Time for Auto Industry to Change Course
NOTE: Mr. Press did not completely follow the prepared text of his speech and EV World has added some of his extemporaneous comments in italics.
Good Morning!... It truly is an honor to address an organization that has done so much to advance our understanding of electric drive technology and the promise it holds for the future.
This week the Toyota family lost one of its most talented engineers and a great human being... Dave Hermance...as many of you know...was killed this week in a plane accident near Los Angeles... As our executive engineer for Advanced Technology Vehicles, Dave was considered by many to be the “American father of the Prius.” He dedicated his life to promoting electric-drive technology... As a result...he earned the respect of the engineering community, policy makers and environmentalists... He will be sorely missed around the world for his numerous contributions to our society and the environment...
Brian [Wynne] and his team have done a super job of putting together a thoughtful program with an all-star line-up of speakers who will address important topics. The work you do is extremely critical to the future of our planet and I'm proud to play a small roll in these sessions.
This morning I want to discuss the daunting task of encouraging major industry and government cooperation to create a sustainable transportation system that will free the U.S. from the bonds of fossil fuels.
Press highlighted four urgent development issues: poverty, water, climate change, HIV/Aids. He noted that energy is the life blood of growth and emphasized that a corporation's contribution to society will be the telling metric of a successful business of the future.
That's a tall order... But since we're in the shadow of the US Capitol, we couldn't have picked a more appropriate theme...Our timing is pretty good, too. With the new majority in Congress...some political pundits say we are on the verge of a seismic shift in how Washington views the environment.
So its time to get busy and add our voice and expertise to turn Washington from red and blue...to green.
Some of you may recall that when I spoke to the Electric Vehicle Symposium in 2003...I went out on a limb... Here is what I said, “the Golden Era of Electric Drive Vehicles has dawned and we are on the cusp of a boom in electric drive like the world has never seen.”
Looking back...that was a rather bold prediction... Was I right? You bet...
The fact is... steady technology advances...growing vehicle sales...and happy customers have made it a reality.
We are doing more with electric drive today than we ever dreamed possible....
Electric-drive hybrids represent one of the fastest growing segments of the market...and as electric technology continues to unfold in the coming years...that growth is predicted to expand exponentially.
Electric drive technology is now used in just about every mode of vehicle transportation--ranging from bikes and scooters to forklifts, golf carts, passenger cars, trucks, buses and commercial trucks.
In other words, the REALITY today is that...electric drive is playing a vital role in transportation no matter WHAT energy propulsion platform we use...
Just a short time ago our ever-advancing technological knowledge was perceived by some as a zero-sum equation...
But now...the dream of creating an entire sustainable global transportation system, with steady economic growth...is within our reach, IF we work together.
But before we get into specifics, allow me to explain why our commitment and concern for the environment is such a vital part of Toyota's DNA.
I'm proud that in exactly 335 days...14 hours... and 22 minutes...Toyota will celebrate its 50th anniversary in America...A lot has happened during that time, but one thing has remained constant:...Toyota's vision “to enrich society through building cars.”
Two other key principles that have guided us are respect for people and “kaizen”...the drive for continuous improvement.
We're always searching for better ways to do things... We know there is no best...only better...and we always strive to find it.
In the 1980s Toyota did a long-term analysis of the automotive business...The good news is that we saw tremendous growth opportunities for our industry as motorization spread to new markets around the world.
The bad news...we realized auto production and the global environment were on a collision course... We realized fundamental changes had to be made for the industry to survive and thrive in the 21st Century.
Today more than three quarters of a billion cars are in operation worldwide. To keep up with growing demand, auto plants around the globe are cranking out 170,000 more vehicles each DAY!
While those multiplying numbers are great for business, they also have a major impact on the air we breathe...the climate we enjoy...and the roads we travel.
That's why Toyota launched a massive effort nearly two decades ago to meet environmental needs of the world in a variety of ways...efforts that are still in full force today.
They range from biodegradable parts for our cars--sourced from sugar cane and sweet potatoes--to making our automobiles easier to recycle.
But along with these incremental improvements, we knew we needed an authentic breakthrough product.
So Toyota engineers went to work on a futuristic powertrain that would cut emissions by as much as 90 percent and double the fuel mileage of conventional cars.
The result was a 4-door sedan we introduced to the world 10 years ago called the Prius...the Latin term for “to go before” ...because it was meant to lead the way for automobiles of the 21st Century.
As the world's first mass-produced gas/electric hybrid car... Today's Prius has the room of a mid-size sedan, delivers about twice the mileage of conventional cars and produces 70 percent fewer smog-forming emissions than conventional cars.
