Welcome to the EV Ready podcast featuring industry leaders and their perspectives on electrification hosted by EV Ready Energy.
Hey everybody, this is Chris Nye and welcome to the EV Ready podcast. With me today I have General Manager of Retail Market Development Ken Parkman of Toyota Motors North America.
That was a little bit of a mouthful.
But Ken, thanks so much for taking the time.
No, happy to be here.
So, then, you know, obviously, we have a relationship, working previously and in this space I think it’s so hard to find companies who really value partners, you know, I think sometimes it’s said out loud but it’s not necessarily acted on and you know just been grateful for our relationship so far
and, and I love, you know, if maybe you could kick off the podcast, talking about Toyota’s approach to having partners.
Yeah, no, I’d be happy to mean I think I think a lot of it starts with just the culture of Toyota here in North America, I mean we, we have have a really long standing relationship and partnership with our dealer network, and I think that’s really where it starts
I mean, our top management many many years ago really valued the importance of the dealers and the importance of working closely with the dealers to support them because ultimately they’re the ones that, you know, take care of the experience for the customer.
So, you know, over the, you know, 60 plus years to it has been here in North America, you know that that culture exists, you know, today, and, you know, every everything that we do as a company that impacts the dealers.
We get the dealers involved in what we’re working on or we’re developing because we want to make sure that that it’s something that’s going to help them. And, you know, I again that that partnership that we have.
I would say knowing a lot of dealers that have other brands, the relationship with Toyota and Lexus is is a great one. It’s special and it’s very different from some of the other OEMs. And, you know, that’s that that culture that we have the relationship with our dealers, I think extends as you were asking to the dealer partners that that we have when we that we work with.
You know, in my case, you know, in market retail market development, we’re responsible for dealer facilities and supporting our regions and supporting our dealers. And, you know, that’s that’s one of the things that, you know, when we were trying to figure out how to get our dealers ready to start selling the BZ4X and RZ on the Lexus side, you know, we we first started by looking at what the other OEMs were doing.
Out there in the space of BV readiness. And, you know, as as people that work for Toyota, we are definitely not experts in the EV space. And we quickly knew that. And the one common thing that we found in all the other OEMs is they had partnered with a company that does specialize in battery electric, not just in automotive space and other spaces.
And that’s really where, you know, we started to work closely with Lane Valente and then also Chargepoint to be able to try to put together, you know, a program that we could offer our dealers to make it as seamless as possible.
But, you know, the last thing, you know, I’ll also add on this partnership is one of the things that that, you know, early on that we communicated to both LVI and Chargepoint was that, you know, we’re all working together and, you know, we all need to kind of be one when we’re communicating and supporting our dealers.
Because any any third party company that we we partner with to support our dealers, and we go and we visit the dealers, the dealers really look at, you know, obviously Toyota, but also the business partners as a part of Toyota.
And, you know, we want the experience that the dealers have to be as as good as it could be. So, you know, it’s it’s I know it’s a long-winded answer, but, you know, I think we just have a culture that we built on many, many years of the importance of a partnership.
And it’s great that they continue, you know, today.
This is interesting because I think in the automotive space, people people know that like Toyota’s reputation is that they are great to work with Toyota and Lexus are two great companies to work with.
Very, very unique in how they go about doing business, but I don’t think like the general population knows that, you know, they more understand like some of the values that Toyota has tied to the cars that you’re selling and the reliability of the cars.
But the approach to business, I think, is just like so unique and not fully understood outside of the automotive space, at least I personally didn’t know until until until Toyota kind of Toyota and I developed a good relationship.
So tell me this, and this isn’t just an easy question.
And my apologies, I’m going to open this door in a second.
But keep going once I do your role of manager of retail market development.
What are like the biggest challenges that you face on a daily basis?
Well, it’s a great question because obviously we all know in the automotive space how how BV is the, you know, the number one thing that everyone wants to talk about.
And, you know, I think over the last couple years, there’s been a lot of questions internally by dealers in terms of, you know, dealership of the future.
I mean, what, what should the dealers be doing?
