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1on1 be.connected Interviews Toyota

A broad product portfolio: the future hallmark of the automotive industry

Few industries are so intricately connected with climate politics as the automobile sector. Given the widely accepted pariah status of combustion engines, however, the only topic on the table seems to be that of alternative drive train technology. But Ferry M.M. Franz, Director of the Hydrogen Affairs Europe & Group Representative Office at Toyota Motor Europe, takes a more measured view. Among other topics in this interview, we’ll delve into his specific thoughts on the matter. We’ll also explore why the European Commission’s ‘Fit for 55’ climate package, which implies the end of the road for combustion vehicles from 2030, might be a case of somewhat blinkered thinking. 

htb: Let’s begin with the current state of play in the automotive sector. What are some of the challenges tied up with transformation in transport?

FF: Car manufacturers have been falling over each other in recent months to put out their roadmaps for emission-free transport. However, these have been limited to answering the question of when and how the switch to electric power will be made – and by whom. Anybody who isn’t going public with these sorts of lines effectively invites criticism. But the challenge for carmakers isn’t limited to developing eVehicles, but also how they can be manufactured with minimal emissions – and recycled at the end of their lifespans. To get an idea of the latter issue, consider that Toyota has a recycling rate of almost 85 %. With our Prius model, we’ve even surpassed the 90 % mark. But when it comes to eCars, the recycling aspect hasn’t really gotten going.

If we’re looking at the bigger picture, then, we shouldn’t completely dismiss any further development for combustion engine (ICE) technology either. My fear is that the recently unveiled ‘Fit for 55’ package will have exactly that effect, especially in Europe. That everyone will simply stop ICE development – and in fact stop engaging with ICEs altogether. We might be able to get away with that in Europe…but consider countries that are technologically underdeveloped and whose economies are weaker. There, in 10-20 years, you’ll have ICE vehicles driving around with 20-year-old technology. I don’t think that would be constructive – and it’s a reason why I think this unilateral move from the EU is perhaps a little counterproductive. We need to consider these issues holistically – and not make it only about the cars.

htb: You clearly feel that the European climate targets are having a major impact on the automotive sector. But does the industry take its own role in decarbonizing transport seriously?

FF: It’s taken with absolute, 100 % seriousness. That’s clear from the number of statements that have come out in recent weeks, as well as the sector’s commitment to hit the ‘Fit for 55’ package’s climate targets for 2030. That all this is genuine is evident from the level of investment we’re seeing. Of course, part of it is also about avoiding fines. We’ve seen some manufacturers signing off on eCars at the end of December purely so that they can hit targets. We’re already in the comfortable position of having not only achieved the targets, but in fact coming in three grams below the mark.

“Since 2005, we’ve been able to achieve a 40% carbon reduction across our product portfolio.”

Although our goal of a further 15 % reduction over the next 15 years is an ambitious one, we’re confident of reaching it – partly thanks to the hybrid models we offer in all segments. After all, we believe transport has got to be affordable. Of course, these vehicles have become cheaper over time, but I expect running costs (electricity costs, in other words) to increase. It’s clear enough that if fuel tax is no longer relevant, a major tax revenue stream disappears too. That means electricity will have to be subject to significant taxes instead.

I’m also very skeptical about the current trend of demonizing cars as the worst environmental offenders of all. Nobody speaks about shipping, for example. This is an industry that also produces not less carbon emissions. Also, to provide zero-emission transport, we’ll need a huge amount of green electricity and hydrogen. But at this moment in time, I don’t see any capability to provide ‘clean’ electricity and hydrogen for vehicles on a mass scale. If that’s the case, you’d own a car that might be carbon neutral as it drives, but isn’t yet green where the ‘fuel’ manufacture is concerned.

“Isn’t the issue really to make transport smarter? After all, for the person sitting in traffic or hunting for a parking spot, it makes no difference at all whether they’re driving an ICE or an eVehicle.”

