Toyota Motor Corporation

Thank you, everyone, for joining us despite your busy schedules. We would now like to begin Toyota Motor Corporation's FY2022 Second Quarter Financial Results Press Briefing. Starting by introducing our presenters today, Chief Financial Officer Kenta Kon.

Chief Communication Officer Jun Nagata.

We'll now like to begin by having our CFO, Mr. Kohn, explain about the financial results. Hello, everyone.

Thank you for joining us today. I'm Kenta Kohn.

We would like to express our heartfelt appreciation to all of our stakeholders, including customers around the world who chose us, as well as our shareholders, dealers, and suppliers who support us. We sincerely apologize for the inconvenience caused to our customers due to the recent production volume reduction.

We are working to recover production as soon as possible.

Thank you for your understanding. I would like to provide a summary of the second quarter of this fiscal year. The semiconductor shortage and spread of COVID-19 in some developing countries caused us to reduce our production volume globally, but our suppliers plants and dealers made great efforts to supply as many cars to our customers as possible. Our results for the first half of the fiscal year reflect our enhanced cost reduction activities and efforts to make more efficient use of fixed costs, while enhancing the product appeal by making ever better cars and investing for growth. We have also benefited from the tightening supply and high demand in the new car market as this has led to higher used car prices and allowed us to decrease the quantum of incentives. We believe these factors have made our results, in certain respects, to be robust beyond our underlying strength. Even though we have revised our operating income forecast upwards, excluding the impact of the depreciation of the yen, it would be in substance a downward revision due to increases in raw material costs. We will keep improving our operation to standardize what we have learned from COVID-19. In terms of our return to shareholders, the interim ordinary dividend is 120 yen per share, an increase of 15 yen compared to the previous fiscal year. We have also decided to conduct a repurchase of up to 100 billion yen of our common stock. Let me discuss our financial results for the first half ended September 2021. Consolidated vehicle sales for the period was at 4,094,000 units, which was 132.7% of consolidated vehicle sales for the first half of the previous fiscal year. Toyota and Lexus brand vehicle sales was at 4,852,000 units, which was 121.0% of such sales for the first half of the previous fiscal year. The ratio of electrified vehicles was 27.7%. Consolidated financial results for the first half of this fiscal year were sales revenues of 15 trillion 481.2 billion yen, operating income of 300 trillion 747.4 billion yen, income before income taxes of 2 trillion 144.0 billion yen, and net income of 1 trillion 524.4 billion yen. I would like to explain the factors which impacted operating income year on year. First, the theft of foreign exchange rates increased operating income by 255 billion yen. Second, cost reduction efforts decreased operating income by 30 billion yen due to the impact of soaring material prices. Third, marketing efforts increased operating income by 1 trillion 55 billion yen. largely due to the increase in sales volume and increased earnings in the financial services business. Finally, a reduction in expenses increased operating income by 10 billion yen. As a result, excluding the overall impact of foreign exchange rates, swap valuation gains and losses and other factors, operating income increased by 1 trillion 35 billion yen year-on-year. Next, I will explain operating income for each region. As shown, operating income increased year-on-year in all regions, largely due to the increase in sales volume. As for our China business, the operating income of consolidated subsidiaries and our share of profit of investments accounted for using the equity method increased due to the impact of foreign exchange rates. Regarding financial services, operating income excluding swap valuation gains and losses for the fiscal year increased year-on-year mainly due to the increase in the lending balance and margins. Next, I would like to explain our return to shareholders. Based on the business results for the first half of this fiscal year, we decided to pay an interim dividend of 120 yen per share, an increase of 15 yen compared to the previous fiscal year. We intend to continue to maintain and improve the consolidated dividend payout ratio over the mid to long term, as well as pay dividends stably and sustainably to reward our shareholders who hold our shares over the mid to long term. In addition, we will repurchase up to 150 billion yen of our own shares for the current interim period, taking into consideration factors such as investment in growth areas and dividend levels. Next, I will explain the forecast for the fiscal year ending March 31, 2022. Consolidated vehicle sales is expected to be 8.55 million units, which was 98.3% of the previous forecast.

Regional sales breakdown is as stated in the presentation.

As for Toyota and Lexus round vehicle sales, we anticipate that vehicle sales will be 9.4 million units, which is 97.9% of the previous forecast.

