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With Toyota's worldwide auto sales surpassing General Motors' for the first time in history, has Toyota's push for hybrids and improved fuel economy helped them get to the top? During today's OnPoint, Josephine Cooper, group vice president for government and industry affairs at Toyota, discusses her company's strategy for making more efficient vehicles. She explains Toyota's plan to keep hybrids at the core of its future technological strategy. Cooper discusses the future of CAFE and talks about her company’s stance on climate change legislation.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Josephine Cooper, group vice president for government and industry affairs at Toyota. Joe thanks for coming on the show.
Josephine Cooper: Thanks for having me.
Monica Trauzzi: Joe, increasing fuel efficiency standards for vehicles is something that many people in Congress are pushing for. Recently a panel of auto executives indicated that they would oppose legislation that would increase CAFE. What is Toyota's take on the CAFE issue? Should that standard be improved?
Josephine Cooper: Toyota has long supported increasing fuel economy standards for vehicles, which means increasing CAFE standards. We think it's really important to continue the progress that we at Toyota have always made in terms of we want to be the best in class in terms of our fuel economy. And we want to make sure that we're moving ahead with advanced technology and also increasing the fuel economy for our vehicles, every single day. Our engineers are working in Japan right now on what can we do next? What kind of technology can we put on our vehicles? What kind of alternative fuel technology can we use? How can we advance the technology for our vehicles?
Monica Trauzzi: So do you guys support what the president is proposing or what some of the Democrats in Congress are proposing?
Josephine Cooper: Well, what we really support is moving the process forward, whatever it takes to do that. And I think the President really started the momentum this year in the State of Union by calling for decreasing the use of foreign oil and increasing fuel economy. His program calls for us to do that by a date certain. The bills on the Hill are basically saying very similar things. So our view is let's move ahead with the process. The challenge is how much and what's the timeframe? That's really the challenge. As you know, the lead time for putting vehicles in the marketplace is about five years. So 2012 for the auto industry, for us at Toyota, our vehicles for 2012 are already set with the technology, with the parts, with all of the components. So anything before that means we're going to have to substantially change what we've already put the money into. So for us it's how long will it take and how quickly can we advance the technology?
Monica Trauzzi: And like you mentioned, the President is calling for the US to decrease gas consumption by 20 percent over the next 10 years. If this happens, how is that going to affect Toyota's fleet? What changes need to be made and how does that affect your bottom line?
Josephine Cooper: Well, for us, we, as you know, have a number of hybrid vehicles in the market today. That right now is our core technology and we see that as being a big part of our going forward strategy, to have those hybrid vehicles, which get anywhere from 20 to 50 percent better gas mileage than a comparable vehicle. If we can do that and then integrate that into a plug-in hybrid system which will, again, improve the fuel economy, eventually we'll get to fuel cell technology. We're going to put alternative fuel vehicles into the marketplace. You may see us going with diesel vehicles. There is no silver bullet here. But Toyota's goal is to continue the progress and to be a part of the solution to these very important, not just US issues, but global issues.
Monica Trauzzi: Toyota's Jim Press recently testified before Congress and he said that your company would be open to considering a national cap and trade program. Specifically what kind of legislation would you all support? What do you think would be the most effective and least damaging to your bottom line?
Josephine Cooper: Well, if you wanted to just jump into a program right now the CAFE program, which we're used to, which we've been working with for the past 30 years, is probably the easiest thing you could do to move us forward quickly. NHTSA could set the standards, new standards for cars, reform the car fuel economy standards process and really move ahead right away if we were able to do that. And I think the President called for us to do that last year and again this year. So that would be one simple thing that we could do right away. But I think in terms of an economy wide program, which is what I think the committee before which Mr. Press testified, I think Mr. Boucher and Mr. Dingell are really looking for an economy wide program, beginning with the energy sector to see what we could do there. Maybe something on fuels, maybe more on vehicles. And if you did move to some sort of cap and trade program fuel economy is really calculated based on the CO2 emissions. Then you calculate what that translates into, into a miles per gallon. So whatever program you move forward with the fuel economy improvement is going to be the way vehicles get to CO2 emission reductions.
Monica Trauzzi: There seems to be a lot of competition among international automakers for who's going to produce the most energy-efficient vehicles. Why do you think it's been so challenging for Detroit to jump on that bandwagon through?