So, maybe we shouldn’t only be pushing for vehicle technology solutions, but for more intelligent transport solutions too.”

htb: So, how do you envision the transport landscape of the future?

FF: You’re probably expecting me to use words like ‘electrified’, ‘digital’, ‘connected’, and ‘shared’. But for me, there’s a critical aspect that’s being ignored. More than anything, future mobility needs to be geared towards the customer. Because ultimately, it needs to genuinely appeal to the end-user. If you pay attention to politics and the car manufacturers, it doesn’t take long to see that battery-electric drive trains are being heavily pushed. But look, for example, at the telling survey run by Auto, Motor & Sport magazine. Even three years ago and since then, 105,000 respondents in 12 countries showed their preference for hydrogen technology. Sure, the energy efficiency isn’t so good as it is with electricity – but it’s substantially better than it is for ICE vehicles.

“And for the last 100 years of combustion engine technology, nobody had much of an opinion about energy efficiency – it was more or less accepted as simply being what it was.”

It’s already clear that future transport needs to be ‘intelligent’. When we consider that cars are being used less and less, and that we can expect more and more speed limits in the future, there’s a real question as to how auto manufacturers are going to make their money. I believe it will be through services. My reasoning? Consider a Spanish or French person, who isn’t allowed to drive faster than 130kph on their country’s roads. They buy an eCar that’s restricted to that speed, but they want to really put their foot down when they drive in Germany. Wouldn’t it be terrific if they could buy an add-on service for a week, whereby the car’s maximum speed could be raised?

We need intermodality too. I’d really like to have an app that allows me to enter my current location and where I want to go, then finds me the best way to reach my destination, takes care of the booking, and handles payment too. Then, a taxi would be on my doorstep, bringing me to the train I need. The app would suggest an eScooter for the ‘last mile’, etc. If I could have all of that in a single app, it would be an absolute winner. We have an incredible number of choices currently, but none of them are integrated.

It’s certainly realistic to expect things like this in the next few years. We just have to think carefully about how we can make smart use of the electrified transport to come, so that it’s ultimately a pleasure for all concerned.

htb: What’s the guiding vision and strategy at Toyota Motor Europe?

FF: At a recent event, somebody asked me why Toyota doesn’t want to ‘electrify’. That’s complete nonsense! We’ve been working on sustainable transport since the nineties. As early as 1995, we unveiled our first fully hybrid vehicle at the Tokyo Motor Show. To date, we’ve sold over 17 million vehicles with this technology. Sustainable mobility is deeply rooted in our vision and strategy. When we published our ‘Earth map’ in the early 1990s, it was a clear signal that we want to live in harmony with the environment – which also means not putting a burden on it. And that was long before the hype around electric vehicles. Then, in 2018, we launched our Environmental Challenge 20501, committing to be carbon neutral on a number of levels by 2050 – specifically vehicle emissions, vehicle production, recycling processes, water consumption, and the wider life cycle. Our focus here is on the technical aspect. Our sixth goal, which is by far the most important – and yes, this is very Japanese and may grate on the European ear – is to follow this mission:

“Establishing a future society in harmony with nature.”

Beyond that, our approach is to produce our vehicles where they will be sold, thereby eliminating transport costs. Around 80 % of the vehicles we sell in the EU have also been produced there. In that sense, we’re probably more ‘European’ than some of the manufacturers who call the continent home.

htb: Alternative drive systems offered by Toyota range from hybrid to fully electric to hydrogen. Tell us how such a wide offering arose, and how you see it developing.