Next, let me explain the forecast for the four-year consolidated financial performance. We have adapted forex rate assumptions for October onwards of 110 yen per dollar and 125 yen per euro, which makes the four-year assumptions of 110 yen per dollar and 128 yen per euro. Based on this, our forecasts for four-year considered financial performance are sales revenues of 32,000,000 yen, operating income of 2,000,000,000 yen, 800,000,000,000 yen, income before income taxes of 3,000,000,000,000 yen, 440,000,000 yen, and net income of 2,000,000,000,000 yen, 490,000,000,000 yen. Next, I would like to explain the factors that impact operating income on your contented previous forecast. The operating income forecast has been revised upward by 300,000,000,000 yen from the previous forecast, taking into account the increase in operating income due to the revision of FX assumptions, reflecting the weekly yen and the decrease in operating income due to the increase in raw material costs. The factors that will impact operating incomes compared to the same period of previous fiscal year are as shown in the presentation. Although we continue to face unpredictable conditions with regards to the stabilization of supply, as well as issues such as the sharp rise in raw material costs, we will continue to work towards the future and establish the lessons learned from the COVID-19 crisis. Thank you for your attention.

We will now like to begin the Q&A session.

If you have any questions, please press the raise hand button on your screen. When your name is called, then unmute your microphone and camera and begin with your question. Please allow us to limit you to two questions per person. Thank you for your cooperation. Mr. Katori from Yomiuri Newspaper Space.

We will now be switching the screen, and when you see yourself on the screen, please start with your question.

And the screen of the questioner will only be shown to the presenters at TMC. Thank you for your understanding.

We are now switching the screen. Yes, Mr. Katori, please.

And Mr. Katori, can you begin with your question? This is Katori speaking from Yomiuri newspapers. I have two questions. First, for this ended first half performance, I'd like to hear your assessment and summary, especially the operating income. Maybe there have been some changes, but I do think that it's a record high. from the past history. So for the factors that contributed to that and also for the large vehicle size performing very well, the sales very well for new car sales, I'd like to hear about the factors that contributed and especially i'd like to ask about the production recovery plan i think you've made a report about what your plans up to november but up to december are you i think we hear that you will be operating on the weekends as well including saturdays but still there is some impact from a covet so what kind of recovery plan do you have that's my second question thank you mr katori for your question so your first question was about the assessment of the ended first half of this term about what were the contributing factors. And your second question was about the production recovery plan after December. That is how I understood two questions. Am I correct?

Yes.

So both of those questions will be responded from our CFO, Mr. Kwon. Thank you very much for your question. Regarding the first half, second quarter results, the assessment, if we can look at the third page, of the presentation material.

Thank you.

This is the summary.

And I'd like to make some additional comments in addition to this page.

So as you can see on the very top, globally, production volume has declined globally. That is how we see the first half of this year. But in this situation, our dealers, our suppliers, our plants, the plants worldwide, as so the Genba or the operation site. They have made great efforts to supply as much cars as possible to the customers without stopping the vehicle plants. If the vehicle plant stops, there will be a huge impact to our suppliers and stakeholders. Therefore, the people working at the operation site has wanted to avoid that situation and made strong efforts, and that has contributed largely to our results. But on the other hand, we are in fact having customers wait for the car delivery. So there are many challenges still that we have to work on. And also for the sales results, even though there was limitations in production, the sales size did not drop so significantly compared year on year. Actually, there was an increase. And this is because the dealers, they have worked and made efforts to drop the level of inventory, also made efficient sales activities, also being able to work flexibly with the existing inventories. So they have been working hard to capture the sales opportunities, have good communication with the customers to deliver the cars as much as possible. This was also a huge contributor to the results. And on the other hand, there were some areas that went beyond our underlying strengths. And it might be just partially, but the new car sales is tight in supply and therefore used car prices are now at a high level. And as a result, the financial businesses, the residual value balance has turned positively. And this is mainly contributed by the high used car price market. And regarding incentives, under the current situation, for all of the OEMs, it's the same situation, but we have been able to keep the incentives low. So these kinds of environmental aspects have contributed. This will be beyond our underlying strength. However, for the market fluctuation, the higher commodity prices is also a large impacting factor. We are not in a situation where we can hand on these price increases to our customers. Therefore, cost reduction, fixed cost reduction, also making efforts to enhance the vehicle value These were the efforts made to recover the negative impact from the market fluctuation. For the cost reduction and fixed cost reduction, there have been huge efforts made company-wide and this effort is continuing.

