Akio

Following on from the Olympic Games Tokyo 2020, the Tokyo 2020 Paralympic Games have recently drawn to a close. I believe many people were moved by the unique stories of para-athletes who embraced their unique conditions and tackled the challenge as only they could.

After their competitions, the athletes shared their gratitude for this opportunity of competing in the Games, for the cheering, and for the support by everyone on the operational ground.

Behind the scenes, countless volunteers and staff worked hard to make the event possible. Among them were some of our 5.5 million auto industry colleagues. What the athletes and people on the ground showed us was a desire to serve someone other than themselves. I believe that sentiment is the true legacy of these Games.

Also, as an automotive company, we want to continue working towards a mobility society that solves the social and technical challenges which the Paralympics brought to light.

Akio

With that, today I would like to share our current thoughts on carbon neutrality.

As COP26 approaches in November, representatives from each country have pledged various targets. To reach these goals, some have targeted cars, which is just one last process of CO2 emissions, and moved toward restricting some available options.

In pursuing carbon neutrality, carbon is our enemy, not the internal combustion engine. To reduce carbon, I believe there should be practical and sustainable solutions that fit the circumstances of each country and region.

I also believe that taking action toward our goals is more important than setting them. The Japan Automobile Manufacturers Association is working towards carbon neutrality, by drawing on our country’s strength in offering a full lineup of electrified vehicles. Establishing task forces based on the specialties of member companies, we have identified the challenges and engaged in discussions with relevant government agencies.

Each company is also speeding up efforts to expand technology options through new partnerships and practical trials.

As an early proponent of electrified vehicles, Japan’s automotive industry has been able to cut CO2 emissions by 23 percent over the past 20 years, an extremely high level by international standards.

What we need to do over the next several years is to leverage the technological advantages that we have built up and take immediate steps to maximize CO2 reductions using the electrified vehicles we have now. Any leeway that cars are able to generate in the process may allow to put more time and resources towards technological innovation in other industries.

Based on that thinking, I believe that exploring options which fit with our country’s circumstances is both a practical and fundamentally Japanese approach.

Akio

As I have said previously, we must not forget that, for an export-driven country like Japan, the issue of carbon neutrality is also tied to employment.

The reason we continue striving to expand options for achieving carbon neutrality is that we are responsible for 5.5 million auto industry jobs, and hence the lives and livelihoods of Japanese people.

Akio

The Liberal Democratic Party’s presidential election is looming. Some politicians have previously claimed that all cars should simply be battery electric vehicles, or that manufacturing is an old legacy. To these points, I disagree.

It’s easy to dismiss efforts by saying that our present course holds no future. But I believe that in order to protect the lives and livelihoods of Japanese people, we need to create a future that builds on the efforts of those who came before, as well as those of us living in the present – to ensure that the course we have charted has a future.

This is our role, our responsibility, as one of the core industries that have continued to underpin Japan’s prosperity.

What I have come to keenly realize is that, given how closely cars are connected with people’s lives and many other industries, focusing on the auto industry can provide us with a better understanding of the challenges and timelines we face even in tackling carbon neutrality.

Clarifying these challenges and timelines can spur action on various fronts. That is why, next month, we plan to present the challenges related to energy, which is the starting point towards carbon neutrality, from the automotive industry’s perspectives, with a focus on practicality and sustainability.

We hope this will drive action across all steps in the auto industry – production, transport, and use. We will continue to take action and make our efforts as a core Japanese industry and a pacemaker in the push towards carbon neutrality. I would like to ask for your continued support for our efforts. Thank you.

Akio

To achieve carbon neutrality, we must reduce CO2 emissions in all processes from production, transportation, and energy usage.

With the “production” part being the current energy mix (where thermal power generation is the majority), at some point in the future, we might be banned to export vehicles we produce in this country (because they emit a large amount of CO2 in the energy production process).

The Japanese government has determined various targets, likely with the upcoming COP26 in mind, but first of all it is just targets that they show us, and second of all, the targets seem to be based on how policies are discussed in Europe, not on the particular situation in Japan.

That is why I would like to ask for your understanding that the paths to carbon neutrality differ in each country. Taking the renewable energy mix target as an example, no discussions on the cost have yet been shared with us, and we feel as if everything else is left up to private companies.

The total amount of vehicles produced in Japan is approximately 10 million units, and of them, 5 million units are exported vehicles.

If internal combustion engines (ICEs) are referred to as the “enemy” in the battle of carbon neutrality, we wouldn’t be able to produce most of our vehicles. In our estimate, non-ICE vehicles (BEVs and FCEVs) will not reach 2 million units even in 2030, so in that case, vehicle production of more than 8 million units would be lost.

If that happens, even in the automotive industry that increased 120 thousand jobs during the COVID-19 pandemic last year, we might lose the vast majority of our 5.5 million jobs. I would like policy makers to understand this point when addressing the environmental issue moving forward this year.

Please note that we are not disagreeing on the goal of becoming carbon neutral. It is the automotive industry’s unwavering commitment to fully cooperate with the government in addressing global warming and CO2 emissions reduction. Let me make sure of that point.

Akio

The Japanese government has proposed a goal of its energy policy toward 2030, but we learned that an additional investment of 25 trillion yen is required to achieve the expanded renewable energy, including necessary investment in upgrading the old electrical grids.

In addition, because the output of renewable energy fluctuates depending on weather conditions, there may be an annual cost of 1 trillion yen to ensure the stable electricity supply.

We would like to clarify some “basic units” of the automotive industry related to renewable energy, such as how much and what kind of energy we need by when, and the CO2 emissions resulting from them. The basis of the analysis is on our mission to contribute to the prosperity of Japan through preserving 10 million units of domestic production and employment.

Based on that analysis, we want to examine how much investment and R&D is needed, what the cost will likely be, whether the automotive industry can keep its competitiveness in domestic production, whether we can expect financial support from the government if the business conditions face difficulties, and where the fiscal resources come from in such a case. We want to lay out such kind of challenges from the automotive industry’s perspectives and spur further discussions.

The CO2 emissions by the transportation sector may only account for 18% among all sectors in Japan. However, the automotive industry has real products made in collaboration with many other industries. That’s why I believe focusing on the automotive industry can clarify the challenges and timelines of carbon neutrality.

This is exactly about wanting to be a pacemaker in pursuing carbon neutrality as we have often explained before. We will present what I just described in more detail next month, so please look forward to it until then.