FF: Nothing happens at Toyota without a clear strategy that makes sense for a given context. We introduced the Prius in 1995. Barely a year later, our then-Chief Development Engineer Takeshi Uchiyamada started researching hydrogen technology. All this emerged from our fundamental wish to provide transport for everyone. That’s not just an advertising slogan – it’s our mantra. Because there are so many use cases, we provide whatever the customer might need. Sometimes, a hybrid or fully electric car is the best solution. With other applications, hydrogen is the most promising option. In dense urban areas, small electric vehicles certainly have the advantage. But when it comes to professional driving, commercial transport, long distances, and heavy loads, hydrogen is definitely the future. That’s why it’s important that we don’t commit ourselves exclusively to one type of drive technology. We’ve always been very open, because to help drive technological breakthroughs we need competition, a broad portfolio, and a good range of products for the customer.

htb: So, does Europe already have the required infrastructure? Who you do think should take responsibility for expanding it further?

FF: Let me put it this way: I don’t think it should be the government. Did the state take responsibility for building and operating gas stations in the past? No. But why are so few commercial providers jumping at the chance to get into this area? The answer is simple: right now, you earn little or no revenue from it, making any investment a gamble on the future. Yet it’s exactly the gamble that auto manufacturers are making – this is where a link needs to be established. Also, both this and the development phase as a whole need government regulation and especially support. But this should be available for all technologies – purely electric as well as hydrogen. For any such technology, a nationwide, comprehensive infrastructure is a key requirement for truly and successfully revolutionizing transport.

htb: It’s noticeable that the transport sector is strengthening its ties with other industries, and even competitors are working together to drive technologies and infrastructures. How do you evaluate the current landscape? Are collaborations just ‘nice to have’ or are they essential to really drive home success?

FF: In my view they are essential – and have been for a long time, in fact. Smaller car manufacturers aren’t remotely capable of the kind of investments in digitalization and electrification that would be required. And they’re aware that they lack the necessary skills in these new fields. Unlike in Europe, these industries have always been strongly interconnected in Japan. We’ve been working with Yamaha since the 1960s. They supported us with our first sportscar, because they understood things like high-performance engine dynamics. We have shares in Subaru and are involved with many other Japanese companies. Going forward, taking this open, wider approach can only strengthen a business. We’re all becoming mobility service providers and are no longer just carmakers. And because we believe in a hydrogen ecosystem and not just hydrogen vehicles, we’ve already established various partnerships in Europe. One of these is the collaboration with CaetanoBus, a manufacturer from Portugal. Having buses with Toyota fuel cells on the market allows us to further expand the range of emission-free vehicles available in Europe.2 So partnerships aren’t just ‘nice to have’ but in fact decisive for future business success.

htb: To end off, can you tell us what tasks you’ve got in the pipeline for the immediate future?

FF: We’ll certainly be having a serious think, and plenty of discussions, about how we’re going to achieve the ‘Fit for 55’ targets. We’ve already brought out nine new electric vehicle models in the last year and we’ll continue in that vein. In the coming months, we’ll be launching electric models and new hybrid models too. Our new Mirai hydrogen car is already out. We’ll also be looking at other segments where it makes sense for us to have a presence with hydrogen technology. While heavy goods transport will undoubtedly take much of the focus, it’s inevitable that there will be many reasons for other vehicles to existing. Not everything can be electric. The recent tragic floods in Germany were proof of that for me. It would have been a major problem if all the rescue vehicles involved had been electric. And these are exactly the kinds of scenarios that should get us thinking. We must deal with the question of how the various drive technologies can (and must) actually be used. And that’s exactly what we’ll be doing.

htb: When you open up your newspaper tomorrow morning, what kind of headline would really make you happy?

“Toyota offers the greenest, most customer-oriented vehicle portfolio.”

htb: And for you, which three phrases or concepts best sum up future mobility?

FF: Greener. More sharing. Increased multimodality.

htb: We wish you every success as you play your part in building a business ecosystem around hydrogen, and we’re really excited to see what Toyota comes up with next. Thanks for your time and the fascinating conversation!

This interview was conducted by Sabrina Wurzer of has·to·be gmbh, on July 19th, 2021.

About has·to·be gmbh

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