Going through COVID, we...

don't have a feel at the point at this time that we are returning back to the before COVID times. So that will be a positive feeling that I have. I'm sorry to be lengthy giving you a lengthy answer, but one of the reasons why we did not see a big drop in the sales activity is because the product appeal being enhanced. As a foundation of our business, I think that is a large contributor, having a stronger product appeal. P&G started from the President Toyoda's statement, and those initiatives were taken, product appeal, strength, and also to set the products in a group or series and a family, and to achieve ever better cars. And this kind of activity has contributed in this result, I believe. And for your second question about the production recovery, after December, we do still see much risk there. However, for the production volume, the 9 million that we have announced today, for December and January, February, March, if we operate in a full operation, we still see some risk in order to be able to operate fully. Therefore, it is slightly conservative, this 9 million in volume. But based on our running production situation, including the Saturday operations, since we have customers waiting at the factory, we will do whatever we can to continue the production. So this will be my answer. I hope I have answered your question.

Yes, thank you very much. Thank you, Mr. Katori, for your question. We would like to move to the next question. Mr. Kondo from Asahi Newspaper, please.

We are going to switch over the screen, so please start your question when you see yourself on the screen.

Mr. Kondo, please.

My name is Kondo from Asahi Newspaper.

Can you hear my voice? Can you hear my voice? Okay.

Yes, we can. So, based upon your financial results, I have a question.

Starting with the sales and operating income and net income, I think it is recording historical high and you made...

a revision upward revision for the four years.

Yes, the NGV depreciation was one factor but I see wonderful numbers and so the society as a whole is suffering from COVID-19 and also the auto industry especially the small suppliers have to deal with carbon neutrality and also face the challenge of case and other new technologies. In other words, there are still struggling to turn around their profits. And I understand your number is based upon those suppliers' numbers.

How do you accept this?

And what do you think about returning those profits and also and also your relationship with suppliers especially with Nippon Steel the champion negotiation so called is the negotiation on the steel price every half a year and at Nippon Steel R&D investments and development costs are being the reasons for the negotiations so what is your measure and how are you going to deal with this and what's your thoughts on this and especially this litigation on this patent and you are expected to make a scientific proof on this and how are you going what is your position on this litigation Mr. Kondo thank you so much for your question the first question was

about good performance on this interim financial results. Well, number one, and your question was that our numbers were based upon supplier's numbers and what is our take on this.

Well, Mr. Komi is going to answer on this. And with regards to relations with Nippon Steel, and the first question was on the price negotiation, Nippon Steel is asking for a further price hike, and what is our opinion on this?

And the second is about this electromagnetic steel, what we think about this.

And Nagata, myself, will answer this question later. Yes, regarding the first question, I would like to answer.

First of all, because of the relations with suppliers, we would like to coexist with our suppliers so that we can reduce cost and enhance the competitiveness together. We would like to enhance competitiveness of suppliers and We would like to meet the achievements fairly together and this would also include our customers.

We have not changed this philosophy all along.

For example, Yes, we do receive comments like the one we just received from time to time.

And as I've been involved in the conversation and dialogue with suppliers, for example, we made announcements of reducing our production volume a couple of times and orders from Toyota has a very high certainty and on top of that when there is a production volume decrease we try to let them know as soon as possible also in detail and especially when there is a decline in the production volume in part delivered from suppliers would also decrease so there is some impact but we

also get opinions from suppliers that they don't have much loss from this because we try to reduce the cost by optimizing the quality and also we try to deal with concerns of suppliers and there are several thousands of proposals from suppliers. When I went to visit one of the suppliers the other day, what I heard from them, including many stories they showed with us, for example, recently they told us that when Toyota makes some casual comments, for example, this component needs to be visible, If we make such a whisper or if we mumble that, then the supplier would use ink that would never disappear to clarify the location of that part. And that could be expensive.

So when our engineer goes to that site,

to see that ink.

