Toyota hopes EU regulators will be 'pragmatic' over Euro 7 pollution rules

PARIS -- Like most automakers in Europe, Toyota does not agree with the European Union's proposed Euro 7 standard to reduce harmful tailpipe emissions such as nitrogen oxides.

"I do not think it benefits anybody," Toyota Europe Chief Operating Officer Matt Harrison told the 2023 Automotive News Europe Congress here on Wednesday.

"It's one of the issues where there is agreement within ACEA," he added, referring to the automakers' European lobby group.

Harrison and executives at rival companies say it does not make sense to force additional costs and investments on automakers between 2025 and 2027 to meet Euro 7 when companies are making heavy investments to meet the bloc's plan to allow only zero emission new cars to be sold after 2035, effectively banning internal combustion engine cars and making Euro 7 redundant.

Harrison said he hopes that "some pragmatism will prevail" in the European Commission. He does not expect the new standard to be blocked altogether, but rather to be diluted into "something more realistic."

Harrison said reducing CO2 emissions as part of the EU's efforts to cut greenhouse gases "will not be a headache for Toyota."

The current EU legislation calls for carmakers to cut the average CO2 emissions of their fleets by 55 percent in 2030 from the 2021 levels.

Toyota mostly relies on hybrid cars to decarbonize its fleet and it has been criticized for being slow to launch full-electric vehicles.

Harrison estimates the share of battery-electric vehicles (BEVs) in Toyota sales in Europe will grow to 15 percent in 2025 and 55 percent in 2030 from zero in 2022.

“We will be ready to sell 100 percent BEVs from 2035, he said.

Asked about when Toyota will consider localizing production of BEVs in Europe, Harrison said "there is no point in localizing until we have reach the right scale, and at 15 percent in 2025 we would not be there."

The moment will probably come "early in the second half of this decade," he said.

As its BEV sales in Europe increase, Toyota may have to consider building batteries in the region.

Harrison said it is not Toyota's intention to produce batteries in Europe in the short term, but it's a possibility in the longer term.

In a first phase of its electric push Toyota will most likely rely on local battery producers, most likely in Central Europe for logistics reasons. "You do not want to be moving batteries too far," Harrison said.