Toyota has been refining for more than 30 years. Putting our best efforts into all aspects of these, with this vehicle, we are aiming for a power consumption of 125-watt hours per kilometer, which will be the highest in the compact SUV class. And this is a midsized sedan that meets customers' expectations for a first car. We also have a large SUV with available third row seats that allow families to experience fulfilling times together. So what do you think? We will not only add battery EV options to existing vehicle models, but we'll also offer a full lineup of reasonably priced mass production models, such as the bZ series, to meet the needs of all kinds of customers. By doing so, we hope to deliver to customers around the world the unique and beautiful styling as well as fun-to-drive aspects of battery EVs and experience of a life with battery EVs. Toyota is a global company supported by customers around the world. The Toyota brand now offers more than 100 models of engine-only vehicles, hybrid electric vehicles, plug-in hybrid electric vehicles and fuel cell electric vehicles in more than 170 countries and regions. The Lexus brand has introduced more than 30 models of engine-only vehicles, hybrid electric vehicles and plug-in hybrid electric vehicles in more than 90 countries and regions. Furthermore, we will expand the options for carbon-neutral vehicles by offering a full lineup of battery EVs. Specifically, we plan to roll out 30 battery EV models by 2030, globally offering a full lineup of battery EVs in the passenger and commercial segments. Now please take a look. Here is Toyota's greater battery EV lineup. [Presentation]

Welcome to our showroom of the future. First, let's start with the Lexus brand. Lexus strives to be the brand that people who knows authenticity choose at the end of the day. As brand holder, I continue to believe that. Lexus has pursued unique styling and a unique driving signature. And as a pioneer in hybrid electric technology, it has refined its electrification technology. And now Lexus is embarking on a new chapter. Please watch this video. [Presentation]

[Interpreted] Lexus will develop a next-generation battery EV sports car, but they inherit the driving taste with the secret sauce of the performance cultivated via the development of the LFA. We will extend the driving taste to refine this way to other models as we evolve Lexus into a brand centered on battery EVs. We can position batteries and electric motors to bring more freedom to battery EVs. This freedom will allow us to be more attuned to our customers, various needs of different regions and various lifestyles, and everything from long distance transport to last mile delivery of commercial vehicles. The vehicles you see behind the Lexus lineup, they are the diverse Toyota battery EVs. Now please watch this video. [Presentation]

[Interpreted] EV for everyone. So what did you think about Toyota's battery EVs? The future that we showed you today is by no means far away. Most of the Toyota battery EVs that we introduced here are models that will be coming out in the next few years. We aim to achieve global sales of 3.5 million battery EVs per year by 2030. Lexus aims to realize a full lineup of battery EVs in all vehicle segments by 2030 and to have battery EVs account for 100% of its vehicle sales in Europe, North America and China, totaling 1 million units globally. And it aims for battery EVs to make up 100% of its global vehicle sales in 2035. To achieve these goals, we have invested in various areas for a long time. In the area of vehicle development, in 1997, Toyota launched the Prius, the world's first mass production hybrid electric vehicle. But in fact, our development of battery EVs had started before that. In 1992, we established the Electric Vehicle Development Division, and we introduced the RAV4 EV to the market in 1996. In the 2000s, we demonstrated our small prototype commuter EV, e-com, in various places. Furthermore, in 2012, we introduced the COMS, an ultrasmall EV, in the small eQ EV. Thus, we have long explored the potential of battery EVs. We launched the C+pod and C+walk this year, and has accelerated the development of battery EVs, including the e-Palette, for freedom of movement in various scenes. As we started developing battery EVs in the early 1990s, we also began developing fuel cell electric vehicles, which run on hydrogen. In 2002, we introduced the Toyota FCHV to the market to go through various demonstrations. And in 2008, the vehicle was redesigned into the Toyota FCHV-adv. Based on such long-term efforts, in 2014, the first generation Mirai was finally launched. Since then, fuel cells have been adopted for buses and large trucks and continue to evolve. Toyota has continued to research, develop and produce batteries in-house for many years. In 1996, we established what is today Prime Earth EV Energy. While refining our nickel-metal hydride batteries technologies, we started accelerating the development of lithium-ion batteries in 2003. Furthermore, since having established our Battery Research Division in 2008, we have been advancing the research on solid-state batteries and other next-generation batteries. Last year, we established Prime Planet Energy & Solutions to accelerate integrated efforts in the battery business. Over the past 26 years, we invested nearly JPY 1 trillion and produced more than 19 million batteries. We believe that our accumulated experiences is an asset that gives us a competitive edge. Going forward, we will increase our new investment in batteries, from the JPY 1.5 trillion announced in September to JPY 2 trillion, aiming to realize even more advanced, high-quality and affordable batteries. Toyota Tsusho began conducting lithium and other surveys as early as in 2006 and has been working to secure stable sources of natural resources. And in the area of energy too, Toyota Tsusho has been working to secure renewable energy sources, such as wind and photovoltaic power generation for more than 30 years. Furthermore, at manufacturing plants, we are aiming to achieve carbon neutrality by 2035 by continuously reducing energy use and by expanding the use of innovative production engineering technology. In this diversified and uncharted era, it is important to flexibly change the types and quantities of products produced, while keeping an eye on the market trends. We believe that the reduction in lead times and high mix, low-volume production methods that we have cultivated through the Toyota production system, along with the steady efforts of Japanese monozukuri manufacturing, will enable us to be competitive going forward. We will continue to advance initiatives in all areas together with many of our partners among Toyota Group companies, suppliers and dealers. Energy plays a critical role in achieving carbon neutrality. At present, the energy situation varies greatly from region to region. That is exactly why Toyota is committed to providing a diversified range of carbon-neutral options to meet whatever might be the needs and situations in every country and region. It is not us, but local markets and our customers who decide which options to choose. Why do we try to keep so many options? In business management, one might think it will be more efficient to focus on fewer choices. However, we believe that quickly adapting to changes in the future is more important than trying to predict the future, which is nothing but uncertain. We want to keep options available for our customers until the right path is known. Toyota aims to be a company that contributes to the global environment, seeks to bring happiness to people, acts and stays close to its customers. In a nutshell, we want to become a company that mass produces happiness for both individuals and society. We want to pass on an ever-better future to the children of today and those who will come after them. We always want the future to be brighter. I believe that the future is something to be built by all of us together. Japan's automotive industry is home to our 5.5 million colleagues who have supported Japanese manufacturing and mobility. And we have many more colleagues throughout the world. If we all take action with unity of mind and with determination and passion, we will be able to leave behind many smiling faces and a beautiful earth for the future generations to come. That is what I believe, and that is what we will achieve. Thank you. [Break]