You know, we have our, our current facility program, which we call Image USA too, and it’s been around for 20 years.
And, you know, we feel strongly that the the look and feel of our Toyota dealerships has many more years to come with the, you know, the white portal and the gray ACM.
So that that’s the exterior of the facility.
But, you know, we’re we’re internally trying to work and figure out what should that facility of the future be now that you’ve got, you know, dealers starting to sell BVs in terms of, you know, should there be more space internally in the dealership for people to come and hang out and charge and have a lounge or those are all things that we’re still trying to figure out.
You know, our hope is that over the next probably six to nine months, that we’ll have a better idea of some more solid recommendations for our dealers as, you know, volume will increase for us over the, you know, probably the next two, three years.
But the other, the other challenge that I’ve learned over the last couple years in trying to work with dealers to get them just with the minimum number of chargers to take care of the launch of BZ is, is just how complex and there’s so many factors outside of the dealers control in terms of permitting and city codes and the current electric, you know, grid in a specific dealers town or whatever.
There’s, there’s so many factors that are out there and, you know, again, trying to figure out, you know, what that future recommended guideline to our dealers is, is something that, you know, we know is going to be impactful.
We know our dealers, we got to have them be ready, but what’s realistic to ask of them?
And I think that’s, that’s something that, you know, if you ask me what keeps me up at night, that I would say it’s that, you know, not really knowing exactly what we should offer our deal, you know, offer our dealers, because we want a good customer experience, but we also don’t want to ask too much of our dealers.
Yeah, so that’s a great transition to the, to the next question. You’ve seen different auto manufacturer strategies tied to progression around how many plugs to install it at dealerships and there are some OEMs that have acquired, you know, a million dollars in investment.
And that’s had a certain, a certain response from the dealer body. Toyota took a much more conservative approach. Tell us a little bit about how you came to that approach and what do you think the response has been from the dealers?
Yeah, no. So yeah, our approach was, was definitely unique and it was a little bit different for Toyota and Lexus. So I’ll start first with Toyota.
You know, from a government regulations, you know, we needed to ensure that we were selling the BZ-4X in our, in the ZEV states that are out there, mainly, you know, California, the Northwest and the East Coast.
So we took the approach that we were going to, from a company standpoint, take 65 or excuse me, 85% of the volume initially was going to go to the ZEV states and then 15% to the non-ZEV states.
Well, for us, you know, we have 1,237 Toyota dealers and if you look at the ZEV states, there’s only 375 dealers that are in the ZEV states and the, the over 850 or so are non-ZEV.
So knowing that that was going to be the allocation and volume that those dealers could expect over the first couple of years, and again, our volume for last year, you know, we sold 8,800 BZ-4Xs and our volume for this year and even in 25 is still relatively low.
It’s in the low teens. So knowing that and looking again, as you mentioned, at what some of the other OEMs had required dealers of adding a lot of level three chargers and, you know, a pretty significant investment, you know, we worked with our dealers, got feedback and said, you know, hey, as a minimum, what would we recommend?
And really it was simple. We wanted to have one charger Toyota branded in the front of the dealership to create awareness. We wanted the dealer to have one charger in service and then we wanted to have one charger that the dealers would be selling in delivery for an at-home charger.
So those, those three chargers and they were level two chargers. Again, you know, in the ZEV states, if dealers wanted to opt for level three, you know, DC fast chargers, they could, but that was not a, not a requirement.
So if you look at average dealer investment in our ZEV states for Toyota, it was roughly average dealers spent $36,000. On the Toyota or on the non-ZEV side, it was about 21,000. So it was a very minimal investment.
But again, knowing the volume being minimal for these first couple years, we didn’t want to have the dealers, you know, over invest because, you know, again, the technology and in level three chargers is changing.
So I would hate, you know, we didn’t want the dealers to invest in technology and equipment today that three years from now, they needed to upgrade. And Lexus was a little bit different just because the volume of Lexus was a little bit was higher.
And there, there’s only 244 Lexus outlets. So the throughput and volume for Lexus is, was higher for Toyota. So that, you know, Lexus had slightly, their, their average was about three level two chargers for each of the respective stores.
