Toyota Motor Corporation (7203) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Simon Humphries. I'm the Senior General Manager of Global Toyota Design. Thank you very much for joining us here today. So let's talk Prius. You know, with the current focus on BEVs, it seems not a day goes by without hearing. So how long are you going to keep making hybrids for? Well, disclaimer. Today, I'm going to talk about Toyota's new hybrid car. But maybe I can give you an insight into the passion behind the next-generation, Prius, including an interesting struggle between Akio Toyoda, the President and the development team about the direction that we should take. The Prius debuted in 1997, its name comes from the Latin word for "Pioneer". And since the launch of the first generation Prius, Toyota has sold a total of 20.3 million hybrids globally, reducing CO2 emissions by approximately 162 million tonnes. Japan has reduced its CO2 emissions by 23% compared to 20 years ago, a high level by any international standard. And in North America, Toyota alone has sold more than 5.2 million hybrid vehicles and reduced emissions there by approximately 82 million tonnes. However, the Prius' greatest achievement lies not only in those numbers, rather that it opened up a viable alternative to gasoline and diesel. And since then, hybrid technology has been adopted and developed not only by Toyota, but by the entire automotive industry. Prius open the door to a different way of thinking. And here in 2022, times have changed. Not a day goes by without the talk of the road to carbon neutrality. But in addition to hybrids, BEVs are also achieving major technological breakthroughs and solidifying their position as the standard for the future. As Akio san stated at the BEV event a year ago, an EV for everyone. Toyota has embraced BEV as a critical part of our product portfolio. We've started to introduce a full lineup of exciting electric vehicles that meet the diverse needs of our global customers together with hybrid, plug-in hybrid and fuel cell technologies. But again, as Akio says, BEVs are an important solution, but they're not always the best option for everyone. In a diversified world, we need a variety of options. However, despite these explanations, we're still faced with people asking how long are you going to keep making hybrids for? And in the face of this, Akio was adamant, the Prius is a hybrid model that must be kept. Why? Well, simply because the Prius is an eco-car within everyone's reach. In order to achieve carbon neutrality, everyone in the world must participate. We need ecological solutions within the reach of many. And it needs to start today, not tomorrow. Toyota believes that eco-cars can only contribute to the environment if they're popularized. And from that point of view, the Prius is a car for the majority. It's not a car to be driven, it's a car to be driven by all people, not just a few. That's its greatest strength and its reason for its existence, and it's the reason the Prius brand should not be lost. Now although everyone in the development phase agreed to these goals, the methods to achieving them were hotly debated. Should the next Prius focus on becoming a commodity or maybe something to love. Akio san proposed the next Prius should evolve the world's becoming a true commodity. Why don't we make the next Prius a taxi? By increasing the number of Prius' in heavy use, long mileage situations, then the contributions to the environment increases together with volume. He also proposed to sell the Prius as an OEM vehicle through other manufacturers, taking the environmental technology of the Prius, which has been cultivated over many years and not limiting it just to the Toyota Group. This would contribute to carbon-neutral society by spreading the Prius' environmental technology beyond the boundary of a single manufacturer. But on our side, we also believe there was another way. We wanted to make a car that people would choose not only for its rational benefits, but also its emotional experience. Without a doubt, pursuing rationality, fuel efficiency and any other numerical values imposes many restrictions, and it makes designing the car no easy task. However, we believe that the next step for the Prius was to become a car without compromises in order to increase its appeal to the customer. A car that is loved not only for its numbers. Now I don't honestly think that Akio thought we'd be able to achieve this, given the difficulties we had faced in the past. But it didn't oppose us. On the contrary, he gave us a chance to fight saying our team's choice of love instead of commodification was interesting. And when he finally saw the final design, he said, "Hey, that's cool. That is cool. So together, we chose love. Everybody, the new Prius. [Presentation]

What do you think? Pretty cool. I think so. We hope there'll be many reasons to love this car, but I'd like to just go through my top 5. So #1, it's beautiful or at least I'd like to think so. So what changed this time? I think it was a mutual understanding that good design cannot be created by designers alone. The engineering team's efforts to lower the ride height, lengthen the wheel base and increase the tire size to 19 inches are not exactly logical. But because of that, we were able to take the iconic silhouette to the Prius to the next level. So now it's not only sleek, it's strong and stable. It's not only bold and simple, it's full of surface movement. It's got attitude. But it's not just design that triggers an emotional response. Number two, it's an EV with an engine, dual power with synergy. The PHV will deliver unparalleled performance, thanks to the dual synergy of motor and engine. It can accelerate from 0 to 100 kilometers an hour in 6 seconds. It's EV range has been extended by more than 50% compared to the current vehicle. In many average usage situations, it is to all intents and purposes, an EV. Number three, amazing driving dynamics. The TNGA platform has matured and the driving dynamics will not let you down. We've achieved a lower center of gravity even with the larger diameter tires and by increasing the rigidity of the body we've achieved firm and stable response in straight lines and easy line tracking in corners according to the driver's intention. Now this, combined with the latest powertrain, well, the result is an even more captivating driving experience. Number four, digitization and quality. In this day and age, a superior integrated digital experience should not be ignored. Not only has a 12.3-inch center screen being adopted, but the layout is such that the digital environment enhances rather than detracts from the driving experience. Combined with high material quality and innovative illumination, we've made the interior user experience, a captivating one. And #5, yes, it's still the most efficient hybrid vehicle in its class in the world. You can be safe in the knowledge that you get all the exciting stuff and it's not come at the expense of contributing to carbon neutrality. The road to 0 emissions is certainly a steep one. But we must not forget that we're doing it for the sake of the earth. Now beyond 0, a brighter and happier future hopefully awaits all of us. But that journey has to start not only today but also with the maximum number of active participants, whether the technology is battery electric or whether it's plug-in, fuel cell, hybrid, hydrogen or some yet to be discovered technology, we will make every effort to offer better solutions for the majority of people around the world. Will commodities or love prevail? Well, that's only something that the customer can answer. What do you guys think? How will this match go? I don't know. But personally, I look forward to seeing people around the world enjoying and growing to love the new Prius. Thank you very much.