[Interpreted] We'd like now to begin the Q&A session. I will introduce the members on stage, President and CEO, Akio Toyoda; Chief Technology Officer, Masahiko Maeda; Chief Branding Officer, Koji Sato; Senior General Manager of Design, Simon Humphries. [Operator Instructions] In the second row, Mr. Katori from Yomiuri Shimbun.

[Interpreted] I am Katori from Yomiuri newspapers. So you earlier said that 3.5 million by 2030. And that is a large upward revision from 2 million that you have been targeting before. And the Toyota was seen to be conservative against electrified vehicles, and this is a significant change. So what is the reason for this big change?

[Interpreted] I'll first start by responding and then I'll have the other members make additional comments. First of all, for the 2 million units, that is quite a volume as well, 2 million units. If it is an automobile company, most of the Chinese [ good ] companies, OEMs, will have about that vehicle. And then we're adding another 1.5 million and making that to 3.5 million. And when it's 3.5 million, for example, it's equivalent to like Daimler, PSA, Suzuki motors, this kind of companies' size. If these companies made all of their vehicles that they sell to BEVs, it will be about this amount. That's the size and volume that we're talking about. A significant volume is what we are talking about here. I hope you can understand that, first of all. And also the -- not only the EVs, but FCEVs included and other EVs included. For carbon neutrality, it's about the using part of the car. And in many ways, for it will be carbon-neutral, carbon-free type of vehicles. But like I said in my message, it also depends on what energy we use. And depending on the region we're talking about, it might become a carbon-reducing vehicle or a carbon-neutral vehicle. And this year, we had COP26. And as COP26 was held, each country has made their announcements and made clear about the energy policies that they have. And as we saw those policies becoming clear, we have been thinking about our carbon neutrality initiatives and have come up with a plan to see a realistic plan. So as we have had this discussion and sophisticated our plan, we have come up with this number.

[Interpreted] In real terms, like Mr. Toyoda explained, that was the background. For example, the U.S. presidential decree being issued and others, we have seen more the change be clear and active in the market. So with that as a background, we have had discussions to come up with a volume that we believe we have to prepare to be able to deliver. So using this plan and volume, we will be doing the preparations and development work in the company. And we said that this is one criteria. So this will be a criteria, a guideline that we will use to do the necessary preparations on the development side, production side, and also make necessary investments. So that will be all in the background here for the numbers that we have announced.

[Interpreted] Thank you. Well, if I can add a little bit from the Lexus perspective. This time, Lexus has said that we are going to target 1 million units. Lexus, in March this year for the electrified -- Lexus electrified initiatives have been announced this year. Toward 2025, the electrified vehicles' popularization is going to be accelerated. That was the announcement. And as Mr. Toyoda explained in his speech, in the world, we are seeing a quick change. And especially in the luxury segment, the advanced technologies. And also, expectations to the EVS is rapidly increasing. And energy mix will be different according to each region. But for the luxury segment, we are seeing a rapid mindset change of the customer. So we want to be flexible to meet those expectations. That is why we have made this announcement this time. From Maeda-san, he talked about the setting the criteria guideline. So once we set this kind of a target as a guideline, we'll be able to work on practical activities to understand and clarify, identify what kind of issues we will have so that we can accelerate all the necessary activities. That is the background of the announcement made today.

