Toyota’s jim lentz nervous about profits as incentives climb electricity sources in canada


In terms of who may get Ford’s share, it’s difficult to say. There’s not a lot of cross-shop between Ford passenger cars and Toyota passenger cars, so it really depends on what happens with those buyers. Are those buyers going to remain loyalists to Ford and move out of passenger cars and maybe into SUVs? I’m sure that’s Ford’s strategy. Or are they going to remain loyal to passenger-car segments? And if that’s the case, we’ll have a chance at them with our product.

Obviously, Ford’s done a calculation that their expertise is more in light trucks. We’re always going to have a little bit of a bias relative to industry numbers toward passenger cars, whether it’s Prius, Corolla or ES. We think that that is an area that we have expertise in. We think we have a competitive advantage in things like hybrids. So we think we’re always going to be able to provide a value proposition to the customer in passenger cars, and as a result hopefully get a big share of the business.

There is a lot of uncertainty around the renegotiation of the North American Free Trade Agreement, along with proposed tariffs on imported aluminum and steel. It could be months before these issues are finalized. How does this affect Toyota’s short- and long-term planning?

The U.S. auto industry has grown over NAFTA. And even the plants that are in Mexico, U.S. employment has grown to help supply those plants with parts. So NAFTA’s been good overall to the U.S. and U.S. workers. Having Mexico as part of NAFTA has allowed the U.S. through its exports to be competitive with other parts of the world, Asia and Europe. So it’s important.

We hope that it remains. We hope that it remains simple, that it remains fair to all manufacturers, and we’re confident that something positive will happen. But in terms of making any strategic decisions today until we know what it is, it’s difficult to do.

We’re never going to have the scale that Ford or Chevrolet has on full-size pickups. When Guanajuato is online with 100,000 and you have 160,000 in Baja [plus Tundra in San Antonio], we’re going to move from the 350,000 range to about 500,000, plus or minus, based on overtime. I think that’s probably a good number for us to be at.

Prius was so successful as a mileage play that it’s more difficult to convince consumers that hybrids actually generate a lot of power and a lot of torque. So as we move from 9 percent to 15 percent and likely beyond that over time, hybrid has to mean different things to different people.

By 2025, our goal is to have an electrified powertrain available for all vehicles. It could be a hybrid, it could be a plug-in, it could be a fuel cell or it could be an EV. By 2030, half of what we sell, over 5 million vehicles, will be electrified. And of that 5 million, a million will be pure battery EVs or fuel cell. So, we really need to convince consumers that hybrids are more than just mileage.

I don’t think that the market will move that quickly. If you look at 2016, the market in the U.S. was 0.47 percent EV. Last year, it was 0.62 percent. So, yes it’s moving. But is it really going to move quickly enough to create enough demand for all the supply all the OEMs are talking about? I don’t think it is.

Akio has a new EV division that reports to him. It’s going to develop, I think, 10 EVs by early ’20s. That is primarily driven to be competitive in China and as Europe weans itself off diesel, it will likely be more important to have in Europe. So at the time that the U.S. market shows that it’s a business, we will have product to choose from. That’s why I don’t lose any sleep.

With Toyota Connected, does the company want something like General Motors’ OnStar, does it want to sell stuff to its customers or does it want a revenue stream from third parties like it is doing with the rental car companies and the insurance companies?

The answer is yes, we want revenue streams [laughing]. First and foremost, we want to make the driving experience enjoyable for our customers. As they want cars to be smarter, the technology to be smarter, that can help them with their busy lives, whether it’s navigation systems that communicate with calendars to understand if they’re running late for meetings, that can connect to cellphones to connect into meetings. That’s what the customer of tomorrow wants.

But the ability for us to create software and platforms that can manage fleets, whether they’re fleet and leasing companies or rental car companies or mobility companies, all of that will be the future of mobility even beyond where we are today.