Working Toward the Mobility Society of the Future

Message from the President The Source of Our Value Creation: What Makes Us Toyota Value Creation Story: Working toward the Mobility Society of the Future Business Foundations Corporate Data for Value Creation > Making Ever-better Cars > Initiatives to Achieve Carbon Neutrality Software and Connected Initiatives > Commercial Sector Initiatives > Woven City Commercial Sector Initiatives Contributing to Carbon Neutrality through Electrification and Enhanced Logistics Efficiency Accelerating Commercial Vehicle CASE Initiatives Since the establishment of Commercial Japan Partnership Technologies (CJPT) in April 2021, Toyota has been working to disseminate CASE tech- nologies in the commercial sector and thereby con- tribute to the realization of carbon neutrality. CASE technologies can only contribute to society once they become widespread. Commercial vehicles can play important roles in CASE technology dissemi- nation, as they travel long distances for extended peri- ods of time to support the economy and society and can be easily linked with infrastructure development. By combining the commercial vehicle foundations of the companies participating in CJPT with Toyota's CASE technologies, the companies aim to accelerate the soci- etal implementation and adoption of CASE technologies and services and thereby help address social issues and contribute to the realization of carbon neutrality. Initiatives with Our Partners Distribution by truck accounts for about 90 percent of overland logistics in Japan, and the transportation sector (including buses and taxis) involves 2.7 million people. Commercial vehicles account for about 40 percent of the total distance traveled by automobiles and about half of all CO2 emissions from automobiles in Japan. Furthermore, the more than 60,000 logis- tics companies operating in Japan currently face numerous management issues, such as high-frequency distribution, harsh work environments, labor shortag- es, and rising burdens on workers. The power of CASE, centered on connected technologies and ser- vices, is a promising approach to effecting improve- ments that will help resolve these issues. Solving these kinds of social issues is not something that one company can accomplish alone. It is neces- sary to seek a wide range of like-minded partners, apply their different strengths, and work together for the sake of those supporting transportation and for society. Expanding into the Commercial Minivehicle Business Minivehicles account for about 31 million of the approximately 78 million vehicles owned in Japan. Furthermore, 85 percent of Japan's roads are so nar- row that only minivehicles can easily use them. In this sense, minivehicles are collectively a kind of "people's car," made to suit the roads of Japan. They are a practical and sustainable lifeline for people across the country and have continued to evolve alongside changing lifestyles. Commercial minivehicles, which account for 58 percent of all commercial vehicles in Japan, are able to effectively cover areas that their small size makes accessible, supporting logistics operations mainly in the last mile. Expanding the CJP project to include minivehicles will enable efficient, integrated logistics, linking the main arteries of logistics (handled by trucks) with the capillaries of logistics (the domain of commercial min- ivehicles) while leveraging connected technologies and abundant data. This new collaboration is also aimed at promoting the broader use of affordable advanced safety technologies and electrification by leveraging Suzuki and Daihatsu's strengths in high-quality, low-cost manufacturing and Toyota's CASE technologies. *CJPT expelled Hino Motors, Ltd. in August 2022 in light of certi- fication testing misconduct. Activities in Electrification and Improving Logistics Efficiency Our efforts to achieve carbon neutrality center on two pillars: electrification and improving logistics efficiency. Amid pressure to enhance cost competitiveness, maintaining a competitive edge in the area of com- mercial vehicle electrification is increasingly challeng- ing. Competitiveness increasingly hinges on connected technologies and uses of batteries and other technologies. Accordingly, manufacturers must step up the unique added value that they offer. Improving transport efficiency will contribute greatly to realizing carbon neutrality. The companies of the partnership will link their connected technology plat- forms to build a more comprehensive platform for commercial vehicles and leverage the Toyota Production System (TPS), one of Toyota's strengths, to realize just-in-time (JIT) logistics and increase transport efficiency, thereby helping to reduce CO2 emissions. Using connected technologies to link logistics from the major arteries to the fine capillaries, from producers to consumers, using truck logistics and local minivehicle-based distribution, JIT logistics have the potential to lower running costs for logistics vendors and sustainably improve logistics. Energy Management System in Fukushima and Tokyo In collaboration with its partners, CJPT will begin the construction and social implementation of an energy management system in Fukushima Prefecture and Tokyo in January 2023 to promote the widespread use of electrified vehicles. The introduction of commercial electric vehicles. imposes an increasing burden on society as a whole, not only in terms of vehicle purchase, but also in terms of downtime for cargo and vehicles due to recharging and hydrogen filling and an increase in peak electricity demand at business sites due to the concentration of recharging at certain times. A total of 580 commercial electrified vehicles will be used in this social implementation project, includ- ing heavy- and light-duty fuel cell electric trucks, light-duty battery electric vehicle (BEV) trucks, and mini-commercial van BEVS, to comprehensively cover transportation from trunk lines to the last mile. In addition, the use of an energy management system (EMS) that is integrated with commercial vehicle operation management will help reduce the overall Commercial Japan Partnership Technologies CIPT Technology and service planning Investment and human resource dispatch Joint planning agreement ISUZU TOYOTA SUZUKI DAIHATSU burden on society and CO2 emissions. At the project in Fukushima, we are working to cre- ate an implementation model focusing on hydrogen use in cities with populations of around 300,000 which is typical of Japan, with the aim of applying the model to similar-sized cities nationwide. Logistics Improvement Begun with AEON in Kyushu CJPT is working with AEON KYUSHU Co., Ltd. and AEON GLOBAL SCM Co., Ltd. on a logistics improvement project for the AEON Group in the Kyushu area that will solve problems faced by the logistics industry, such as soaring logistics costs and driver shortages. By combining the logistics expertise built up by AEON KYUSHU and AEON GLOBAL SCM with the connected technologies of the companies participat- ing in CJPT, the project aims to Establish new operations to improve efficiency by linking each process in the supply chain 2 Improve efficiency by minimizing logistics down- time through the use of big data and real-time processing on connected technology infrastructure 3 Promote collaboration with a wide range of part- ners to achieve these initiatives Going forward, through the CJP project, the partici- pating companies will deepen their collaboration while openly considering cooperation with other like-minded partners, working to help fulfill the auto- motive industry's mission of helping improve people's lives and leave a better Japan and a better planet for the next generation. Primary and trunk line transport (main arteries) Secondary and intermediate transport (arteries) Last-mile transport (capillaries) Electrification of logistics vehicles (FCEVS, BEVS, HEVS, carbon-neutral fuels, etc.) + Solving the various problems that arise from the use of electrified vehicles (Energy management integrated with commercial vehicle operation management, etc.) Improving logistics efficiency by combining the Toyota Production System with connected technologies TOYOTA MOTOR CORPORATION 29 INTEGRATED REPORT