Next question, please. A journalist from Nikkei, please, in the third row.

[Interpreted] I am [ Yuzawa ] from Nikkei. So towards 3.5 million vehicles, Maeda-san mentioned the increased amount of investment. At this point in time, what sort of investment do you have in mind? If you have any information that you can share with us, I would appreciate it.

[Interpreted] Now at the time of battery IR, we announced a number of JPY 1.5 trillion. As Mr. Toyoda mentioned in his presentation, we will be increasing that to JPY 2 trillion. Now 3.5 million vehicles, R&D investment will be involved, totaling JPY 2 trillion, another JPY 2 trillion. So the total would be JPY 4 trillion. In addition, when it comes to all electrode fleet outside of batteries, we have hybrid. We also have plug-in hybrid and FCVs. So we are making another JPY 4 trillion of investment. The total therefore is JPY 8 trillion, based on the criteria that I mentioned earlier. We are not saying that we are going to use it all up. This is an indication that we are ready. And when actually spent the amount, how much we will be able to reduce the cost and reduce the lead time and when it comes to timing, if we can reduce and shorten lead times. We can certainly make our investment more efficient and effective. And that is an area that we are especially careful about. So based on all such assumptions, we are now talking about JPY 8 trillion. Thank you for your question.

Next person, please. Thank you. It is NHK. NHK, please.

[Interpreted] I'm Noguchi from NHK. So as I watched the presentation earlier, I could see how you are emphasizing the EV strategy. And you are talking about a full lineup, so a strategy plan for all directions. And going forward, there are a variety of electrified vehicles. But are you saying that you're going to be further emphasizing battery EVs, but for your 360 degrees or full lineup electrified vehicle strategy has not changed? Which is it?

[Interpreted] Well, for us, currently, as we strive to achieve carbon neutrality, we are going to make a company-wide effort to achieve that target. This has not changed. But as you know, Toyota has a global -- we are a global company with a full lineup of products. And in that sense, we'll -- there has been a big change in the country's and region's policies. And the way the vehicles are used is now more diversified. In addition, the market or the customers, when we look at them, how -- which will be the final menu they would like to choose. This is something that Toyota cannot control. It will be out of our control. And just because we make a decision, it doesn't mean that our decision will be the solution. So what I have been repeatedly saying is that for Toyota, for which option will be selected, that is not what we're going to decide on. We are going to have a more wider option available. And this has been the same as before. And going forward, for all of the menus that we're going to have on the list, we will be seriously engaged to provide all of these options. And there's a tendency that some people says that Toyota is not interested in EVs. That's what we hear a lot. But as I said before, it's 2 million. When you think about the volume that we're talking about, it's a huge volume. But since we have the total volume of 10 million for ourselves, then everyone would think about the ratio. But even if it's 2 million, it's a huge number, and we're saying now 3.5 million as a baseline. But then people still say that, well, Toyota has -- for Toyota, it's 10 million, 3.5 million out of the 10 million. But for us, we want to keep the options for everyone available. And rather than making a selection in concentration of which path to go on, we want to watch how the customers and market will change. And we want to be prepared to flexibly meet the expectations and preferences. And I believe that, in this way, we will be able to enhance our competitiveness. And I believe that this approach will be able to provide a timely proposal to the customers in the market. And that is the way that we will be able to survive. So this is -- has not changed from before. For all of the options, we are not going to decide on the priorities. All of these options we're going to put our full effort in. So in a sense, just because I'm riding a fuel cell electrified vehicles, it's not that we're prioritizing the fuel cells and the -- so the hydrogen engine, excuse me, hydrogen engine. Just because I'm riding it, it's not that we're having a full priority on that, that doesn't mean that. So for all of the employees, the suppliers and also the affiliated companies and the 5.5 million of the people working in the automobile industry, with all of these friends and partners, we're going to work on this business mindset. And we are having these activities global-wide. And our weapon in our global operation is the full lineup of products. So us battling in the global field with a full lineup of products, that we want to make a proposal of a way to battle -- to have a -- to be in this market. And we are really putting our serious effort into this approach, whether it's a multi-solution approach or otherwise, we are very seriously working with our full effort in all of these areas.

Can I just add a little bit to Toyoda-san's comments there? I think that the future, of course, is very difficult to understand for everybody. That's the first comment. But within that future, one thing that we can probably say for sure is that each region and all of society is becoming more diverse. So what are the next steps for Toyota? More than anything is to build on our strengths, which is understanding what customers really want. And within that diversity, we see customers increasingly more confident in their choices, particularly with regard to products and design. And what we need to do now, probably the biggest hurdle or challenge is to increase customer acceptability in carbon neutral-based design, I think. We -- the principle -- all people agree that this type of direction is a necessity. But whether or not they're willing to accept that in practice is the next big hurdle, I think. For example, reusables fabric, reusable materials. All these type of factors will have to change the way of customer thinking, then perhaps we can get to a point where we can achieve the numbers that are being talked about.