The engineer would say, no, no, you don't have to use this expensive ink, but you can use a marker instead. In such a way, we are trying to enhance the competitiveness together, and as a result, the suppliers would have less concern.

Of course, we are still in the middle, so it's never complete, but We think we are trying hard to carry out these kinds of activities together, but the fact that we are still receiving such comments from outside like this one, maybe we need to try harder.

So if you could deliver such feedback, then we will stop and rethink and try to improve ourselves further.

Please continue to give this guidance. This was my answer to the first question.

Mr. Kondo, regarding the second question with regard to the relations with Nippon Steel, starting with the price negotiations, as you know, and this year, price hike was in the conversation. This is not limited to Nippon Steel, but in the steel industry as a whole, there will be significant investments in carbon neutral aspects. And we are also struggling with the hike of material costs. And we honestly understand their circumstance at Nippon Steel.

And on the other hand, as you may also be aware, we are in the BTC business.

In other words, we deliver the complete product, which is car to customers. In other words,

Even when there are price hikes, it is difficult for us to transfer those hikes directly into the consumers.

That's the nature of our industry. So, as was explained, we have to sincerely, steadily reduce costs one by one. In other words, with regards to price negotiations, both sides need to explain each other's circumstance and understand each other and then

continue to and continue to sincerely negotiate how we can set the price and regarding the electromagnetic steel it is yes a litigation right now but there are 5.5 million people in this industry and then we pursue to achieve carbon neutrality in the auto industry therefore we have to try making this effort steadily and sincerely and regarding the litigation I have to say that because this is a pending case I have to refrain from making any further comments that is all from myself

Thank you very much, Mr. Kondo. I would like to move on to the next question. NHK, Taruno-san, please. I will be switching the screen.

When you see your face on the screen, please ask the question.

Thank you for waiting. Mr. Tarno, please. Please unmute your microphone. Excuse me, can you hear me now?

Yes, I can hear you. First of all, regarding the sales volume, you have reviewed the forecast, and can you explain about the factor? why we have done the review and hearing the results it seems that it is improving but your explanation was that in substance it is a downward revision so you are looking at this at a very that it is a tough result a forecast so can you explain also why you're looking at it from as a tough I think you have one question. So the reason and also how the way of concept of this reviewing of the production volume and also for the in substance downward revision, why are we having this kind of a tough understanding of the forecast? The reason is what you've asked. Yes. So Mr. Hong will respond. Thank you for your question.

regarding the review of our sales volume.

So on this slide on the screen, you can see the initial forecast term. It was 8.7 million for the consolidated sales which has been dropped 150,000 this time with the most latest forecast. And we had some opportunities to explain this up to this day, but there are some situations where we had to drop our production plan volume from our initial plan due to certain reasons. And I might be repeating myself, but first of all, there is a, in Southeast Asia, mainly COVID-19, has had impacts and therefore the local production plants had to be shut down and the parts supply had limitations and also there were some impacts from semiconductor issues Malaysia, Vietnam there were parts supply shortages that there were some months that had dropped in production because of these impacts. So the reason of this review will be impact from those factors. And also about the downward revision that we are interpreting the forecast in a very tough perspective. To explain that, for the first half result, for example, compared with last year and two years ago, we do understand that it is a large increase in operating income and again repeating myself this is really because of the strong efforts by the dealers the suppliers and also the people working in Toyota there were strong efforts made so that they can deliver the customers the vehicles as much as possible as early as possible and all of these efforts have been combined to come up with these results however in these results there are some areas there are some reasons or factors that was a contribution from something outside of our own strength so we are looking at that neutrally and for the full year forecast it is actually in numbers a upward revision but we focus on the areas outside of the forex effect and we focus on those non-forex impacts to make improvements in the profit as much as possible. So that is how we explain to outside as well. And when we focus on these non-forex impacts, we do see multiple challenges that we have to face. So as much as possible, we're going to make efforts to recover and overcome these challenges to improve as much as possible. So that effort will continue. That will be my explanation for your question.

Did I answer your question?

Thank you very much. Yes, I understood.

Thank you. So from Wall Street Journal, Mr. Sean.

I'm going to switch over the screen, so please start your question when you see yourself on the screen.

Hi, can you hear me? Yes, we can hear you.