Today's hybrid revolution really began with Prius... We took a big risk in bringing it to market. Sure, all of us at Toyota loved it, but who knew for sure if anyone would buy it once it hit dealer showrooms.
It turned out that it's been so popular we can barely keep it in stock. Until recently there was a two-month wait to get one.
Last month, for the first time since the current version of Prius went on sale in 2003, there are enough to fill customer demand.
But Prius was just the beginning... In the spirit of kaizen...we're not only expanding our hybrid lineup...we're offering better performance and gas mileage.
Last year, we launched the world's first luxury hybrid...the Lexus RX 400H...followed by the Toyota Highlander Hybrid... the industry's first 7-passenger gas/electric SUV.
Both offer the power of a V-8... the mileage of a compact car ...and produce significantly less smog-forming emissions than conventional SUVs.
This year, we've added two more: a Lexus GS hybrid sedan...and a Camry hybrid built at our Kentucky plant... And early next year...we'll offer the world's first V-8 hybrid option on our flagship Lexus LS sedan.
Toyota now has six hybrids... And more will follow because they are making a difference.
In fact, look for the Camry Hybrid, the Prius and Highlander Hybrids in the Toyota display... And the RX 400H and the GS 450 H hybrids in the Lexus display.
In total, we've sold more than 426, 000 hybrids in the U.S. In fact, we've sold more U.S. hybrids so far this year than Cadillac...Buick...or ...Mercedes Benz... has sold cars.
In fact, we estimate that all the hybrids we've sold in America have saved more than 210 million gallons of gas...enough to fill FOUR tankers the size of the Exxon Valdez...not to mention eliminating more than 4 BILLION pounds of carbon dioxide.
People in this room probably know that the EPA estimates about 67 million tons of health related pollutants are emitted into the atmosphere each year in the United States... I know that concerns you... and it concerns us... The need for hybrids springs from those deep concerns...the concerns that consumers and society have about quality of life issues...such as air pollution and traffic congestion associated with automobiles...
But we have a response...the real beauty of hybrids is that they are available right now... You can pick one up at a dealer today... and not have to make any major sacrifices to drive them.
What's even better...hybrid technology can be teamed with every other promising technology to make it even more efficient and fuel stingy...whether its high tech gas engines...clean diesel...bio-diesel...ethanol...or plug-in hybrids... [He referred to pug-in hybrids as the 'next frontier']. In fact, we're so confident of electric drive's potential for the future, we've installed it on all six generations of our hydrogen fuel cell vehicle.
Toyota believes electric drive and hybrids are the technology of the future. They will play a starring role in the automotive industry during the 21st century...no matter what fuel we use or what cars we drive.
It's a great business formula for us. We're making money, conserving energy and helping the environment...all at once.
I can assure you that Toyota is not backing off its strong commitment to electric drive hybrids... They remain at the core of our strategy for advanced technology vehicles... We know they are absolutely essential to the future success of this industry.
Now... I should confess that when we first unveiled the Prius and discussed our future R&D plans with Wall Street, our shareholders were skeptical... In fact, the most common question asked was... “How much money are you going to lose selling those things?” ... I think you'd call that skeptical.
But those same shareholders have since changed their tune... Here's at least one reason why....According to a recent report by AllianceBernstein, a global asset management firms, more than half of all new cars sold in developed markets will be hybrids by the middle of the next decade.... According to the report, “leadership in hybrids will be the key to success in the auto industry.”
When it was first launched, Prius benefited from the halo effect of the Toyota brand reputation... Now, the Toyota brand is benefiting from the halo effect of the Prius.
That's quite a turnaround.
Did the turnaround happen faster than we expected? No question. Gas prices definitely accelerated the pace of change. But there's no going back.
Because people realize hybrids are a simple way to make an important difference in curtailing foreign oil dependence...air pollution...and greenhouse gases... plus they're a heck of a lot of fun to drive.
And being able to skip gas stations on a regular basis is icing on the cake... without the calories. As volumes keep rising...costs for hybrids will continue to come down. In fact, we're aiming for a 50 percent reduction in cost by 2008.
Americans like to do the right thing...and they love doing the smart thing. With hybrids we make it easy for them to do both.
We're proud that the 2007 Toyota Prius and the Camry hybrid have the distinction of being the ONLY vehicles to qualify for the EPA's Smart-Way Elite rating.... They earned that designation based on their superior performance in reducing air pollution and greenhouse gases.
And we're not alone in our confidence about hybrids.
Honda has three and plans to add a fourth... Ford has two and plans to add three more...and nearly every other automaker...from Hyundai to Porsche...plans to introduce hybrids in the near future.