Obviously ZEV states, you know, had a little bit more. So again, that, that was really our strategy. We wanted to be realistic. We didn’t want the dealers to over invest, but we knew it was also a short term. It was really a strategy for that was going to get us the first three years.
And then now, as I mentioned earlier, that’s these next six to nine months is, is our, our plan to develop that next, that next phase to prepare the dealers really for the volume that’s going to come in 26.
And, and just, just for folks that aren’t in the industry, ZEV is a zero emission vehicle state where there’s a requirement to sell a certain amount of electric vehicles and dealership in those states.
So, so Ken, can you talk a little bit about, generally what we see in the marketplace is luxury models electrify first. And then as the cost of the, the gas vehicle goes, gets a little bit lower, those take a little bit longer to electrify.
Talk to us a little bit about the strategy of, of a Lexus electrification efforts versus Toyota.
Yeah, no, I mean, the, the, as you mentioned, the, you know, the cost of EVs is much higher. So I think, you know, mainly the luxury industry is certainly seeing more of a focus and really we’re seeing that, you know, on Lexus when it comes to their future product.
And that’s why, as I mentioned, you know, for example, RZ launched this year and there are sales of 5,300. The next year’s volume is going to be around 14,000 and then it’s going to go up to about 40 plus thousand.
So the Lexus volume over the next couple of years is certainly going to increase. And on a by dealer basis, again, that throughput through a much smaller number of stores is a, is a significant amount of the volume.
And, you know, the current plan right now from a company standpoint is by, you know, 2035. So 12 years from now, roughly that 100% of Lexus volume will be BEVs. I mean, obviously, you know, there’s a lot of things that could change.
I mean, you know, we’re all banking on, you know, BEVs are, you know, are what people want, but, you know, there’s also a cost associated with it. So, you know, that that’s really the focus, you know, from a product standpoint has really started more on the luxury side for Lexus.
And then obviously on Toyota, you know, we’ve got our BZ model. There’s plans, you know, we’re going to get a minor change, some minor changes to that vehicle in 2025. So it’s going to be another year. And then the future product cadence after that on Toyota.
So really the, our focus getting into the world of BEVs, I know many would say that we’re a little late to the party, but, you know, we’re going to focus on the Lexus side to compete on luxury. And then obviously now that, you know, we’ve got a Toyota offering.
So to your point, you know, there is a reputation sometimes for Toyota of electrification being a little bit more slower than some of the other brands, but you also have a heavier mix of hybrids and plug-in hybrids as a part of your strategy, I think, than other car manufacturers are focusing on.
And I think part of that story, it is a little bit misunderstood, you know, in the general public, but it’s part of it’s about the idea of like decarbonizing the world and what’s the strategy and is the best thing to decarbonize to have fully battery electric vehicles, or is it to have a mix of different types of electric vehicles? Can you talk to us a little bit about how Toyota thinks about that, you know?
No, that’s a great point. And again, with all the focus on BEV, you know, we’ve been selling hybrids for 20 plus years, you know, with the Prius launching in the mid 90s. And, you know, we’ve sold millions of hybrids over the years, and it’s been a great vehicle for us.
And, you know, it’s the environmental impacts of hybrids. And, you know, now that we also have plug-in hybrids, and we also have hydrogen, we’ve got the Mirai, which is sold in California, obviously in small volume.
So, you know, when you look at our product offering, we’ve got, you know, ice engines, we’ve got plug-in hybrids, we’ve got hybrids, we’ve got BEVs now, and then we also have hydrogen Mirai.
You know, we call our approach a portfolio approach. And, you know, we’re not putting all of our focus just on BEV or just on hybrids because we know that there’s people out there that want certain things.
But when you look at the carbon footprint, you know, and I’ll share something with you that you may have heard of or not, but it’s something that we’re trying to communicate out to, you know, a larger audience is, you know, with so much focus on EVs.
And if you look at the raw materials that are needed to build one BEV, you know, we have this 1690 rule that, you know, that’s out there.
And really what that’s saying is the raw materials that it takes to make just one battery electric vehicle, you could actually build six plug-in hybrids.
