Mazda’s Akira Marumoto on a cautious EV approach

Where do you see Mazda’s U.S. sales heading in 2023?

Dealer inventory levels are just over 10 days. So there is potentially very strong demand. As long as we supply vehicles, they are sold. But we are afraid that the allocation our U.S. team wants us to provide is not something we are able to provide yet.

Starting next year, I think we should start thinking about recession. It depends upon the magnitude of a recession, and we aren’t that pessimistic about a recession. But so far, high grade models have been selling well, and we are ready to accept that maybe the high-grade mix of sales may not be as good as next year. Meanwhile, interest rates are rising, so customer payments may increase. So the rich, high-grade mix that we have this year may not be applicable next year.

Could Mazda’s U.S. sales decline in 2023?

We still haven’t decided the next fiscal year’s sales trend. If there is no Shanghai lockdown-type problem, and if semiconductor supply improves, we believe we will grow globally and in the U.S.

How serious is the labor shortage around Mazda’s new Alabama assembly plant?

Alabama is facing a tight situation. The unemployment rate is around 2.2 percent. So it’s tighter than the national average. I think the labor shortage in the manufacturing sector is really a serious issue.

We’ve been dealing with COVID-19 for more than two years and nine months. Employment in the service industry is really growing, but not in manufacturing. Also, turnover among young people is very bad. That is the challenge that faces U.S. manufacturing.

What is Mazda’s strategy for EVs in the U.S.?

If you look at the U.S., eventually we would like to produce EVs there, but the earliest timing would be the latter half of Phase 2 (Phase 2 runs 2025-2027). There are so many things we need to research and study first. We are not considering establishing a dedicated EV plant.

When Mazda thinks about building an EV, the Alabama plant and the Mexico plant are the two plants we can think about in terms of the U.S. market.

In Alabama, we just introduced the CX-50. So we have to make sure the CX-50 is nurtured into a profitable product. And we must nurture the Alabama plant into a plant with high quality.

There are so many uncertainties, like the employment situation, the battery procurement situations and the [Inflation Reduction Act] requirements. As soon as we see clarity, we will make a judgment.

Is Mazda working in-house on its own battery technology?

We are actually doing research in that area right now. We are working from the chemical reaction level and we would like to establish those technologies.

In Phase 3 (2028-2030), we will make a judgment as to whether we can produce those batteries ourselves, based on the progress of development and whether we can establish a good financial basis for it.

Can such a small automaker as Mazda realistically achieve its own battery breakthrough?

We have just started the research, so we can’t make a judgment yet. But we are doing research in chemical reaction because we want to understand the control technology.

If we want the best battery control technologies, we need to understand the chemical mechanisms.

Is the industry over-investing or under-investing in EVs?

Compared with two years ago, customers’ acceptance of EVs has really increased more than we expected. I’m sure EV volume will continue to increase. But I can’t predict the timeline of EV penetration because there are so many uncertainties.

We have to ask why we are making EVs. The answer is to achieve a carbon neutral society. To achieve a carbon neutral society, we need to increase carbon neutral power generation in tandem with the increased penetration of EVs. Otherwise, it’s pointless.

It may not help carbon neutrality to increase EVs in markets that rely on coal- and oil-based power generation.

The auto industry can’t achieve this by itself. It requires linkage with energy policies. Power generation methods are not following EV penetration. We need to strike a balance, and we are not there yet.

Mazda’s timeline calls for using carbon neutral fuels by 2035. How do you envision that?

We use trucks to transport things within the company. For example, we mass produce engines here in Hiroshima and transfer them to the Hofu assembly plant in Yamaguchi. We envision using carbon neutral fuel in that kind of transportation.

What is the strategy for the MX-5 Miata or a future RX sporty car in the era of electrification?

To achieve carbon neutrality, we will proceed with electrification of those models. And we want to keep the joy of driving that is the essence of the Mazda brand. We will keep evolving that value. We are committed to continuing that.