Matthew Harrison, President of Toyota-Europe (Photo: Benjamin Brault, Toyota)
Matthew Harrison should now be leaning back and letting out a sigh of relief.
The Briton who grew up at Ford, has been serving for the past two years as the president of Toyota Europe, one of the main divisions of the world's largest car manufacturer.
In 2022, Toyota became for the first time the second best-selling car brand on the continent after the eternal leader Volkswagen, overtaking BMW, Mercedes and Peugeot, with 767 thousand cars, recording a 7.6% increase in sales, in a market that decreased by 4.1%.
For Israelis who admire Japanese cars since Subaru broke through here 40 years ago, it seems natural, but in Europe Japanese cars like Toyota and Lexus were for years a curiosity.
But Harrison (54), who arrived in Israel for the final event of Toyota's ISRAEL EARTH PRIZE competition, which is designed to encourage ideas for a cleaner world, is not so calm.
An hour before he presented the first prize to the "Vnetat" association, which encourages planting in cities, at a ceremony at the Israel Museum in Jerusalem, a prize of about one million dollars, he spoke with Maariv with rare openness about the competition with Tesla and the Chinese manufacturers, about the effects of the global chip and supply crisis, he responded to criticism against the late entry of Toyota to the streetcar market and found out with which vehicle of another manufacturer he evaluates and thinks that Toyota should produce itself.
Which new Toyota models will soon arrive in Israel? (Photo: Toyota)
"I always enjoy coming to Israel, and not only because Toyota has a market share of about 12%, almost twice as much as in Western Europe. You are a benchmark for us," says Harrison.
Do you have any news for the Israelis, some of whom are currently waiting a year for the delivery of the Rab4 they ordered, and long months for other Toyota models?
"We've had 18 months of an unprecedentedly disrupted supply chain. Fortunately, most of our competitors ran into a chip crisis before us. Right now, on a global level, our production capacity is slightly below the level of demand. There is no margin of safety in the system. As soon as there is a problem - a strike, a fire or If a component supplier stops production because of a corona outbreak, the whole system could suddenly stop. We were hurt a lot by this.
"Last year there were around 100,000 cars that were meant to be built for Europe that we couldn't produce because of events like this. This year didn't start well in January and February, but I'm quite optimistic about the rest. We did a lot of work with the suppliers and the rest of 2023 looks more stable. I'm sure the waiting times will be shorter "
The situation in Israel is also different than in Europe now.
"Your market is hot right now, with a double-digit percentage increase in sales compared to the same period last year, but this is not the case in other European markets. We are seeing a large increase in energy prices, inflation at a rate double that in Israel, an increase in interest rates and a general jump in the cost of living. This also affects on the car market".
In Israel there is a big shortage of Yaris.
You seem to have increased the production of its crossover version, the Yaris Cross, which is more expensive and profitable, at the expense of the super mini car.
"We act according to market preferences. Yaris Cross is very popular, both in Europe and in Israel, I think what you see in most markets is the transition to a crossover configuration instead of a sedan, instead of compact cars and even instead of a station wagon. Electrification will further accelerate this trend for technical reasons, because because of location The battery at the bottom of the tram vehicle tends to be higher than vehicles with internal combustion engines. Most customers want the height that gives them a better field of vision."
There are rumors of a new Land Cruiser.
When will we see him here?
Will it be a hybrid?
"We are now in the process of a global launch of the new model. In Europe, in most markets there is no longer much demand left for large off-road vehicles with internal combustion engines and we are looking for a way to still maintain a presence in the market and preserve the iconic brands Landcruiser and Hilux. We are testing alternatives for the future such as a fuel cell , which turns hydrogen into electricity. There is demand in the world and production continues, but in Europe we adjust marketing to what is sold. The new model still has an internal combustion engine, and not a hybrid, which limits it in Europe."
You launched the electric bZ4X last year, but in Israel its price starts at NIS 240,000.
When will you have more and cheaper electric cars?
"We have a slightly different approach to streetcars. I know the world claims that Toyota entered this market too late, but we have to remember that we have a very successful technology called hybrid, which gave us a great advantage in reducing emissions and complying with regulatory requirements in the field. So our situation is different from manufacturers who switch directly from gasoline engines and diesel to electric. I would be more concerned if I felt we weren't meeting customer expectations.
"The regulators are pushing the agenda of switching to electricity very aggressively, which is not suitable for every market, I'm not sure for Israel, nor for many other markets. We see the gap between what the regulators want, the road map for the deployment of the charging infrastructure, especially the public ones, and production capacity The electricity comes from renewable sources. Our motto is to follow consumer expectations and currently we are not always able to meet the demand for hybrids. So we do not feel behind. There is no doubt that Europe is quickly turning to electricity, and I do not foresee a change in the challenging goals set by the regulators, to sell mainly electric cars in 2030."
These goals are practical, will the car industry meet them?
"They can become practical if the deployment of the charging network is accelerated. But it is not certain that the mining capacity, for example, of the raw materials for batteries will meet the demands. We will have to re-examine every year whether it is realistic. We are preparing for it: by 2026 we will launch 6 more electric models in Europe, so if in In 2025, electric cars will take up about 10% of our sales, in 2030 they will already be 60%. We will greatly accelerate electrification in the second half of the decade. In 2025, the majority will come from
Toyota's global portfolio, but as demand in Europe increases, we will also start producing at home. We are preparing Also to produce batteries in Europe, together with our international suppliers, such as CATL. or BYD. You don't want the battery factory to be far from the production line of the cars, it's not a product that you can just shake from a distance."
