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 Toyota Times Answers to Five Questions about Toyota's BEV Strategy (Report on Media Q&A Session) "Do you like battery EVs?" Akio Toyoda's Response At a Q&A session with the media after his presenta- tion, President Akio Toyoda talked about his ideas. Is This a Strictly BEV Shift or Part of a Multi-solution Approach? -Going forward, are you going to focus more on BEVS than other electrified vehicles? Or has your strategy of BEVS being just one part of a full lineup of electrified vehicles not changed? Akio We have made the utmost efforts toward achieving carbon neutrality, and we will contin- ue to do so going forward. Toyota is a global company with a full lineup of products. We have seen changes in the energy situation in each country, and the way customers use vehicles is diversifying. It is the customers, not we at Toyota, who choose which options to use. So, no solution will come from our decision alone. What we will do is have a wider range of available options, and make serious efforts across our full lineup of options. We want to be prepared to meet customer and market expectations and preferences more quickly, and more flexibly. In this way, I believe that we will be able to enhance our competitiveness, and that is how we will be able to survive. Just because I drive a hydrogen-powered vehicle, it does not mean that I am prioritizing it over others. All of our employees, suppliers, affiliated companies, and the 5.5 million people work- ing in the automobile industry, have made serious efforts in Japan toward achieving carbon neutrality. Toyota does business worldwide, and our full lineup of products is key to our global operations. I hope you see that we are putting our all into this approach. Why Not Pursue 100% BEVs across the Whole Lineup? -As the largest carmaker in the world, why are you targeting only 35 percent of your current volume? Why not go for 100 or 50 percent BEVs, as many of your competitors have now done? Why is 3.5 million sufficient in your mind? Akio With a baseline toward 2035, we want to increase our carbon-neutral vehicle offerings as much as possible. However, the energy situations in individual countries are having a big impact on the path to carbon neutrality. That is the reality. I hope you understand that this is something Toyota cannot control. If no sufficient clean energy and charging infrastructure exists in a market, expanding our BEVS and limiting options will result in inconve- niencing customers. We want to avoid that. When we look at the global market, it is a diversified market that we are dealing with, and that is what Toyota does. Diverse solutions are necessary in diverse situations. Also, the best solution for the average person will not neces- sarily be the best solution for everyone. Therefore, as we are in uncharted territory with lots of uncertainty about the future, we want to take a diversified approach. That is why we have worked hard to maintain our full lineup. We will take on this challenge together with our suppliers, affiliated companies, and partners. That is what I would like you to understand. Toyota vehicles are used all over the world to fill various needs, not just for one particular market or one specific need. Thoughts on Preserving Jobs -Your suppliers are closely watching this announcement, since some of them could face major impacts. What are your thoughts on employment within the industry? Akio First of all, it is the market and customers who decide which carbon-neutral options to choose. This is the premise here. The numbers related to carbon neutrality that we have heard so far are goals for 2040 or 2050. We don't want to be a company that sets an appealing target but doesn't bother trying to achieve it once the announcement is done. What we are announcing today is a bit more in the near term. Many of the cars that you are looking at right now will be launched on the market very soon. Looking at the run up to 2030, what we presented today will be a good tool to start discussions and take action with various stakeholders while leaving room to imagine more what the next eight years will be like. By presenting a guideline in the product planning area, we will be able to examine the potential impact on our suppliers or our pro- duction plants. The automotive industry accounts for 75% of the components procured from suppliers and there are tier one, tier two and tier three suppli- ers supporting the industry. Even if we empha- size the importance of keeping many options available, any shift toward carbon neutrality can be a critical issue for suppliers who have until now produced only engine-related parts. We can't just tell these suppliers that we have no use for them anymore because that's what the market chose. I would like to evolve the automotive industry such that the people and companies who have been pursuing existing businesses for decades will not feel that their efforts were in vain, and we will continue to show respect for their mean- ingful work. The future is not determined by the goals presented by leaders, but by purposeful passion and action. Looking toward the goal for carbon neutrality in 2050, what the future looks like in 2050 will change depending on how we act in the next few years, five years, and ten years, and we want to make the change happen. The future will not suddenly emerge from the present; rather, the future will be created by the accumulation of present moments as they become the past. We hope that you will allow us to leave many options open in this process. It is not true that we are not fully committed because our goal is not 100% BEVs. We hope you will understand that we would very much like to continue our work in this industry. Evaluation by Environmental Groups and the Future of Engines and BEVS -An environmental group put Toyota at the bottom of the climate action rankings. Let me ask you again. What is Toyota's position on BEVs? Also, what is the future plan for engine development? Akio It is their ranking, and we take it seriously, but if we are still not considered proactive toward BEVS with our 3.5 million BEV target and 30 TOYOTA MOTOR CORPORATION 18 INTEGRATED REPORT

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