Toyota explores UK investments after hybrid ban postponed

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Toyota is exploring two investments in the UK, including a new model at its Derbyshire car plant and the mass manufacturing of hydrogen fuel cells, after the government pushed back a ban on the sale of new hybrid cars, a senior executive has said. 

The UK’s decision to allow new petrol, diesel and hybrid car sales to continue until 2035 and to make it easier for carmakers that miss EV sales targets to avoid fines, has helped the Japanese group “remain competitive,” Matt Harrison, head of operations for Toyota in Europe, told the Financial Times.

“We are not facing any premature discontinuation or ban of hybrid [technology], and there’s a little bit more pragmatism,” he added.

The company has been a longtime proponent of hybrid vehicles as a way of reducing emissions in the shorter term. But it also plans to launch at least six battery-only models in Europe by 2026, to keep pace with rising demand in the region, and to sell only zero-emission vehicles across Europe by 2035.

Harrison told the FT that the market was changing quickly and that Toyota anticipated “a tipping point . . . around 2027, where our centre of gravity will start to shift” towards electric vehicles.

Decisions on possible new UK investments were not “imminent” though, he said. The first EV to be made by Toyota in Europe is unlikely to be an electric version of the Corolla, the model manufactured by its Burnaston plant in Derbyshire.

The group has also not yet decided whether to replace the current Corolla with a hybrid or fully electric model, he added. 

Every other major carmaker in the UK has announced new spending or production of electric vehicles this year. 

Nissan last month announced £2bn of spending on new models and a battery factory, while BMW has pledged £600mn to build electric Minis at its Oxford plant. Vauxhall owner Stellantis started production of electric vans at Ellesmere Port, while JLR announced eight new electric models and its owner Tata Motors has committed £4bn to a UK battery factory.

The Society of Motor Manufacturers and Traders calculated that around £20bn of spending has been announced over the year, more than the previous seven years combined.

“The UK wasn’t investible, now it is again,” SMMT chief executive Mike Hawes told the industry body’s annual dinner last week.

As well as making a new car model at its Derby plant, Toyota is exploring investment in manufacturing hydrogen fuel cells, which would be exported for use in larger Toyota vehicles or to other industries such as shipping. 

The business is trialling hydrogen fuel cells in some Hilux pick-up trucks that could be used by UK commercial vehicle customers for long distance journeys that are less suitable for battery models. 

“Part of scaling up is not just moving into industrialisation, but developing the supply chain, so we have to understand the dynamics of the fuel cell supply chain as well as the electric vehicle supply chain,” said Harrison. 

The carmaker’s engine plant in Deeside, North Wales, “would be naturally the starting point to think about producing [hydrogen cells],” he added.