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2023 Toyota BZ4X
Image courtesy Toyota

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Toyota EV Strategy Explained: Affordability Vs. Range

Toyota thinks range is less important to potential EV buyers than price. Are they right?

Toyota has been roundly criticized by CleanTechnica writers and readers for its fierce embrace of hydrogen fuel cell technology for passenger cars, its misleading statements about “self-charging electric cars” that are nothing more than 30-year-old hybrid technology, its willingness to join the Trump administration in its assault on the California Air Resources Board, and its ongoing lobbying to slow the EV revolution in any way possible.

Where other companies are investing in EV charging networks, Toyota is pushing for taxpayer dollars to build hydrogen refueling stations. Its CEO, Akio Toyoda, is notorious for suggesting EVs will crash the Japanese economy and bankrupt the company. This is the same fellow who has assigned himself to head the company’s electric vehicle program. Is there any wonder why its embrace of the EV revolution has been tepid so far?

In an interview with Green Car Reports, Cooper Ericksen, Toyota’s vice president for product planning and strategy in North America, explained that his company’s focus is more on affordability than range. “‘Nothing happens until you sell a car’ is an expression we have internally,” he said. “To have a positive impact on the environment, you must sell a high volume of cars, so it’s really important that the price point is such that we can make an actual business model out of it.”

The Obsession With EV Range

“The bottom line is, over time we view EV range similar to horsepower,” Ericksen said. “People who are affluent and can afford a really expensive vehicle can afford a lot of horsepower. Batteries are expensive and the bigger you make the battery, the more expensive it is. So the trick, I think long-term, is not all about range, range, range. The trick is matching the range and the price point to what the consumer can afford. And as people become more accustomed to operating an EV, I think the anxiety over range is going to dissipate.” He believes EV customers will come to understand they don’t need 300 or 400 miles — especially for a second or third car.

“We’re trying to right-size the battery to the customer use case, to get the right price point, right peace of mind,” Ericksen said. “And we think we’re pretty much there with the BZ4X now. Will there be customers longer-term that demand higher ranges? Absolutely.” The BZ4X is said to have “up to” 250 miles of range.

Ericksen thinks 400 to 500 miles is a proper goal for luxury models, but longer range means bigger batteries, higher prices, and a bigger carbon footprint.

“The low end to me is the more curious number. What’s the lowest number that you can put out there that achieves the affordability and the use case for that customer? I think we have some examples in the market over the past five years or so that we can learn from. It’s something we’re going to have to figure out because it has a huge impact on resources. We have to be really careful if we build EVs with 200-kwh batteries and you can build four EVs for that one. We have to think about that as a society and as an industry to figure out what’s best for consumers in the environment.”

Ericksen says that Toyota has learned valuable lessons from its years of experience building hybrids. For instance, making batteries that last for the entire life of a vehicle. When the Prius first came out, people were nervous about the cost of replacing a battery, but the company learned how to make those batteries last for 200,000 miles of driving or more. That experience has paid off by making it possible for the battery pack used in the BZ4X’s pack to retain 90% of its capacity after 10 years. “If you haven’t addressed degradation, then it’s diminishing returns,” Ericksen said.

EV Efficiency Doesn’t Interest Consumers

We talk a lot about efficiency here at CleanTechnica. The best internal combustion engine converts about 40% of the energy in a gallon of gasoline into forward motion. An electric motor converts about 90% of the electricity supplied to it into forward motion. But trying to explain that to most drivers may get you lots of blank stares.

“My focus is what range and price point does the consumer demand,” Ericksen said. “Efficiency plays huge. It’s how you manage the electric drive motors and what style of drive motors and battery. I’m not sure how relevant that is to consumers. It’s less about efficiency and it’s more about what am I going to pay for it and what’s my range and my driving dynamics, you know, it’s all those things.”

The Price, The Price, The Price

Ask any salesperson with experience in the car business what the most important consideration is for new car shoppers and you will be told it is three things — the price, the price, and the price. As consumers, we have been conditioned to focus as much or more on how much we paid for our cars as we do on the car itself. An old expression in the sales game goes like this: “It’s not the deal you got. It’s the deal you think you got.”

The car industry promotes that dynamic because it has gamed out the sales process and fine-tuned it over many decades. Very few people go to Las Vegas and beat the house, and very few new car shoppers walk away leaving the poor dealer in tears because they drove such a hard bargain. The dealers win 98% of the time, but they are smart enough not to brag about it. If you think you beat the dealer at its own game, it is only because that’s what the dealer wants you to think.

On that basis, Ericksen makes a good point. EVs have to be affordable in order to sell in significant volumes. But in America today, the average transaction price of passenger cars and light trucks is just over $45,000. That makes “affordable” a relative term, doesn’t it?

How Much Range Is Enough?

I have just transitioned from a 2015 Nissan LEAF with about 85 miles of range to a 2022 Tesla Model Y with 326 miles of range. The LEAF was perfect for 96% of all my driving needs, but when I wanted to go visit friends who lived 100 miles away, I had to rent a car. At highway speeds with the A/C on, the range meter dropped faster than the gas gauge on my 1978 Cadillac Eldorado with its humongous 8.2-liter engine! I was always driving in the slow lane with the cement mixers and school buses with the A/C off and the windows rolled down to conserve battery power.

With the Tesla, I can go wherever I please in air conditioned comfort and keep up with traffic. It’s a total paradigm shift. Before I was aware of driving an electric car all the time. Now I have a regular car I can do regular car things with that just happens to be electric. It took about an hour to completely adjust my thinking.

By a happy coincidence, the whole range thing is the subject of a lively discussion on the reddit EV forum today. reddit user OK-Zookeepergame started the thread this way (lightly edited): “We still see a lot of discussions about EVs lead with range. For those of you who have lived with an EV for a year or more, has the importance of range changed for you or does it remain a critical metric? For me, I have had an EV as my daily driver for two years and today I think a long list of other factors are more important when I think about what I drive next. Range is clearly important, but should it still be so front and center or is it a false flag that is holding back adoption at this point?”

He adds, “The ‘use case’ that is prevalent in the media is the road trip though, and as a result, range becomes the metric that matters to non-EV owners and I suspect it is holding many back from making the switch.”

There are 96 responses to that thread so far and no, I am not going to copy and paste all of them for you. (You’re welcome!) If you are interested, follow the link and view the reddit conversation for yourself. What you can do, if you are so inclined, is share your views with other readers in the comments section.

Is Toyota right? Should manufacturers focus more on affordability than range? Does it make more sense when it comes to reducing emissions from transportation to sell 1 million cars with a 40 kWh battery or 500,000 with an 80 kWh battery? There is no right or wrong answer here, so tell us what you think. It promises to be an interesting discussion!

 
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Written By

Steve writes about the interface between technology and sustainability from his homes in Florida and Connecticut or anywhere else the Singularity may lead him. You can follow him on Twitter but not on any social media platforms run by evil overlords like Facebook.

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