Great. So I was hoping to get a little more insight into your outlook for the remainder of the year and on next year in terms of when you think sales volumes will fully rebound, basically when the industry will get back to normal with your outlook on that and what are the biggest challenges to achieving that. And then secondly, I wonder if you could talk about shortages beyond semiconductors. So we've seen some news recently about shortages with magnesium and and other parts. Basically, what are you seeing on the horizon? What are the things that you're looking out for that could possibly affect your recovery?

Thank you.

Thank you very much for your question, Chong.

First of all, your question was about the timing of our recovery in the remaining year and also the overall industry's recovery and what are the challenges to achieve that.

This is the first question.

And the second question is that now semiconductors are in shortage and it is being focused.

But other than semiconductors, is there any concern and any shortage? Then you would like us to make a comment on this.

Mr. Kohn is going to answer both questions. Thank you so much for your question.

Starting with the first one, In the remaining period of fiscal year, the planning for us to completely recover is difficult to make anything certain. Of course, risk is becoming significantly smaller. However, we're not in a stage to say that the risk is zero.

I don't think the situation allows us to say that yet.

And for semiconductors,

Well, there are many factors, many things.

Games and the other components, the NAND has the The demand has sort of stopped. So the supply and demand balance has stabilized. But on the other hand, I think the funding conducts are different from the type to type. So we have to be very cautious in looking at it.

So in December, in January... cannot say that it will recover to the past. I cannot say that there is no risk in reducing the production. However, in comparison to the past level, even though there are some risks of production decrease, it is going to recover quite a bit, and that is the situation.

And as for the overall industry, I cannot say anything certain about the industry, but for the challenge, the supply of the components is solved, then the OEM challenges will be solved all of a sudden.

And in that sense, the energy and the material cost

we hope that those price would not be hyped so rapidly and we have to also secure those materials and that is the challenge that we are facing as industry other than the semiconductor there is nothing that is critical at the moment due to the energy shortage some magnesium yes we are hearing that there are some shortage however

We do not think that is a critical issue at the moment, and that's not what we hear at the moment.

Thank you, Sean-san, for your question.

We'd like to move on to the next question.

Shiraki-san from Reuters, please. We will switch the screen for your faces seen on the screen.

Can we ask you to start your question?

Ms. Shiraki, please. Thank you. I'm Shiraki from Reuters, and I have two questions as well.

So in your consolidated sales forecast, the electrified vehicles volume is my question.

Here, also compared with the initial forecast, there has been a slight decrease, and I might be taking it in a selfish way, but here... Is it purely about the sales trend impact, or is it the cause of the semiconductor crunch and the material price hike? Because of such a high level of material prices now, does it mean that price pressure is more on the electrified vehicles? Related to the inventory management issue that you said before, maybe are you focusing on selling more of the conventional gasoline vehicles? Will that be a background to this revision? Guessing price spikes is another trend that we're seeing in the market. And so, of course, from the environmental perspective, I thought that electrified vehicles will have a higher ratio, but why is it that you drop the ratio there too? And the next question is about not really to the performance, but under Mr. Kishida's administration, there is a topic discussed about to reduce the disclosure from companies and to reduce the frequency from every quarter. And from the press, there are some concerns, but from the PR side, the functions inside the company, also for the investments towards making future investments towards human resource development and other business plans, some people say that quarterly disclosure would be too much frequent. So Toyota, being a global company, what are your thoughts regarding this quarterly disclosure? And in Europe, there are some reviews that are being discussed, but if you have any ideas about what would be an appropriate way to review the quarterly announcements, can you share with us? Thank you, Shiraki-san, for your question. The first is for the electrified vehicles volume. It has been downward revised from the previous forecast, so the reason is what you want to hear. And the second question is about the disclosure announcement of the quarterly results. There is a discussion about reviewing this frequency and what does Toyota think about this topic. So both of it will be responded by Mr. Kohn. Thank you for your questions.

Starting with the electrified vehicle ratio, as you have pointed out, slightly the ratio has dropped, but there is no significant factor to this, such as a global common factor. That is not the case.