[Interpreted] And if I may make 2 additional comments for this full lineup strategy. The reason why we are continuing this strategy, there's 2 efforts that we have been continuing. And one is make the development more efficient, the development process being more efficient. For the one model, 30% to 40% of the development efficiency has been improved. And this is because we have worked on creating the TNGA. Establishing TNGA has a large effect on the development efficiency. And now as we expand the BEV side, we have been able to strengthen our basic capabilities. And in addition, one -- another effort we have been making is branding. As we have announced today, the reason why Lexus -- overall Lexus is going to be leading the BEV products, and this is because of the characteristics of -- and trends of the luxury market, but also because advanced technology will be led and be the front -- Lexus the front runner as the corporate brand. And then for the GAZOO Racing, like we talked about, hydrogen engine, Mr. Toyoda talked about that. So motor sports is going to be the starting line to look into the possibilities of the carbon-neutral fuels. So we'll be making these, all these challenges, so that all the brands can utilize their strength, and also look into -- explore the wide area of possibilities. And that is the strength that Toyota has. And this is the background on why we want to continue our full lineup strategy.

[Interpreted] And for this full lineup strategy, I can make -- I'd like to make some additional comments from the customer's perspective. For example, the U.S. or North American market, the electric power supply and the usage situation, the West and East Coast, as you know, these West and East Coast will be -- have a preference for the environment-friendly cars. And also, they have a good established infrastructure. But when you go to the Midwest or into the more the central areas of U.S., the usage environment will be different. It will be quite tough to shift immediately into using battery EVs. So even if it's one country, looking into the different areas of one country, there are areas where battery EVs convenient and not so convenient. Therefore, the customers will be selecting different types of products, depending on their situations. And that is why we need to have a wide variety of products available, so that we can provide to our customers. And like you know, Brazil, they have the bioethanol fuel already being commercialized. And for Toyota, for biofuel -- bioethanol, we have a combination with our products. And bioethanol, it is more lower in price than gasoline. So in the market, it is more marketable. So thinking of these actual situations of difference of the each region. We don't want to force the battery EVs into this kind of a market because they might not want to buy it. And like Mr. Toyoda said, globally, Toyota is -- has a global operation. And we have been building trust in each of these regions that we operate in with our products. So we don't want to break this -- damage this relationship. We want to continue to look into the environment that they are using their cars and their preferences, and be able to meet their expectations. So as a result, we'll have take this full lineup strategy. So that is our situation. Thank you.

Thank you very much. Next question, please. In the first row, a journalist from Toyo Keizai, please.

[Interpreted] I'm from Toyo Keizai. And your battery EVs plans are very ambitious. And procurement of batteries appears to be the key. Within your presentation, JPY 1.5 trillion or -- is increased to JPY 2 trillion for development of batteries. And earlier, there was a talk about the North Carolina plans. And you also have alliances in [ Prius ] and so forth. So procurement of battery is an area that I'm most interested in.

[Interpreted] Thank you very much for your question. For different regions, basically, we would like to see the local production, local consumption, while considering the logistics fees and so forth. But how to procure, at what level of volumes, we still are yet to see the clear picture of that. Basically, we have to reduce the single line unit cost and come up with the most optimum procurement plan for batteries. And at which point in time, which markets to launch into would also are dependent on what sort of regulations will develop in those different areas. So basically, we plan for local procurement. But depending on the stages of the development of the market, we still have to continue working with different types of partners to be sustainable in procurement. But as Toyoda-san mentioned earlier, as for materials, Toyota Tsusho has had long history of securing natural resources, and we are safe until 2030. So we will have both partners' help and in-house production. The basic materials will be secured.

[Interpreted] In 2030, 200 gigawatts hour or plus was your original plan. It also has to be increased because of 3.5 million vehicles. How much would that increase be?

[Interpreted] Based on that criteria, 280 gigawatt hour is something that we are looking at.

Next person, please. Yamamoto-san, journalist in the front row, please?

[Interpreted] I'm Shinya Yamamoto, a freelance journalist. This time, there were a lot of specific announcements made, and I was quite surprised. But what I am -- want to know more is about President Toyoda's true feeling. For hydrogen and hybrids, I think you have a lot of aspirations, and your true thoughts have been made public in many occasions. But for battery EVs, I think it's more like, yes, we're doing it. It's kind of a business-like reality announcement kind of presentation. So I want to strike the point and ask you, for you, President Toyoda, do you like battery EVs or not? Well, maybe if it's difficult to respond as the President of the company, you can respond as Morizo.