And if you look at those same resources for one battery electric, you could build 90 hybrid vehicles.
And if you look at the carbon footprint and the impact of those large number of vehicles that are out there that are much better for the environment, it’s very positive.
But, you know, I know a lot of people are just focused on BEV, and I mean, there’s some OEMs out there just putting all their chips into, you know, battery electrics today.
So, you know, again, we’re taking a more conservative approach.
I mean, we’ve come out and said by, you know, 2030, you know, roughly 30% of our sales will be just BEV.
But again, we’re going to continue to focus on hybrids.
You know, we’ve got, you know, if over the last couple years, you know, we’ve actually started to transition when we’ve launched new models to fully hybrid.
You know, we used to have a nice engine option in a hybrid.
I think Sienna was a great example of that, you know, when that new model launched, it just comes into hybrid.
And that’s really, you’ll continue to see that over the next several years when we’ve come out with some of our new products.
They’re going to start transitioning, even some of the higher volume vehicles are going to transition into just hybrid offerings, which from our standpoint, again, we feel is much better for the environment.
It’s just, I think, unfortunately, most people are just focused on, they just hear BEV, and that’s all anyone talks about.
You know, it’s like the only way to help the environment is to have more battery electrics.
But we just need to help educate people a little bit more on the fact that hybrids and plugins are very impactful in a positive way.
Yeah, I just thought it was so interesting to hear this is like, you know, I developed a relationship with Toyota because, look, I’m a BEV fan.
I will never drive anything but a battery-electric vehicle.
I love the performance of it. I’m addicted to it and all those different things.
But there’s so many discussions about, you know, the environment as it relates to electric vehicles, and it’s turned into a political thing.
And I think the way that Toyota speaks about it is very unique in the industry and is worth people listening to.
So I’m happy to hear you kind of explain that.
And just out of curiosity, if people wanted to learn more about Toyota’s decarbonization plans, where would you go?
There’s information on Toyota.com.
I mean, I’d be happy after this. I’d be happy to forward you the document that our government affairs document put together to help educate not only our team members that work for Toyota and Lexus, but all our dealers as well.
So, yeah, no, I’d be happy to forward some material that we have, you know, we’ve developed.
And, you know, it’s public information. But, you know, I think if you, again, if you look at it from an environmental standpoint, you know, you can go on Toyota.com and it’ll talk about a lot of the things that, you know, that we’re doing.
You know, there’s a lot of environmental programs. I mean, Toyota has this 2050 environmental global plan.
And obviously, BEVs are one part of it.
You know, in speaking about environmental efforts, one thing I’ll just touch upon real quickly is, you know, two years ago, you know, we know a lot of our dealers are reinvesting in their facilities and, you know, many when they originally built were focused on lead environmentally
dealership and facility. And, you know, there’s a lot of lead environmental facilities, non-automotive that are out there in cities and towns.
But, you know, we just created a program called DEEP, which is our dealership environmental excellence program that is starting to gain some traction.
You know, we’ve got about 65 dealers signed up. Our hope is to get to maybe 200 by the end of the year.
But that’s a program that we’ve partnered with, you know, a company called Altura that goes out there and, you know, sits down with a dealer and looks at all, you know, they’re from electric to water to, you know, all their utilities, talks about solar, talks about LED.
I mean, there’s so many things that a dealer can do to modernize their facility to make it more environmentally friendly.
And, you know, it’s a program that, you know, Honda had been doing for quite a few years. They also have used Altura.
But, you know, it’s something that we’ve started and, you know, it’s been really well received from our dealers.
You know, the savings that dealers have been able to recognize over just the first year or two years on the program have been really, really positive.
So, you know, that’s again, from an environmental standpoint, you know, Toyota is very environmentally friendly, very conscious.
So, you know, we’ve got our focus on our future product, but we also, you know, are looking to figure out how can we help our dealers with their facility and being more environmentally friendly.
Yeah, obviously so many dealerships out there. There’s a big opportunity there.
And as like Korean economics become more economic, I imagine that more dealers will jump on board.
