Energy crisis forces strategic transformation: Toyota Motor Corporation (TM.US) plans to introduce hydrogen energy into parts logistics and factory supply chains

The Zhitong Finance App learned that Toyota Motor Company (TM.US) is considering using hydrogen energy to power trucks transporting auto parts because the war in Iran boosted gasoline prices and caused supply constraints, and alternative fuels are popular as a result.

Toyota Vice Chairman Koji Sato said in an interview that Toyota may eventually use hydrogen as energy in its plants. Promoting the use of hydrogen fuel in the supplier's logistics network is also an option, he added.

Hydrogen has been highly anticipated as a key energy source for the world to achieve carbon neutrality goals. However, hydrogen's widespread adoption has been difficult due to the high cost and inefficiency of production, storage, and transportation. Meanwhile, passenger cars powered by hydrogen fuel cells are almost unsellable in Japan, forcing officials and executives to shift to a more realistic approach and focus on the commercial vehicle sector.

According to the Hydrogen Energy Commission and McKinsey, as of July 2025, the global committed investment in clean hydrogen energy has exceeded 110 billion US dollars, an increase of 35 billion US dollars over a year ago.

Sato's plan is part of Toyota's commitment as a member of the Japan Hydrogen Energy Association (JH2A) to make hydrogen account for 1% of all logistics, fuel, and raw material deliveries. As of last month, 67 businesses and organizations, including banks, trading companies, insurance companies and local governments, have participated in the initiative, reflecting the growing momentum for the wider application of hydrogen energy.

For a long time, Toyota has juxtaposed hydrogen energy with internal combustion engines, oil-electric hybrids, and pure electric vehicles as a key option as part of its “multi-path strategy” rather than a complete shift to battery-powered vehicles.

So far, however, there has been no breakthrough in these efforts.

Japan was the first country to develop a national hydrogen energy strategy and has set ambitious goals, including putting 200,000 fuel cell vehicles on the road by 2025 and 800,000 by 2030.

However, according to data from the Ministry of Economy, Trade and Industry, as of March 2025, fewer than 8,300 hydrogen fuel cell vehicles were driving on Japanese roads.

Since the Middle East conflict broke out in February this year, energy security has been a key issue in Japan. This conflict has had a supply shock to the automotive industry. Sato said that in the past, hydrogen energy was mainly promoted in the context of reducing emissions, but now it is receiving attention from the perspective of energy security.

A clear shift is taking place, he said, from “getting energy to making our own energy”. He added that under this trend, various parties are advancing relevant initiatives to firmly incorporate hydrogen energy into the national framework to enhance resilience.

Collaborate together

Sato is also the president of the Japan Automobile Manufacturers Association. He said that in the face of drastic changes in the global industry brought about by changes in Chinese brands, consumer demand, and protectionist policies, Japanese automakers must change their methods to maintain competitiveness. Koji Sato served as CEO of Toyota from 2023 to early this year before being replaced by Kenta Miyazaki.

Koji Sato said, “We can no longer fight alone,” and “we need to consciously find ways to cooperate.”

Since becoming the president of the industry association, Sato has led the Japan Automobile Manufacturers Association's efforts to expand parts standardization among automobile manufacturers to simplify production and reduce costs.

Japanese automakers source around 70% of their parts from other manufacturers, and their unique quality control and safety standards often burden suppliers, leading to wasted time and increased costs.

“This makes it difficult to break away from the labor-intensive industrial model,” Sato said.

Sato said that by reducing the variety of parts, suppliers can increase productivity through automation, and “the entire industry can enjoy the fruits of our labor.”

Regional focus

Sato said industry leaders have reached a consensus that using old methods to manufacture and sell cars may no longer work; the key is to develop products tailored to the needs of each specific region.

Automotive analyst Tatsuo Yoshida said, “Instead of going it alone, now more than ever, we need to rethink the areas of competition and cooperation.”

Japanese automakers have been rapidly losing ground in China, the world's largest automobile market, as it is difficult for them to compete with a wave of technologically advanced and affordable electric vehicles. Although the enduring popularity of oil-electric hybrids has provided Toyota with a respite, other car companies have been forced to scale down or join forces.

Honda Motor Company and Nissan Motor Company agreed earlier this week to jointly develop key software for the next generation of vehicles. According to a spokesperson, Mitsubishi Motors, which has already established strategic partnerships with these two car companies, also hopes to join this software cooperation agreement in the end.