[Interpreted] Great question. Well, if I had to make an answer, well, the battery EVs that Toyota was developing, in the past, I was not interested in. But the EVs that we are now developing for the future, I am interested in. And the reason why I say that is because the first EV that I've driven, it was a RAV4 EV. That's the first Toyota EV I've driven. But at that time, of -- for my driving skills was not so good either within those times, so the impression that I had at that time, probably it's not worth even talking about it. But the level of -- that I have been seeing is of the electrified vehicle for the [ '86 ] and I've had a test drive in this [ mega wave ]. I forgot how many years ago it was. But the comment that I gave after my test drive was that it's a electric vehicle. That's what I said. And when it's a electric vehicle, it becomes all -- more or less the same kind. It can be all grouped as an electric vehicle, not different so -- from each other. But for us, we have the Lexus brand and we have the Toyota brand. And we are a OEM pursuing what is the distinctiveness of that brand. But then if it's EVs, it becomes more like a commodity, so that was the path. So like you have said, Yamamoto-san, business-like, I was, of course, supporting. But driver Morizo have a different opinion, so that was how you've seen it, and maybe you were right. But now I'm a master driver. And as a master driver, the reason why I became a master driver and the training that I came -- went -- I came through, you always use a FR vehicle for my driving. And also that was -- FR vehicle was the reason for becoming a master driver. But recently, I'm now in the rally races and also Super Taikyu races. And in these motor sports gemba, from the FR vehicle, I've now changed it to a 4-wheel drive vehicle. This is the car that I use in my motor sports activities. And so my master driver sensibility probably has changed with this vehicle change. And that will be the power, the motor efficiency. The motor will have a higher efficiency of power than the gasoline engine. So in a certain sense, like I -- if we have a 4-wheel drive, a platform with controls, it can become an FF car or an FR vehicle. So if we have that kind of control technology, then Morizo, in any circuit, any rally competition, Morizo will be able to drive fast and safe. That's what I think. And in the past national championships, Nori-san won, he became champion. And at that circuit, the rookie racing drivers -- there are many rookie racing drivers, now they're very active in motor sports. So we have the professional drivers. And those driving skills of those professional drivers are reflected into the vehicles. So I think we are now able to those skills and make a fun to drive car. So that is the higher expectation I have now. And like myself, a gentleman driver, whether it's dry or wet or if it's a mountainous or snowy road whatever -- or rough road, in any kind of road, a fun to drive car that you can drive safely, with this platform, there is a possibility that we can develop that kind of a car. That is a big change point of our company. But just with control technology, if we try to create the flavor, it's like you have an overcooked noodles and putting tempura on it, and say that it's delicious. But in the past several decades, starting with our TNGA initiatives, we have started the base, the framework and then the chassis, the body rigidity. We have really been focused on making ever-better cars, and all of these areas, a very steady improvement, steady Kaizen has been accumulated in the past decades. And now we have the Shimoyama proving grounds open, and therefore, we have -- are able to use these proving grounds and test the cars with tough conditions and train the car. So with this environment, we, I think, are now at a point where a more safe and a more fast driving, and more fun to drive vehicle can be developed as an EV. So including BEVs, I have expectations for Toyota vehicles. So that's why -- it's not anymore just a business matter. And even for driver Morizo, from a Morizo hat, I have strong expectations, and it will be very interesting. And probably, the autonomous driving vehicle will be different. If it is kind of OEM creating it, so that is also included into our plan. So from your perspective, maybe I hope you understand that we are very much serious in BEVs, FCEVs, hybrids and also the gasoline conventional vehicles, that smell like gasoline and you have the big sounds. We're still very much serious. So as Morizo hat and also as my president, that has not changed. But again, I want to repeat myself that for any of these fields that we work on, we're working with our friends and partners very seriously. And if it is something that our customers will be willing to choose then, and if they can become into smiles, that's the kind of products we want to provide from Toyota. And so the developers, we want to have a strong feelings for it and have our affection and develop it. And then we hope the customers will select it. Whether it will be selected is an uncontrollable for us, so that's why we have a full lineup for our strategy.

Thank you very much. Next question, please. I see a hand over there, [ Mihori-san ], is that you? Please?

[Interpreted] I am [ Mihori ], a freelance journalist. Next year in Japan, bZ4X will be launched. And at the time, the national dealership we'll have to have fast chargers. Do you have a plan of realizing that? Because I really feel it is necessary for your dealership to have the fast chargers.

[Interpreted] We do have a -- yes, but it may take longer. 2025 -- the year 2025, will be the target where all the dealers in Japan will have fast chargers. For our customers, I believe that's an important part of the infrastructure. But on the other hand, in Japan, unfortunately, we're seeing the declining number of chargers installed. I don't know whether we are in the transition period, but well, certainly, we have to make sure that our electric vehicles will be easily charged for our customers. So once again, that's another area that we are full in. Now when it comes to charging equipment, this is an area where different parties must collaborate and cooperate, OEMs for BEVs and FCEVs. Well, certainly, some of the OEMs can establish some by themselves, but that should not be left to the usage of the customers of only that particular OEMs. The infrastructure should be commonly shared. And that is an area that Toyota would like to work harder to realize. I hope the media would also send messages of making electric vehicle is more convenient for the consumers because there is only so much OEMs can do when it comes to infrastructure. Lexus, 100%. We talked about the U.S., Europe and China. The 900 in, Europe, 1,700 in China and 5,000 in Japan would be the plan for the chargers. Now non-Toyota owners should also have an easy access to the chargers that we provide. That's another important consideration, and I thank you for your question.

