Toyota calls for fuel efficiency standard to be delayed

Australia’s automotive sales leader Toyota has declared itself in favour of the federal government’s NVES CO2 reduction strategy but has called for it to be delayed and changed.

And in a sign it’s willing to play hardball to get its way, Toyota says it would rather pass on the cost of fines for its polluting vehicles to consumers in the form of price rises than buy emissions credits from clean vehicle makers such as Tesla or BYD as the New Vehicle Efficiency Standard (NVES) proposes.

Toyota has a lot at stake with the NVES as it imposes increasingly tough emissions targets on large diesel SUVs and utes such as the Toyota LandCruiser and HiLux it sells by the thousands every year in Australia in a bid to drive the uptake of electric vehicles.

The federal government published an impact analysis at the end of January outlining three NVES strategies – a soft Option A, intermediate Option B and tough Option C.

Option B is its preference and it wants it in place by January 1, 2025, with the current proposal outlining annual emissions reductions out to 2029.

“I think Option B with some alterations to the timing of implementation and the categorisation and maybe even the credit system could be looked at,” said Toyota Australia marketing chief Sean Hanley at this week’s launch of the brand’s first EV to be sold in this country – the Toyota bZ4X SUV.

Essentially, Toyota wants more time to reduce the emissions of its SUV and commercial fleets than Option B currently allows.

It is also concerned its large SUVs are in the passenger vehicle emissions segment rather than grouped with utes in light commercial vehicles, which has a higher emissions limit.

Toyota has been pilloried by environmental groups such as Greenpeace for its global stance on EVs. In Australia, the Federal Chamber of Automotive Industries (FCAI) has been widely perceived as doing Toyota’s bidding by vociferously opposing Option B.

Toyota has also orchestrated a mailout by its nearly 300 dealers to members of parliament warning about the impact of the NVES.

But at this week’s launch of the bZ4X EV, Hanley insisted Toyota Australia was supportive of the NVES.

“I want the myths and mistruths to stop,” said Hanley. “Toyota welcomes the policy certainty of an ambitious fuel efficiency standard.”

However, he then added:

“Nevertheless, the proposed transition we are seeing right now, the timing of that trajectory is too quick, especially for large SUVs and light commercial vehicles.

“It simply doesn’t recognise the technical hurdles, the lengthy times and the substantial cost of delivering commercial BEVs that are practical, that are capable and, above all, that are affordable.

“We just need time to make the adjustments.”

Without that added time he warned buyers would be denied access to affordable large SUVs and utes. Counterproductively, he predicted, owners would keep their existing vehicles longer.

“There are a bunch of people out there in rural and regional areas and even in cities in middle Australia who drive these big SUVs who drop their kids to school, they’ll hang on to them,” he warned.

Hanley was offered the chance to venture a new timeline for NVES introduction but declined to be specific: “I can’t get a ZEV LandCruiser in 11 months’ time.”

The NVES applies to new passenger and light commercial vehicles and provides car companies with targets for average emissions per kilometre from new vehicles sold.

Makers who have a corporate average below the emissions limit will gain credits while those who exceed the limit will have to either buy credits from other brands or pay fines.

Hanley said Toyota’s planned imports of more EVs and hybrids over the next few years would not generate sufficient credits to overcome the fines imposed by its large SUVs and utes.

He said Toyota was not planning to buy credits and would instead raise prices of vehicles to pay for fines.

Under Option B, these are calculated at $100 per gram of CO2 emitted per kilometre (g/km) exceeding the target. So if Toyota sells 200,000 vehicles in a year and the combined average efficiency across its range is 10g/km above that year’s target, the car-maker will be fined $100 x 10g x 200,000 cars – or $200 million that year.

“Our going-in position right now is we would need to pay the fines and ultimately a good proportion of that – if not all of that – would need to be passed on to consumers,” he said.

“We have a philosophical problem buying credits off something we don’t have an ownership stake in.”

Hanley also signalled a potential interest in the addition of Super Credits. They are essentially a multiplier reward for selling EVs that would help cover the cost of selling CO2-emitting vehicles.

“These are things we need to consider,” he said.

As carsales has reported, Hyundai has already called for the addition of Super Credits to the NVES.

Along with Hyundai, Toyota joins Volkswagen, the Electric Vehicle Council, the Motor Trades Association of Australia and the Australian Automotive Dealer Association in backing a version of Option B that’s been softened to some degree.

Submissions in response to the NVES impact analysis must be made by March 4.

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