Josephine Cooper: Well, I think you have to look at what consumers are asking for when you talk about fuel economy. And for many years gasoline was so cheap in this country, I wouldn't say that today, but gasoline was so inexpensive that consumers could buy any size vehicle, whether it was a pickup truck, an SUV, formerly called station wagons, all these vehicles. And the fuel economy was not nearly as critical. And I think we let consumers have what they want, gave them all kinds of attributes, many of which add weight to the vehicle, which means you're going to burn more fuel. Well now we're in a time where gasoline prices have gone up. Consumers want the same attributes, so it takes a lot of effort and a lot of R&D to get to the point where you can deliver the attributes in larger vehicles and at the same time get really good fuel economy. So that's where I think some of us from other countries, because of the system in our home countries for our company, they have very small cars in Japan. So we've tried to apply the thinking there in terms of the fuel economy and giving consumers what they want, applying that in the United States. And what we come up with is really fuel-efficient vehicles. And that's really what I think the difference is.
Monica Trauzzi: Sales for hybrids and alternative fuel vehicles went up last year. They exceeded automaker's expectations by 50 percent. But do you think that there are enough government incentives pushing consumers to buy these types of vehicles?
Josephine Cooper: Well, we believe that any new technology benefits from having consumer incentives that really level the playing field. And sometimes the new technology may cost a little more. And consumers may be reluctant to try it because of that increase in cost. So if you can give them the incentive, level the playing field, then they'll try that vehicle. And that then creates a larger and larger market for that vehicle. And if you can move from it being a niche vehicle or an early buyer market, then you're really beginning to change what consumers are looking for, if you can make it a part of the mainstream in terms of the vehicles consumers are really looking for. Then you can really make a difference.
Monica Trauzzi: Obviously the Prius is a very popular vehicle for Toyota. How much of the success of the Prius is based on gas prices?
Josephine Cooper: I think part of the success of the Prius is because it's a new innovative technology and there are lots of gee whiz kinds of displays on the vehicle to let you know how much fuel economy you're getting. Every time you put your foot on the gas you can see what it does to your fuel economy. I also think that people were looking for a new approach. There were some people who were already thinking about climate change and global warming and what can we do about that? There were others who are thinking about energy security. So I think it was a combination of things that really lead people to try it. The other is, when it came out, it was a one-of-a-kind. It looked a little different from other vehicles. We didn't badge it the same as one of our - like the Camry for example. We made it a different vehicle so that people began to identify the technology with that particular vehicle. In a lot of cases, even today, people who are talking about hybrid technology really say the Prius technology, just because that was the first one that people really identified with.
Monica Trauzzi: Beyond hybrids, what can we expect from Toyota in the next few years?
Josephine Cooper: Oh, you're going to see the plug-in hybrid, which we think is very exciting, offers consumers really great potential for saving fuel and a lot more flexibility if you will. You'll also see us coming out with more flex-fuel vehicles. I think you'll see that in the future. And all of automakers, including Toyota, we're all really working hard on fuel cell technology. But Toyota's core technology, our going forward strategy today is really based on the hybrid technology and integrating that, even into fuel cells. You'll see our fuel cells, there's going to be a hybrid component to our fuel cell technology.
Monica Trauzzi: There are technological hurdles to the fuel cell technology though. Do you think that something like that is going to exist on a large scale in the US? I mean beyond the technological issues they're also incredibly expensive.
Josephine Cooper: Well, I think over time the battery is one of the key elements, the battery pack, and how do you fuel the vehicle with the hydrogen? How do you make that happen? I think as we experiment, as we learn over time we will perfect that technology. We will refine it to the point where it will be cost competitive. But that's probably 15 or 20 years out into the future. So between now and then we've got to rely on things like our hybrid strategy, flex-fuel vehicles, biodiesel, clean diesel, all of these things, everything. People are experimenting with all kinds of things today that we might not have even thought about 15 years ago.
Monica Trauzzi: Did your company feel pressured to start making flex-fuel vehicles because Detroit was jumping on that bandwagon? And ethanol, there's a lot of talk about ethanol and cellulosic ethanol in the U.S.
Josephine Cooper: We think that in order to serve our customers in the best way possible we want to offer them a wide array of technologies. And if there's one customer who comes and says I want a Toyota flex-fuel vehicle and they can't get one, we're disappointed. So from our perspective it was really to serve our customers.
Monica Trauzzi: All right. We're going to end it right there. Thanks for coming on the show Joe.
Josephine Cooper: Thanks for having me.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
[End of Audio]
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