Next person, please. Wall Street Journal, please.

Wall Street Journal, Sean McLain, apologies for the question in English. The question is for Mr. Toyoda or anybody else. I was wondering if you could help me and the rest of my colleagues understand what exactly the message is you're trying to send today? On the one hand, you say you are going to sell as many EVs as you can, 3.5 million. But on the other hand, you want to make sure that we know that you're serious about zero emissions. So as the largest carmaker in the world, why are you only targeting 35% of your current volume? Why not go over 100% or 50% as many of your competitors have done? Why is 3.5 million sufficient in your mind?

[Foreign Language]

[Interpreted] Thank you. So we have said that we are going to be reducing the carbon as much as possible with our carbon-neutral vehicles. And the -- with the baseline of 2030, we want to increase the carbon neutral vehicles. So that is what our message. And in reality, in order to achieve carbon neutrality for each country's energy demand will have a big impact on this plan. That is a reality. That's a fact. And for that -- it's an uncontrollable for Toyota. So I hope that you will understand that point. So if Toyota says -- because there is no energy infrastructure and no charging infrastructure, if we expand our coverage to those areas too, then the customers who actually use our cars will have to think about what kind of situation they will end up in. I think it will be very inconvenient. We will force our customers to be -- having an inconvenient environment to use their vehicle. So we want to avoid that inconvenience for our customers. So what we want to -- the people here to understand today is that, currently, the market, when we look at the global market, it is a diversified market that we are dealing with. That is Toyota. Toyota is operating in a diversified global market. And for a diversified market, it's necessary to prepare a diversified solution. So I hope this point, you will understand. And also, if we provide the best solution for the average person, that will be not the best solution for everyone. Therefore, currently, in a time where we have -- see no correct answer and when everything is not clear, we want to take the approach of having a diversified approach. And for this diversified approach and diversified solution, we will work with full effort on every menu on this list. And also, there are the suppliers that are fighting together and also the affiliated companies and partners that are working with us together. And we are going to -- all going to be working on this seriously, this approach attempt seriously. So I hope you understand that.

[Interpreted] And if I may add some comments. Regarding carbon neutrality, at the end, it's about energy security, very closely tied with energy security issue. The energy situation of each region and also the way that cars are used for -- by the customers and their needs must all be taken in consideration to strike the best balance. And for example, energy, you have to produce it, also transport it and use it. So we have to think from a life cycle perspective for energy. And for the car usage environment, this will be greatly different according to the region we talked about, U.S., Europe. In the usage of cars area, they will be run more for long distances. But in Japan, on the other hand, compared with U.S. and Europe, the average driving range will not be that long. So thinking of this situation, the use part, the life cycle impact of the usage of car part will be different according to the region. And also, the infrastructure establishment speed will be different. So we'll have to look at this in totally in perspective and try to find the best mix. So that is what we're trying to do, find the best mix. And so we've been talking about the baseline, the criteria guideline. So if there is a sign that this situation is going to be changing more, then we have been building up our capability to deal with the changes in an agile way and flexibly. So that is the preparation we'll be doing. And this is the kind of passion that we have, an intent that we have to create the future. I hope you feel that with today's presentation.

[Interpreted] Well, maybe -- Looking at this from the other side. The battery EVs, when we think of which market is more -- most advanced with the battery EVs introduction, I think it's a good perspective to have. And as for example, it is Norway that you will know. And in the passenger car market, 60% to 70% is already battery EVs in Norway. And the background of why it has popularized so much is one is taxation privilege and also the free parking and free tolling. And these kind of situation infrastructure has been set up there in the Norway market. And as the President just said, probably for the users, that was the convenience for the customers. So the convenience was prepared for them. And at the end, taxations and rules, at the end, just with us, it is uncontrollable. But when we look at the reality and when we look at the markets where the customers are selecting the battery EVs, we'll have to have a cool mind to understand what is the situation that they are in, in selecting the battery EVs. So going forward, we now have shown today our intent -- strong intent to be working on this direction. And for the customers, we need to look at the customer situation, their energy situation, like Mr. Toyoda said, and what kind of balance is needed in order to select the battery EV. So we have to discern what the necessary balance is as we move forward. And therefore, with -- for the changes that we are now facing, we'll have -- we need to deal flexibly in an agile way. So it's very important for us now to prepare by shortening the lead time to do that as much as possible.

Thank you very much. The next question, please? Asahi Daily.

[Interpreted] I am [ Kundu ] from Asahi Shimbun. Mr. Toyoda, the carbon neutral is related to employment, as you have said. 3.5 million is a new criteria that you have for 2030. The suppliers, which are being influenced certainly, is watching your announcements very closely. There are things Toyota can do and there are others Toyota cannot do. But I would like you to revise your thoughts about employment.

