Toyota Slouches Toward Trump Autocracy In California Clean Car Fight

I’ve been an obsessive student of Toyota at least since 1979 when I worked on the Fleetwood assembly line in Detroit. After a string of layoffs, I began to realize that Toyota’s low-cost manufacturing methods, and what were then its modest little cars, were laying waste to Detroit as I knew it.

By 1997, after I’d become a journalist, Toyota introduced Prius, the first high-volume car with gas and electric motors operating in tandem. To me, this so-called hybrid offered at least the hope that Toyota’s factory know-how could help address our planet’s grave environmental threats.

But last month, Toyota president Akio Toyota knocked over the pedestal on which I’ve been placing his company. He did so by joining Donald Trump, General Motors and Fiat Chrysler (three unapologetic apostles of burly pickups), in a full-blown legal assault on California’s authority to require electric cars. To make matters worse, according to the EPA data from 2012-2017, Toyota alone among automakers has been sliding backward on fuel economy.

This last point, about Toyota’s fuel economy regression, is easy to explain, says Gopal Duleep, president of H-D Systems, a Washington, D.C.-based research company.

   U.S. sales of the Prius, which averages 73.4 miles per gallon in combined city/highway driving, are down 24.3 percent this year. Sales of Toyota’s 4Runner SUV, which burns three times more gasoline than Prius and sells twice as fast, are down just 6.0 percent. The 4Runner and other Toyotas built on heavy metal frames are much less efficient than their Detroit counterparts, Duleep says, and drag down the company’s fleetwide average.

Toyota’s embrace of the Trump assault on California is murkier. It requires an analysis that’s like peeling back the layers of an onion.

First, there are the California standards themselves. Even though they’ve been indispensable in dragging automakers toward zero-emission technology, I’ve never described them as perfect. Neither has California, which has modified them several times in response to automaker complaints. The state did so again in July by allowing companies who declined to join Trump’s anti-California lawsuit to cut their annual rate of fuel economy improvement in half, to 2.7 percent.

This flexibility is necessary, according to Mary Nichols, chair of the California Air Resources Board, because consumer tastes are bound to be fickle during an unprecedented transition from one primary energy source (gasoline) to another (electricity).

Doug Murtha, Toyota’s group vice president for planning, acknowledged the difficulty of managing this transition in an interview four days ago with Jack Nerad of Forbes.com.

    More than twenty years after the Prius introduction, according to Murtha, nearly half of U.S. consumers don’t know they can refuel hybrid cars at any neighborhood gas station. To entice them to learn more, Toyota is promoting its latest technicalogical marvel – a plug-in hybrid version of its top-selling RAV4 sports utility – more on speed than environmental responsibility. The new RAV4 Prime accelerates from zero-to-sixty in 5.8 seconds, faster than any Toyota except the 335-horsepower Supra sports coupe.

It’s with nimble marketing like this that Toyota hopes to make gas-electric hybrids the backbone of its eco-friendly strategy. The company expects to be building about 11 million cars and trucks annually by 2025. Of these, five in ten will be gasoline-only, four in ten will be hybrid, and one in ten will be zero-emission (battery-only or fuel cell), according to a July announcement. No other automaker comes close in building so many hybrids.

To many environmentalists, a much more rapid transition to battery-only cars is not only possible but necessary to save the planet. But Toyota already devotes ten percent of its $279 billion annual revenue to R&D and capital spending, says Koji Endo, an SBI Securities analyst in Tokyo. And even though Toyota is the world’s richest automaker with a record $36.6 billion cash hoard, the company can’t expect to make money on its electrification and self-driving investments for at least a decade, Endo says. And even then, he says, electrified cars will generate a much smaller profit than gas models.

Given these risks, it’s at least plausible to say the company must hedge its bets. “I don’t think Toyota plans to sink the planet with CO2,” says James Womack, founder of the Lean Enterprise Institute in Cambridge, Mass. “They’re selling gas-guzzling SUVs now to generate the money they need for the next generation of technology.”

But these financial pressures don’t explain or excuse Toyota’s embrace of Trump. The company could have accepted California’s fuel economy compromise. But even if the president weren’t threatening automakers with tariffs and anti-trust complaints, Toyota and Trump have plenty of natural affinities.

The company is joined at the hip with Shinzo Abe, the Japanese prime minister who was the first foreign leader to meet with Trump as president-elect, and who’s no slouch as a nationalist. And in the U.S., Toyota’s corporate persona has become redder and less blue as it’s built a string of factories in Southern, right-to-work states, and shifted its sales headquarters from California to Texas.

So heads-up America. We’re no longer dealing with traditional capitalism. We’ve got an autocratic president who’s taking a chainsaw not just to environmental regulations but also to American democracy itself. This means auto writers like me can no longer be content with questions like, “why are Toyota factories so efficient?” We need to analyze whether even revered companies like Toyota are slouching too much toward the autocrats and helping them undermine democracy. In this case, sadly, the answer is yes.