Every quarter at BCG, the Houston office “Green Team” sends out a newsletter with a media spotlight section, which I occasionally write. This is a copy of that section.
This week, Toyota revealed its newest iteration of the Toyota Camry. It's a product that nearly everyone has interacted with at some point - a family car growing up, the car that seemingly every Uber driver uses. The Camry is not known for getting your heart to race. Its design is not going to wow anyone who sees a dozen every commute. It is the vanilla ice cream of sedans - reliable, dependable, a solid choice that isn't as polarized as, say, mint chocolate chip. It is also the best-selling passenger car (i.e., sedan) in the US, and has been for 22 straight years. Toyota has sold over 3.6 million from 2013-2022 in the US, many of which will remain on the road for today's kindergarteners to graduate college.
The new Camry will be hybrid only - from the most barebones version to the top-of-the-line trim, the only option for moving the wheels forward is a hybrid system. Today's Camry Hybrid gets 46-52 MPG versus the non-hybrid's 25-32, a 60-80% increase. Multiply that sort of gain by hundreds of thousands of units sold a year, and you're left with a highly sizeable reduction in fuel consumption and emissions. That's a win, right? Not quite.
There's an old adage that goes "what got you here, won't get you there". If you're aiming for a zero-emissions future, you need to stop adding durable, polluting assets far before then. I had this exact same conversation with a client this week, though this time it was about gas-driven vs. electric-driven compressors in the Permian. The client wants their operations to be ~90% electrified in the Permian by 2050, which would imply that gas compressors (which have a 25 year life) can't be deployed after 2025 unless you're willing to fork over the cash for retrofits. Along those lines, this is the importance of not chasing early wins that ultimately lock you into a path of emissions reduction. The harder, but ultimately optimal path is to zoom out, figure out how to get to 0 emissions, and pursue that path. That applies to cars, oil and gas, and any other industry has happens to have a carbon footprint.