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Is it possible that the hydrogen revolution will precede the autonomous revolution?
At least according to Harrison, it can definitely be (Photo: Toyota)
The Chinese syndrome
You mention a Chinese battery supplier, but the Chinese are today first and foremost competitors.
Do you feel it in Europe too?
In Israel, the Chinese car manufacturers are already starting to become a significant force.
Israelis who cannot buy a Corolla or Rab4 because of the waiting times, buy a BYD or Geely.
"I was surprised by the amount of sales of Chinese cars in Israel, which is a year or two ahead of the situation in Europe, both in terms of quantity and the presence of 15-17 Chinese manufacturers, even if the sales of some of them are still small.
"There is no doubt that the Chinese, whether the big manufacturers like BYD and Geely or the small start-ups, see Europe as a market that is going to be electrified quickly and can be attacked. They have the production capacity to take advantage of this opportunity. They know how to produce cheaply, they are very good at the connectivity capabilities of their cars , and in general. The Chinese manufacturers are a much bigger threat to us than Tesla, for example. But they also have weaknesses: in terms of their sales network, in terms of the financial services they know how to provide, and the long-term customer support. It is not easy to maintain customer loyalty. Knowing how to take care of the electric
battery After use. You must also control the entire surrounding ecosystem, selling a car is only the beginning. I am aware of the threat, but we have a lot of strengths to deal with this."
Toyota has been promoting hydrogen technology for years, but the only car equipped with it, the Mirai, you sell in very small numbers.
"We learned a lot with the Mirai, it is definitely a success story. In Paris, for example, today we have 600 Mirai that are used as taxis. They need a vehicle that can work 24/7, in two shifts, and you can't do that with an electric vehicle that needs to be charged for hours. Nor do you have Range issues. Hydrogen has a big role in the market, but I must honestly say that it will only happen after 2030. We see that the governments are looking at the technology, which will need their support to establish a network of hydrogen refueling stations. By then, the prices of the fuel cell that produces the electricity from hydrogen will also drop.
But Already in the current quantities we are preparing to move the production of the fuel cell, which is currently carried out in small numbers in our research and development center, to one of the production lines. We supply fuel cells not only for Mirai, there is a demand in trains, ships and any vessel that needs 24/7 operation and a large amount of batteries is too heavy for it We supply fuel cells to Mercedes, for example, for trucks."
If the vision that the automobile industry broadcast a few years ago were to come true, we would hold this interview in an autonomous vehicle that drives itself on the streets of Jerusalem.
will it ever happen
"We are working on it. The autonomous capabilities have levels, from one to five, and level 5, which completely eliminates the need for the driver, will not happen until there is full confidence that it is safe enough even when driving outside closed areas, as in the experimental city we built in Japan to test this technology, Woven. We have
vehicles Autonomous tests are also in San Francisco and Brussels, and in the meantime we see that a computer is still not as good as a human brain at driving, with all the human limitations. The computer is not as good as our brain at anticipating what is going to happen. At understanding that a hand gesture can override a travel plan. And there is also a high cost for all the sensors and the necessary processing capabilities.
"There will be autonomous vehicles, but not soon. I estimate that in the second half of the decade we will see such vehicles operating in closed areas and special lanes. We are developing the autonomous technology in two modes: Chauffer, a personal driver, where the car can take you home while you sit in the back, and Guardian , a driver assistance system, and intervenes in driving when a driver does not respond to warnings. In the Mirai and Lexus LS we already have very advanced systems of the second type."
So the hydrogen revolution can still happen before the autonomous revolution?
"It can definitely happen."
Toyota has invested 394 million dollars in the American start-up Joby which is developing a type of flying car.
When will you sell a flying Corolla?
"These technologies are also being tested at Woven. We have an investment in Jovi, but this is an area that still has major challenges, both technological and regulatory. We will not see breakthroughs there in the next two or three years."
In Israel, private leasing is getting stronger, in Europe the trend is actually car subscription plans, which are even more flexible: a car for 24 hours to 36 months, including everything, without a down payment.
Are people willing to give up buying a car and pay for it only when they need one?
"We operate in Europe in the field under the Kinto brand, through our agents, because they know their communities best, and can provide service and maintain the cars. We operate carefully, after some of the competitors burned a lot of money in this field, until they realized that it is not so simple. We want to create a business that sustains itself. We already have 130,000 subscribers."
Our lives have changed a lot in the last two decades, with digitization and cell phones.
Do people still want to drive?
"People want freedom of movement. But its implementation will vary from country to country and region to region. As cities around the world begin to restrict the movement of vehicles on their territory, sometimes even of electric cars, we see an increase in the whole yet undeveloped field of tiny vehicles, of micro-mobility."
You launched the Ego X last year, maybe it's time for the Ego Minus.
"We are examining this market and may enter it. One of the challenges for small cars is electrification. It is difficult to reduce the costs of an electric vehicle enough and have it still be in the price range that customers expect. But there are products like the Citroen AMI, a tiny car that in Europe does not even need a license to drive In it. This is because we might want to go in it."