For electrified vehicles and, for example, China, China is not included in the consolidated sales volume, but hybrid accounts for about 20% last year in China. And this year, it has increased up to around 30% electrified vehicles in China. Therefore, globally, it doesn't mean that we see a reduction in the ratio of electrified vehicles in the global market. So our understanding of this change is that this is not a significant change, difference. Well, it's not about the ratio, but I wanted to hear about the volume, actual volume. Well... So is that the same reason as well? Yes, for the forecast, we first see that a drop of 150,000 revised downward from our initial forecast. It's not that we intentionally drop only the electrified vehicles, honestly speaking. So it's just that looking at when we revised the most latest sales volume forecast, we have revised also in the same ratio, in the same way, the electrified vehicles. So this is not something that is just focused on electrified vehicles changes. And is it okay, did I... answer correctly. Was there anything in the leading comments? No, I'm fine. I understand now. Thank you. So for your second question about the quarterly performance announcement, for right now, I do not fully aware of what kind of discussions in detail is happening, but When I talk to investors and stakeholders, it needs to be something that will be beneficial for the stakeholders and investors. That is the way I look at the quarterly results announcements. A company has a going concern always. Well, rather than every three months, we're thinking about 10 years in the future, 20 years in the future as we operate our business. I think that's a common way that a company operates. And in the meantime, of course, it's very important to make the most appropriate and timely announcements and reports. And for key matters, for very important matters, we should not wait three months and we should and make those kinds of reports and announcements of key matters in timely way and appropriate time. But if the quarterly results should be announced, we have to think about it may cause that the ups and downs as seen in every quarter may be in sync with the ups and downs of the company value. So if it is understood in that way, probably it will not be so positive to make a quarterly report. Therefore, together with those financial disclosures, we think that it's important to have media like Toyota Times and own media like Toyota Times to be able to disclose the way of thinking of Toyota, the philosophy of Toyota, what's happening in Toyota. We think we are trying to use the most of these own media to explain about what is happening within Toyota and I think this is quite important for us. So that will be my answer to your question.

Thank you, Ms.

Shiraki.

Thank you.

We would like to take the next question from Nikkan Kogyo Shimbun. Mr. Masatoshi, please. We are going to switch the screen, so please start your question when you see yourself on the screen.

Please, Masatoshi, please.

This is Masatoshi from Nikkan Kogyo. Can you hear me? Regarding the first half results, so minus 30 yen for the cost reduction effort, and I think this was impacted by the material cost increase.

So together with cost reduction benefit, can you give me the breakdown?

And also, compared with the period from January to September, the role material of Christ, do you change your opinion and position on this?

And that's the first question. And the second question is that under this situation, what kind of extra room do you have to gain back those benefits, and what are the measures that you're going to take?

Thank you very much for your question, Ms. Masatoshi.

The first question was about the impact of the cost reduction and the breakdown of that. And also your question was about the hike of the material price. And the second question was about whether or not there is any more opportunity to recover the profit.

Mr. Kony is going to answer this.

Thank you so much for your question.

In the first half, the minus 30 billion yen breakdown, so the so-called pure cost reduction excluding the market is about 300 billion yen per year being the target for us. And because this is half a year, which will be 150 billion yen, and we were a little short of this target as a result of the pure cost reduction. Conversely speaking, the other than that was the market fluctuation. little less than 100 billion yen we were short of this target unfortunately this is the cost reduction benefit and remainder is the market in the second half one moment please

In the second half, compared with the first half, the impact is going to be larger.

On year-on-year basis, the cost reduction will be minus $345 billion on page 18, that is.

The annual cost reduction is 200 billion yen and we are also a little short of this target. In other words, conversely speaking, remainder is the market fluctuation but little more than 200 is the cost reduction and the remainder is the market impact. In other words, net-net, the second half is going to be tougher, a little tougher than the first half.

And our measures to strengthen our profitability, well, on this point, As much as possible, the effects fluctuation should be eliminated as much as possible. In other words, we would like to turn this number more positively by excluding those effects impact. That is a numerical aspect, but there is no

major measure which can turn around the number by 100 billion all of the sudden it's in the unit of several thousand or several tens of thousands the accumulation of small benefits and we will continue with those a series of more methods and also of value chain including the supplies and used cars and connected car business software. We would like to further improve the profitability of those areas.

And by doing so, we would like to improve our profitability higher, more than 2,800.

Thank you so much, Masatoshi-san. It is now the scheduled time.

However, we'd like to take a last question.

When you see yourself, please start your question.