[Interpreted] Thank you. Whether carbon neutrality will be accepted, certainly, we have to make sure that customers would accept the idea. Now as for carbon neutrality, the numbers that we have heard so far would be for 2050 and 2040, the only target numbers that we have heard so far. Just -- we just did not want the targets to remain a target. We wanted to make sure that targets would be more achievable. For example, the cars that you are looking at right now, many of them will be launched into the market very soon and running up to 2030. In 8 -- next 8 years, whatever we do will be based on how we can imagine in the future with our products. We have to continue having very good discussion with the stakeholders, and I'm sure today's event will be a springboard of accelerating such discussions. We have been making quarterly announcements for a business. And as for carbon neutrality, the criteria for different products are clearly announced so that the impact can be felt by the suppliers as well as the different production sites. So as the President of gemba, I often said, if BEV 100% in Japan, then 1 million people would lose job in this automotive industry out of 5 million. At that time, different companies have come out with some big target numbers, not any specific figures and road maps to achieve them. That's why I said that would lead to unemployment. But now recently, we have seen more concrete plans from different OEMs. And now as Toyota, we are also coming up with our very concrete plans, including the models to be launched. I'm sure we'll have a renewed discussion therefore about carbon neutrality. At any rate, just because the trend is toward BEVs, we will not just follow suit, because as you know, the automotive industry comprises of 75% of the components procured from supplier. And there is this [ private ] of Tier 1, Tier 2, Tier 3 suppliers supporting the industry. We've been focusing on emphasizing the importance of leaving options at our suppliers. Some may manufacture components only for the ICE engines. And certainly, carbon neutrality can become -- or BEVs can become a major challenge. You cannot just say you're going toward the direction of BEVs just because that's the trend of the market. Whatever the size and scale of the company and the business models, we have to remember that there are companies and people who work there who have been making those components. And we do not want the automotive industry in the future to leave some of them behind. What they have done so far was meaningful. But still, if the market decides to go differently, then you have to come up with some ideas of how for those companies and people to continue their business, and we want to have a realistic discussion about that. Like I said in my presentation, the future will not be determined by the numbers cited by the leaders, but by the action based on passion and aspirations. Even if we have this carbon neutrality target for the future, our action in conduct for the next 5 years will certainly change our future in 2050. And we would like to see that happen. We have done that in the past. We have done that until now. And I'm sure whatever we have done have been meaningful, and that applies to our suppliers as well. And we want to make sure that our suppliers feel the same way. That's the reason why we would like you to understand, the future will not be changed overnight. The future will be the accumulation of today and the past. We've been talking about leaving many options, as many options as possible. And I would like you to embrace the idea of the importance of that. Well, 100%, not being 100% does not mean we have aspirations. We -- this is the best we can come up with in terms of the number of vehicles that we would like to build. I really hope you will let us and let this entire industry keep on working. Thank you very much.

Next person, please. From the Daily Automotive Paper, Nikkan Jidosha, please, on the second row.

[Interpreted] I'm [ Fukui ] from Nikkan Daily Automotive News. And for the EVs that you've talked about, I'd like to ask about the cost. So comparing with the same size gasoline vehicle, how close will the selling price be? Or when is the timing that it will be lower than the current vehicles? I think EVs, the cost will be a big bottleneck. So what is the cost plans for Toyota? In the past, you said the battery cost for EV, so it's going to be halved by 2030. But for the total vehicle class, how are you going to be reducing the cost? President Toyoda has always been saying that Toyota is going to provide affordable vehicles. So how are you going to make it more closer to the gasoline vehicles, the ICE vehicles? What is the plan?

[Interpreted] Thank you for your question. Cost reduction is really something that we have to steadily work on step by step. That's the only way that we can achieve cost reduction. That's the reality. And for example, as I explained in the battery IR event, the power efficiency, power consumption efficiency, making it more efficient, then we can reduce the usage of the power, and that will reduce the battery cost. So in order to improve the battery, this is also something that we have to steadily step-by-step make improvements. For example, the approach that we have acquired through our hybrid experience is that the car that is in driving, maybe the brake is being dragged, and that dragging feeling -- the dragged brake, also considering how to make up, strike a balance with the feeling of the driver, we have to make the adjustments. And little by little, we have made the improvement, and that is the kind of experience that we have built up. And Toyota is that kind of company. From the past, we have learned from our predecessors of this approach on making improvements. And going forward, for the R&D efforts, we will be working little by little steadily. That's the same approach we'll do. So that's also exactly what Mr. Toyoda said, that we are going to be seriously working steadily. There is no way that we have one solution to fix -- make a big improvement. There's an -- and we have to do steadily. So it might be we use the same perspective, come up with different ideas and build it up one by one. An accumulation of these efforts will be ending up in the reduction of prices in maybe 5, 10 years in the future. But honestly speaking, when it change -- it becomes lower than the gasoline engine vehicles, it's not easy to achieve that kind of a price level. But we are not going to give up. And for whatever kind of gasoline vehicle it was, what kind of electrified vehicle it was, what kind of battery electrified vehicle it is, the nonchanging OEM's responsibility is to provide a reasonable and affordable vehicle that is good in quality. So that will not change, and that will be our approach.

