Boosting the electric vehicle business is the first priority for Koji Sato as the new CEO of Toyota Motor Corp. strives to improve its competitive advantage as the world’s #1 car manufacturer.
The 53-year-old veteran engineer has pledged to address energy security and carbon neutrality, and aims to transform Toyota from a conventional carmaker into a mobility company at the same time.
Toyota Motor Corp. President Koji Sato speaks at a news conference in Tokyo on April 7, 2023. (Kyodo)
The world’s largest auto seller is the leading maker of gasoline-electric hybrid vehicles, but lags behind in pushing fully electric vehicles.
Toyota currently offers several green technology options instead of focusing on electric vehicles under a “multi-track strategy” that is sometimes seen as a factor behind its relatively slow shift to battery-powered vehicles.
“Sato was Akio Toyoda’s right-hand man. I think they are thinking along very parallel lines,” Christopher Richter, deputy head of research at CLSA Securities Japan, said at a recent press conference at the Foreign Correspondents’ Club in Japan
Sato took the helm of the automaker on April 1, replacing founding family scion Akio Toyoda in the company’s first leadership change in 14 years.
In his first news conference as Toyota’s top executive on Friday, Sato set a lofty sales target of 1.5 million electric vehicles with 10 new models by 2026. Toyota aims to increase its electric vehicle sales by to 3.5 million vehicles in 2030.
“We have been preparing to expand our line, including battery electric vehicles,” Sato said. “We were waiting for the right moment” to launch a new strategy.
Toyota sold 10.48 million vehicles worldwide by 2022, but its electric vehicle sales accounted for a tiny fraction of that at 24,000. The figure compares with 1.31 million electric vehicles sold by the world’s largest electric vehicle maker, Tesla, in the same year and Volkswagen Group sales of 572,100.
When the Japanese automaker announced the appointment of Sato as its new chief executive, Toyoda said at a news conference that he himself felt too “old” to tackle the rapidly changing business environment. New services and technologies are expected to become increasingly necessary for connected, autonomous, shared and electric vehicles, known as CASE.
Toyota believes that battery electric vehicles are not the only solution, betting on the need for multiple alternatives such as fuel cell vehicles, hybrids and plug-in hybrids to reduce carbon dioxide emissions.
“What Toyota is competing with is not really the rivals in China or Europe, but all those governments and government policies,” Koji Endo, head of equity research at SBI Securities, said at the press conference on FCCJ, referring to the regulatory environments of these countries. .
According to analysts, Toyota’s approach can better meet the different requirements for each country’s emissions standards. Some countries still have to rely heavily on fossil fuel power generation in the short term and electric vehicles may not be the best choice in these markets. If customers cannot afford relatively expensive EVs and FCVs, hybrids could be an option.
“If the Biden administration is replaced by a (Donald) Trump administration, the policies in the United States will change completely, 180 degrees,” Endo said.
US President Joe Biden aims to make 50 percent of all new cars and light trucks sold in the US market by 2030 electrified vehicles under the Green New Deal policy. But when Trump was in office, the world’s largest economy pulled out of the Paris climate accord.
Not many automakers can follow suit, as higher development costs and more human resources are required to prepare for a variety of powertrain options.
“Electric vehicles have to come first, but it’s really great to have some other technology covered in the future,” said CLSA’s Richter.
Still, analysts say electric vehicles are the most promising technology for long-term carbon neutrality, and Toyota’s slow approach to the market could hinder its future growth.
According to an estimate by Goldman Sachs, global electric vehicle sales are expected to increase to 73 million vehicles by 2040 from 2 million in 2020, accounting for 61 percent of the global market.
“There’s no doubt that Toyota is lagging behind in the field of battery electric vehicles,” said Takaki Nakanishi, auto analyst and CEO of the Nakanishi Research Institute. “The important task for Mr. Sato and his new team is to increase their effort in BEV.”
The new CEO is expected to take strong leadership as he did when he ran the Lexus luxury brand division that is spearheading Toyota’s electric vehicle strategy.
The Japanese automaker has committed to making all Lexus models electric by 2035 with plans to launch a next-generation electric model in 2026.
Toyota didn’t get off to a good start recently with the botched debut of the bZ4X. Production of its first mass-produced EV model had to be halted for a few months after its launch in May last year in Japan due to possible wheel separation.
“We will expand our offering of electrified cars in a practical way,” Sato said.
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