Mr. Kigawa, can you hear me?

Can you hear me? Yes, we can hear you now.

I have a question about your future plan about how you promote electrification. 2030, 200 gigawatt plant operation capacity is what you explained as secure. And BZ4X was what you have announced. And 2025, you're going to have a North American plant established and make a investment by Toyota alone. And in the meantime, what happens in the world is electrification momentum is becoming stronger. And also you need a lot of investment. You need to have efficiency in your investment. But once again, how are you going to be taking initiatives towards electrification promotion?

Thank you, Mr. Kikawa, for your question.

This question, myself, Nagata, would respond to. Regarding electrification, we receive a lot of questions, and we have repeatedly responded that basically it is about how we are going to reduce CO2 as quickly as possible. Starting now, and what Toyota has been saying is that regarding electrification, we are going to become a department store of electrified vehicles, which in other words means that we're going to have a full lineup of electrified vehicles so that we can deliver it to various regions and market customers all around the world and have our customers choose what they want to use. That's what we have been saying is our approach. And for each region, especially the energy situation that will be supplied there and also the fuel situation is completely different. Therefore, in Europe, there's a lot of renewables, so battery EVs will be good. But in other regions, there should be other options that will be most appropriate for them and to have the consumers, users selected. So this has always been our approach.

And for what you have mentioned, Mr. Kigawa, regarding battery EVs, we...

Also, I think that for both quantity and cost, if the renewable energy is reduced further in terms of cost and has more supply, then the battery EVs will be a very good potential CO2 reduction vehicle, a very good solution. And as you have mentioned, the batteries, Toyota is going to make 1.5 trillion yen investments to build that foundation for supply. And also within United America, we're going to make until 2030 the battery plants, making investments of 380 billion. And for until 2025, the battery EV investments and lineup, we have committed to 15 models to be prepared in that timing. And then we have the BC4X, the battery... EVs specified the lineup we have announced. So batteries and battery EVs, both of it, compared with other OEMs, I don't think we are inferior. I think we are preparing ourselves to be competitive in the competition with other OEMs. regarding the batteries and battery EVs, so we will be steadily promoting this approach and plan. However, up to now, we have been saying many things, but at the end, battery EVs, you need to have the clean energy as the base. If you have clean energy as the premise, then, as a precondition, then it will be very effective. But unfortunately, in Japan, with our energy situation, the plug-in hybrids and the other electrified vehicles meet our conditions, it will reduce the CO2 emissions in Japan, and also it will be also easy to buy as a product, and then that will also contribute to reducing the CO2 emissions in this region. This is also what we have been saying. And also, in order to promote electrification, having the options, a wide variety of options of electrification is what we want to do. And that means the full lineup of electrified vehicles in Toyota terms. So in order to prepare this full lineup, we will be working on various technical innovations so that Japan's 5.5 million employment related to this industry can be protected. This is another message that we have been... Very unfortunately, we are going to do a lot of S5 vehicle projects, but what is happening now will be a question that we have been asked. And unfortunately, some people are saying that Toyota is a promoter of hybrids and is against promoting battery EVs. Unfortunately, that is how we are talked about. I'm feeling a struggle. It's very difficult to communicate what we're trying to do. So that is also a fact, feeling that our message is not really conveyed. And so how we communicate this, how we can receive the understanding that Toyota is very serious in promoting the battery EVs, this is something that we still have to consider and plan, and that is a struggle that... I have right now regarding how to communicate, so I very much appreciate the advice and comments from the media, too, so that we can think about how we will be able to better communicate. I'm sorry, I'm giving you back a question, receiving a question, but I hope that we can work together in that communication side. Well, then, about the battery EVs, how you explain that, especially the communication to consumers, You said a little earlier that you are in a well-positioned to compete with the other OEMs. So probably the way that you express this should be changed. I think I need your advice on that. Well, we always talk about we're going to show maybe it's better to have a more concrete lineup of battery VEV more clearly and show it to the press and to the consumer. But we'll now be putting our heads together to thank Sean. to think about what is the best way of expression in commuting our intention for the electrification vehicle promotion.

Thank you very much, Mr. Kigawa. And with that, we'd like to end our financial results briefing.

Thank you very much for joining us despite your busy schedule. We would like to end our press briefing here. Thank you.