Yeah. And, you know, the investment for the dealers, you know, there’s a fee associated.
I mean, obviously Altura works closely with the dealer.
And, you know, on average, the dealer investment from the dealer standpoint is about $3,000 a year.
But the dealers that have been on the program, the average savings has been anywhere between $15,000 to $20,000 per store.
So to spend $3,000 to save $15,000 to $20,000 or so, I mean, that’s a pretty good deal.
And we’ve had many other dealers that have even saved more.
So it’s definitely gaining traction.
Some of our larger dealer groups and some of the public companies have definitely seen it as a benefit.
And, yeah, we’re excited about it.
So my final question for you is electric, not electric.
What’s the most exciting thing about Toyota and Lexus in 2024?
Most exciting thing in 2024. That’s a great question.
What are you most looking forward to?
You know, I think the dealer, you know, the dealers have done really, really well over the last few years.
I mean, inventory, I mean, both Toyota and Lexus, you know, since, you know, pre-COVID.
So let’s just say last three years, you know, inventories have been in the single-digit day supply.
And, you know, I think a lot of customers may not have necessarily got the vehicle they wanted.
You know, they took what they could.
You know, we ended the year now, you know, Lexus is a 20-day supply.
Toyota is now at 13, 14-day supply.
We’re going to see inventory continue to grow, not grow, you know, to pre-COVID levels.
I mean, pre-COVID, you know, our dealer stock for 1237 dealers was around 300,000 units at any given time.
I mean, today we’re still less than 100.
You know, I think we see that getting back to maybe 15, maybe 20-day supply throughout the year.
But we also have a lot of, you know, exciting new product that’s coming.
And I think there’s nothing that gets dealers more excited and customers than the new product.
The all-new 2024 Tacoma is just arriving in dealerships now.
We have an all-new Camry that’s going to be coming out this year.
You know, on the Lexus side, you know, they launched the TX, which has been just a home run of a vehicle.
The new GX is coming out.
You know, again, over the next couple years, you know, our BEV lineup, you know,
it’s going to be 25 until, you know, we start looking at, you know, changes to our current product.
But no, I’d like to see, you know, inventory improve.
You know, I think that’s going to make it a better customer experience for people out there looking for vehicles.
I mean, I got to tell you, I’ve had so many family and friends over the last couple of years that are, you know,
wanting this vehicle or wanting that vehicle and they’re going reaching out to dealers and they can’t find it.
And it’s it’s frustrating for a lot of people, especially if they need to or have to change their vehicle.
There’s just such a there’s been such a limited inventory.
So, I mean, that’s it’ll create a better customer experience.
And, you know, dealers are going to continue to provide the customers with what they want.
So it should be a great year.
You know, dealer profits, you know, continue to go well.
You know, I think one other thing that you talked about or really here, you know, kind of wrap it up on this kind of partnership is, you know,
we we don’t we have a history of many, many years where, you know,
we don’t add we haven’t added a lot of stores to our dealer network, you know, both Toyota and Lexus.
I mean, we, you know, again, we’ve got twelve hundred thirty seven to two hundred and forty four Lexus.
And, you know, we that’s really the way it’s been for the last several years.
And, you know, we we have the mentality that we want to grow with the dealers that we have.
We want them to have the highest sales per outlet.
You know, we want them to be the most profitable because we know if they’re profitable, they can reinvest in their facility.
They can reinvest in their customers and their and their own people.
So, you know, that that’s, you know, that close partnership mentality that we have.
Again, we want our dealers to be really successful.
And, you know, the dealers appreciate that.
And again, I think it goes back to, you know, to trying to that winning combination is, you know, us working closely with them, you know,
us providing them the best product that customers want and, you know, them doing their job, which is given the customer a great experience.
Yeah. Well said. Well said. A good year ahead.
Well, Ken, thanks for taking the time to join the podcast and telling us a little bit more about Toyota and Lexus.
And I know I encourage people to go to Toyota’s website and read their sustainability program.
It’s just, you know, it’s unique. It’s interesting. And yeah, thanks again for the time and for everybody joining the podcast.

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