In fact, according to news stories, today GM is expected to announce its plans for future hybrid production... including development of a plug in hybrid vehicle...When the top two automakers place bets on electric drive...major progress will follow.
That means more good news for customers and our environment.
So let's recap a bit...electric drive and hybrid technologies are moving forward... hybrids remain at the core of Toyota's strategy for the future and hybrids are already saving our nation millions of gallons of gas... But we can't afford as a society to sit back and get comfortable... A lot more needs to be done.
And that's where Washington and industry need to come together... We need to re-engineer our relationship.
The cost and frenetic rate of technological innovation today means that no individual, no company, nor any country has the resources to do it alone.
To continue the pace of change our customers and our planet deserve...We must create monumental cooperation among all the key players...automakers... suppliers...labor...government...educators...NGOs...oil...utilities... and other industries... And it all starts with major collaboration between government and industry.
Too often in the past our industry and many others have been at odds with the government...That needs to change... We need to become partners for progress.
Some of you may recall a time when we were anything but partners... When progress was measured in the number of lawsuits won or lost.
That time needs to end... Global corporations, with their enormous technical resources, must not only accept responsibility for reducing our dependence on limited fossil fuel...they must join with government and assume a leadership role in that journey.
Car companies everywhere are committed now, not only because it's the right thing to do, but also because our customers expect us to do it.
That represents a dramatic turn around from the not too distant past. For too long the auto industry fought even the most fundamental government intervention on everything, including the environment.
That's changing, but we have to pick up the pace.
The auto industry needs to be more proactive... To start, it's time for us to stop being the “against” industry...and to come out strong “for” something important...like a better quality of life.
Automakers need to work with government to set reasonable goals to improve fuel economy standards and reduce greenhouse gases... And we need to do it in a way that doesn't severely damage the health of one of America's most vital industries.
Our industry also needs government... Cooperation to further the development of advanced vehicles technologies like electric drive. One good example may be plug-in hybrids.
While the electric industry is working with automakers to bring plug-ins to market... government research support and financial incentives are critical to ensuring wide-scale commercialization.
We need government cooperation in establishing industry standards and demonstration projects for plug-in vehicles...There's also a shared responsibility to solve the remaining challenges on battery life, cost, recycling and a sustainable electricity grid.
On a much broader scale; we believe government should adopt policy initiatives that are market-based and that recognize our need for energy diversity...
The 2005 Energy Act provided up to $3,600 in tax credits to Americans who buy hybrids. By encouraging consumer support for a promising new technology, our government is supporting innovation and investing in our nation's future. We'd like to see those consumer incentives continue.
But government can do even more. It should be leading by example.
[Press says that the government needs to adopt policies that include all carmakers, not just Detroit-based ones, referring to the traditional Big Three. He emphasized that tax incentives worked in getting American's to transition to hybrids, but that full incentives should be restored, pointing out that prior to Toyota's share of the incentive being cut in half after reaching the 60,000 sales quota, the company had a 5-6 month backlog of hybrid orders.].
For instance... government at all levels should accelerate the purchase of hybrids or other alternative fuel cars for their fleets where appropriate.
If we learned anything from this past election, it's that people are tired of the bickering in Washington, the partisan politics, and general government malaise.... They want government and industry to work together and create a better life for all of us and future generations.
Let me leave you with this thought.
Some of you may recall a special July day in 1969... When something extraordinary occurred...Many of you may even recall what you were doing at the time it happened.
The Apollo astronauts were the first to walk on the moon and send back the first photographs of our earth from beyond the moon. The pictures appeared in every newspaper around the world....Do you remember?
Archibald MacLeish, the Pulitzer Prize winning poet, was stunned by the sight and wrote these words: .."To see the earth... as it truly is... small and blue and beautiful... in that eternal silence where it floats... is to see ourselves as riders on the earth together."
That moment created a monumental shift in our human perspective.
People began talking about taking responsibility for "space ship earth," and seemed keenly aware that... as Buckminster Fuller put it..."space ship earth did not come with an owner's manual."
We ALL share one small blue planet...the only one we have ... We can't talk about fixing a part of the environment without speaking in terms of fixing every part of it...everywhere.
We can't speak of the environment as if it someone else's responsibility...maybe industry...or government...or the science community... or the other guy's problem... It is everyone's responsibility to do something...to actively work together to preserve our planet earth.
I intend to spend my time encouraging the auto industry to make a new pact with government. A pact to be part of the solution... A pact to stand for something. And I ask that you support that effort in any way you can.
If there was ever a challenge that crossed all of the boundaries of society -- business, government, and the academic world, this is it... If there ever was a time for everyone to engage and take action...it is now... Let's do it! ["Let's start today!"].
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