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 Business Foundations Corporate Data for Value Creation Society of the Future > Making Ever-better Cars > Initiatives to Achieve Carbon Neutrality Software and Connected Initiatives > Commercial Sector Initiatives > Woven City Software and Connected Initiatives How Toyota Is Taking on Car-making Going Forward Amid this once-in-a-century era defined by major CASE* transformation, automobile manufacturing requires technological development in such new fields as electrification, automated driving, and connectivity. Among these fields, software is becoming an important factor in determining product appeal. Today's cars are equipped with more than 50 electronic control units, or ECUs, and use as many as 1,000 chips. Furthermore, society has entered the age of the internet of things, and things being connected has become the norm. Cars are also equipped with communication devices, further advancing their electronification, and the volume of software (lines of code) is thus growing ever larger. Facing this major transformation in the auto industry, Toyota is paying particular attention to the transition of cell phones. As the shoulder phone evolved into the feature phone and then into the smartphone, the commoditized product of the phone became linked with information, creating new value through new experiences and quickly spreading around the world. This transition is supported by software and connected technologies. Due to the CASE revolution, cars are becoming more deeply connected to communities and people's lives through information, becoming a more integral part of social systems. At the same time, cars will become more linked to information, and through the movement of people, goods, and things, Toyota aims to provide new value through new experiences and by bringing excitement to customers. * CASE: Connected, Autonomous, Shared, Electric. The technological revolution in these new fields is expected to speed up and continue changing cars, and, by extension, mobility and the structure of society. As a mobility company that can provide a wide array of services related to mobility and meet diverse needs, Toyota is working to realize the mobility society of the future. Autonomous Focusing on the Real World and Internalization When it comes to the manufacturing of cars, Toyota has a basic stance that has been handed down internally over the years: we stick to our principles and internalize important elements by attempting to first achieve them on our own. We also continuously introduce improvements on the front lines to enhance our competitive advantage. Since its founding, Toyota has been producing various production equipment in-house as neces- sary. In the 1990s, we pursued the in-house design of ECUs and established an electronics plant, a chip plant, and a battery plant. These efforts eventually led to the commercialization of the Prius, the world's first mass-produced hybrid electric vehicle (HEV). Toyota has always maintained a strong aware- ness of the real world regardless of the era at hand, pursued our principles, and promoted internalization. That is why in the area of software and connected technologies, we established the Toyota Research Institute (TRI), Woven Planet weven planet TOYOTA arene TOYOTA RESEARCH INSTITUTE Connected Shared Electric T TOYOTA corected Holdings, and Toyota Connected, and it is why we are working on the development of the e-Palette, the construction of Woven City as a town for pilot testing, and the development of the Arene platform and other technologies. Progress on Connected Cars and Connected Technologies To date, Toyota has sold 10 million Lexus and Toyota vehicles that are connected cars, mainly in Japan, the United States, Europe, and China. Toyota's vision of the connected car is not simply one of connecting the car to the internet. Rather, it is about providing customers with emotional experiences through the movement of people, goods, and activities-a vision centered on people that we call "human connected." To achieve this, we are operating a call center as a point of contact with customers; the Toyota Smart Center, which provides a variety of services; and the Toyota Big Data Center, which utilizes vehicle information gathered from cars. In addition, we have established the Mobility Service Toyota Times Toyota's Key to Software Survival: In-House Capability and Real Customer Contact Platform (MSPF) to provide mobility services and are promoting collaboration with service providers. Connected cars and connected technologies will be applied to a variety of areas, and that which is to be connected will expand to include people, cars, communities, and society (business-to-society, or BtOS). Toyota will handle the information gathered from customers and vehicles with care, utilizing it for the happiness of customers and the develop- ment of society while creating new value from experiences centered on mobility. With the e-Palette battery electric vehicle (BEV) used in the Olympic Village for the Olympic and Paralympic Games Tokyo 2020, our goal was to create mobility that integrates cars and information and that coordinates with the community. During the Games, 49,000 athletes, staff, and volunteers used e-Palette. We also developed a fleet management system for e-Palettes based on the principles of the Toyota Production System (TPS) to ensure effective, efficient, and accurate opera- tion. The system monitors the vehicles remotely and operates them in a just-in-time fashion according to the conditions of the surrounding environment and the number of passengers. All of Service Providers Insurance Rideshare companies Car- sharing Rentals Taxis Logistics Retail Food & Govt. offices, lodging Olympics & Paralympics Mobility Services Platform (MSPF) API (Vehicle management, fleet management, authentication functions, payment functions, etc.) Telematics insurance Flexible leasing Smart Key Box/ TransLog Vehicle information Toyota Smart Center (TSC) Telematics services (map updates, agents...) OTA updates of onboard software Individual/device authentification ↑ Operational information Use of big data (CRM quality control) Big data (TBDC) Global Communications Platform ↑ ↑ Operator- assisted services TOYOTA MOTOR CORPORATION 26 INTEGRATED REPORT

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