Toyota Motor Corp. is hedging its bets as the auto industry confronts the existential challenge of climate change. The world's biggest carmaker envisions selling about 3.5 million electric vehicles per year by 2030, a third of its current annual sales, and converting its luxury Lexus line to all-electric by then. But it's not one of the six automakers that pledged last year to work towards phasing out fossil-fueled vehicles by 2040. Toyota just introduced an amped-up version of its Prius model, signaling it's not planning on giving up on hybrids. It's also the rare automaker that's investing heavily in hydrogen as a fuel for both trucks and passenger vehicles. Toyota is squarely in the middle of the pack in terms of its vehicles' greenhouse gas emissions, according to the latest EPA data — but it did post the largest year-over-year emissions reductions. Tom Stricker, Toyota's vice president of sustainability and regulatory affairs, argues that the uncertainties inherent in battery cost and supply chains — and the fact that a billion people still lack electricity — require placing bets on other technologies, too. This interview has been edited and condensed for clarity. What is your message here at Stanford ? When it comes to sustainability around our vehicle strategy, we are looking not at how many vehicles of a certain technology we can put on the road. We are looking at how can we reduce carbon the quickest? We sell 10 million vehicles in 170 countries. That's a lot of diversity. We need options that are across the board, that are affordable. Our philosophy is we leave no one behind when it comes to affordable, carbon-reducing transportation. So that's why we're doing hybrids. That's why we're doing plug-in hybrids. That's why we're doing battery-electric vehicles, and that's why we're doing hydrogen fuel cells. Carbon is the enemy. That's what we're trying to avoid and/or reduce. Reuters reported Toyota is considering a reboot of its electric car strategy to better compete with Tesla. Is there a rethink going on? I'm not deeply involved in that part of the planning process. We're always looking at the best way to run the business and design the vehicle. So maybe that's what we continue to do. There's a lot of different ways you can configure vehicles. You can have [battery electric vehicle]-dedicated platforms, you can have platforms that can accommodate multiple powertrains. And they each have their advantages and disadvantages. To what extent will you be able to meet the manufacturing and sourcing requirements under the Inflation Reduction Act? It's clear the objective of the bill is to recognize that pretty much right now the supply chain is through China, and to change that and to localize it. We've broken ground or under construction of our battery plant in North Carolina . That started out as a $1.3 billion investment. It's now up to a $3.8 billion investment. From an industry basis, there's going to probably be very few vehicles that qualify to start, but we're still waiting on guidance from the Treasury Department on a number of open issues. I don't know that there'll be any earth-shattering open issues that will change that outlook, but what you'll see and what you are seeing, is the industry moving towards trying to localize more, but it's tough. What specific guidance are you waiting on? I'll give you a simple example: When does the mining and processing of minerals end and the production of batteries begin? Because those fall under two different parts of the tax credit. Manufacturing a battery is an incredibly complex thing to do. It involves multiple suppliers in multiple locations. And so to figure out and be able to delineate where you stop counting what's considered mining and processing, and then where you start counting what's considered battery production, is not as straightforward as you might think.
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