Heroes and Zeros: Mercedes-Benz vs. Toyota

The world’s first car maker prepares to go all-electric as Toyota lobbies against climate action

electric vehicles
Illustration by Joren Cull

Hero: Mercedes-Benz

Carl Benz struggled to find his groove as a young man before designing a single-cylinder gasoline engine that he fired up for the first time in the German town of Mannheim on New Year’s Eve 1879. Seven years later, Benz fitted an improved version of the engine to a rickety three-wheeled vehicle, and his Benz Patent Motor Car model no. 1, generally credited as the world’s first automobile, took to the road.

More than 130 years later, the luxury brand that bears Benz’s name is pulling out the stops to make its mark on a new generation of vehicles. Mercedes-Benz is now in the vanguard of mainline carmakers hoping to topple Tesla from its perch as the world’s top electric vehicle (EV) producer.

Mercedes’s parent, Daimler, announced in July that every new platform will be EV-only by 2025. It plans to spend virtually nothing after that on gasoline engines, instead pouring €40 billion into a predominantly, and perhaps entirely, electric lineup by the end of the decade.

“The EV shift is picking up speed, especially in the luxury segment where Mercedes belongs,” Mercedes chairman Ola Källenius said in early September as he unveiled four new electric SUVs and sedans. “That’s why we’re accelerating from EV-first to EV-only.” The new models include a super-luxury Maybach SUV, expected to sell for more than US$200,000. Mercedes also plans to build eight EV battery plants with various partners around the world – four in Europe, three in China and one in the U.S. It expects that EVs and hybrids will contribute at least half its sales by 2025.

Getting there will not be easy. Only a handful of countries appear poised to reach that target. In Norway, all-electric cars made up 60% of the total market in the first eight months of 2021. But EVs still account for just 3% of U.S. car sales. One big challenge facing Mercedes – and every other carmaker – is a shortage of charging stations in North America.

Unlike some of its rivals, Mercedes has wisely stopped short of forecasting when its last gas-powered car will roll off the assembly line.

General Motors aims to be all-electric by 2035, and Volvo (owned by China’s Geely) has set an even earlier target of 2030. The three Detroit-based carmakers – GM, Ford and Chrysler – have cautioned that their commitment to EV sales targets hinges on government funding for manufacturing, supply-chain research and development, buyer incentives and a national charging network. There is no guarantee those conditions will be met.

Zero: Toyota

Toyota has, by and large, been an amazing success story since it began life as a maker of textile looms in the 1930s. The company overtook General Motors in 2007 as the world’s top-selling carmaker. Its Prius hybrid pioneered the move to battery-powered vehicles, and Toyota’s company culture of kaizen, or continuous improvement, has become a mantra for managers around the world.

But the Japanese carmaker now risks tarnishing its reputation with an aggressive effort to slow the rollout of EVs in favour of its own preferred technologies: hybrids and zero-emission hydrogen cells.

Toyota has a mixed record on action to combat climate change. Earlier this year, the company, together with several other carmakers, dropped its support of Trump-era legal action against California’s moves to set stricter fuel-economy and greenhouse-gas emission standards than the federal government.

But self-interest has appeared to be paramount. Toyota remains the leader in the hybrid market, and the company has invested heavily in hydrogen fuel cells. The cauldron at the recent Tokyo Olympics was powered by hydrogen in a nod to Toyota’s role as one of the Games’ main sponsors.

Company president Akio Toyoda pushed back earlier this year against Japanese measures to regulate gasoline and diesel engines on the grounds that such restrictions would limit technology options. In recent years, Toyota has also assailed policies mandating electrification, opposed a carbon tax, and questioned the cost of extra power supplies and infrastructure needed to charge EVs.

Instead, Toyota is pushing for what it describes as “a portfolio of products with advanced, alternative-fuel and zero-emission powertrain technologies.” It aims to roll out 70 “electrified” models by 2025 using a combination of power trains. However, its favoured technology – hydrogen cells – has yet to prove itself. Critics argue, among other points, that fuel cells wear out fast and are hard to recharge, and that hydrogen is expensive to produce and distribute.

InfluenceMap, a U.K. think tank that tracks corporate action on climate change, concludes that “despite positive top-line messaging on climate, [Toyota] has consistently engaged in opposition to regulatory efforts to increase the stringency of emissions and fuel economy standards.” What’s more, “Toyota has at times been highly negative on policy mandating the electrification of the automotive sector, appearing concerned to promote an extended role for hybrid vehicles.”

Toyota scores a “D-” in InfluenceMap’s rankings, the lowest of any major carmaker. Given its achievements in so many other spheres, it can surely do better.

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