Thank you very much. The next question will be the last one. From NewsPicks.

[Interpreted] I'm [indiscernible] from NewsPicks. Recently, some environmental organizations have ranked Toyota at the very low end of the climate action ranking. They believe you are not following into EVs. Well, at least that is my understanding. Now once again, for Toyota, what is the positioning of EVs? And in addition, up until now, you have been working full fledgedly on ICEs. And what will happen to ICEs and their -- further development?

[Interpreted] Each 3 of us should respond to the question because I'm looking forward to listen to their responses myself.

[Interpreted] Thank you. Now in terms of ICE development, hydrogen engine has now become a reality. Now you burn something and get energy. As an industrial manufactured goods, this is a technology which can be dubbed as artistic because this has enabled many consumers comfortable and high quality of life. And it's a very important tool which achieved that. As [indiscernible] says, what is evil is carbon. When you burn something, if you don't get any carbon emissions, then you can still have a major utility of what burning does. So ICE without carbon emissions, if that is possible, it shouldn't be applied to all the themes to all the customers. But for some customers, they may enjoy utility of that mechanism. Now in Brazil market, carbon neutral, bioethanol is cheaper than gasoline. And it's a reality. And then hybrid being added, more efficient use of energy has become possible. So there are such markets. There are such countries that exist. And we don't hear any complaints from the consumers from the market from that country. And we are selling a sizable number of vehicles there. So engine or ICE may be an option. Although the number may come down as a part of full lineup, we will continue to have that option. In comparison of EVs and ICEs why you asked that question. So I took -- I responded from the perspective of ICEs. Now Sato-san would address EV part of your question because he has made an announcement, the Lexus will be EV, 100% EVs. Thank you.

[Interpreted] Now not only BEVs, but we are selling cars with wonderful experience to our consumers. So being a vehicle, being a car is important. ICEs and hybrid alike, cars should be exciting. As Mr. Toyoda often says, the smell of gasoline, the sound of ICE engines, there are some excitement from ICEs. BEVs, on the other hand, may have a different form of excitement. BEVs use electricity and motors with wonderful responsiveness, with smooth acceleration and deceleration and quietness, something lacking in ICEs. Some new value add is there. Especially for luxury segment, customers are looking for acceleration, something not achievable by ICEs. Motors can offer such excitement. I think the time has come. What I mean by that is under master driver, Toyoda, we have been trained. We have been going through exercises, like those have high school students. And we have been refining Lexus and is -- continuing such exercises. And as you have seen in the video, it took 10 years for us to come up with a BEV which can make a Akio Toyoda smile, a little, finally. So exploring new opportunities are still abound in BEVs, especially when it comes to performance. As Mr. Toyoda mentioned, controllability of the performance really leaves you with interesting maneuverabilities. And electrification technologies are very effective in doing so. So we may be able to build cars, which is more exciting. And that's the reason why we are shifting to BEVs at Lexus. So this is my response to your question of positioning of EVs. It's an opportunity which can offer us exciting future. Simon?

Yes. I'll keep it really short. But basically, from a design perspective, from a product perspective, an EV or the EV era is really an opportunity for new experiences for the customer, and to be able to do something that's proactively fun, exciting, and at the same time, have some value toward the future carbon neutrality, and this is an incredibly exciting time that, I think. So what I want to say more than anything is sometimes it's easy to look at the rational side first. But actually, the chance or the opportunities are going to come on the emotional side as well. And maybe we've heard for the last 10 years or so that people have lost interest in cars and vehicles. I think it's exactly the opposite now. I think there's an incredible potential to open up, not only with the electric powertrain, but also connection through digital data, and create incredible new experiences for people. That's my take on it.

[Foreign Language]

[Interpreted] In addition to that, you mentioned the environmental organization ranked Toyota at the lowest in climate action. Well, it is their take. But are we really backward looking in terms of EVs? We are talking about 3.5 million EVs now, with 30 models. Will we still be judged as backward looking in terms of electric vehicles? What should we do then? I would very much like to hear the answers. What we should do if that's the case? Do we look at numbers by percentage? Or the absolute numbers? Vehicles are for individual customers, one vehicle per one customer. So it's not the percentage business. It's the number of absolute numbers that we are talking about, serving that number of customers, the total number of vehicles. However large that may be, we will be building each and every vehicle with great effort putting into it. Whatever the powertrain, whatever the vehicle type would be, Toyota and Lexus, vehicles should continue to offer the value of fun to drive. And that's what we are determined to continue to do. Thank you very much for being with us today toward the end of the year. So many people showed their interest, and I'm extremely grateful. As for carbon neutrality, we will be active and proactive in working toward. And in this world of uncertainty, we still remain confident in offering many possible options. And each of those options, we are putting our full effort. And that's something that we wanted everyone here to understand. Thank you very much once again for being with us.

[Interpreted] Thank you very much. Now it is time to close this event. Once again, thank you very much for staying with us. Thank you very much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]