Koji Sato speaks while riding on screen with his predecessor Akio Toyoda (right).
(Photo: Bloomberg)
Tokyo The world’s largest carmaker Toyota announced on Monday a stronger focus on electric cars. Toyota will stick to its strategy of developing several drive types, future boss Koji Sato said at his first press conference.
But the focus is shifting: “Now that the time is right, we will accelerate the development of battery electric cars with a new approach,” Sato said after incumbent Akio Toyoda introduced him as his successor.
On the one hand, Sato wants to introduce a new management structure that is intended to promote the conversion to a mobility group. On the other hand, he wants to introduce a new architecture for electric cars with the premium brand Lexus as a pioneer, which is to be gradually adopted by the Toyota brand.
The next generation of Lexus EVs in 2026 will see everything – battery, platform and production – optimized for EVs as the company expands its current EV range, Sato announced. He intends to present more detailed plans and goals after taking office in April.
The 53-year-old is thus addressing Toyota’s greatest weakness, which the incumbent Toyoda had recognized himself: electromobility. Toyota is the only company that sold more than ten million cars in 2022 and is currently very profitable. In the final quarter, the Japanese achieved an operating profit margin of 9.8 percent. But the hybrid world market leader has so far hardly been present in purely electric cars.
Tesla surpasses Toyota in profitability
The British lobby observer Influencemap gave Toyota even worse marks than the German car manufacturers when it switched to electric drive. Toyota’s declaration in 2021 that it intends to sell 3.5 million electric cars annually by 2030 has not changed that.
At the presentation of Sato at the end of January, Toyoda himself admitted that the conversion of the car manufacturer into a mobility group had reached a limit. Sato should now overcome this. The grandson of the group’s founder wants to retire as the head of the board of directors.
>> Also read: Toyota boss Akio Toyoda resigns
The development of a fundamentally new platform and a new production is an important factor in this. The American production engineer Sandy Munro, who repeatedly dissects electric cars from different manufacturers for his YouTube channel Munro-Live, complains that most manufacturers would expand their existing platforms for electric cars instead of developing a new platform from scratch.
This would make the cars heavier and more expensive than necessary, he said in a recent post. For him, this strategy is one reason why the established manufacturers are now lagging far behind Tesla’s profitability.
The future boss explained that he wanted to develop electric cars that were distinctively Toyota.
(Photo: Reuters)
The Japanese business newspaper “Nikkei” took the same line after Toyota’s quarterly figures last week: “Tesla earns five times as much per car as Toyota,” she explained. Toyota’s net profit per vehicle was $1,820, while Tesla’s was nearly $10,000.
Toyota is looking for a new balance of electric cars with combustion engines and hybrids
One factor for the different margins is certainly that Toyota is sticking to its approach of further developing internal combustion engines, hybrid vehicles and fuel cell drives. Toyota wants to be able to offer vehicles for all markets and customer groups.
On the other hand, Tesla is concentrating on the high-priced premium segment, which offers enough margin to break new technological ground and set an example – in Tesla’s case, fast acceleration, long ranges and its own charging network. In the meantime, the group, which has been in deficit for years, can even afford discounts.
Toyota now wants to follow Tesla’s strategy. Sato said he wants to develop electric cars that are distinctively Toyota. It’s about design, software, but also lean production.
Toyota’s net profit per vehicle was $1,820, while Tesla’s was nearly $10,000.
(Photo: Reuters)
Toyota’s new production boss Kazuaki Shingo, who is also responsible for compact cars, explained the focus: In order to make a real contribution to reducing emissions, electric cars would have to be sold in large numbers and therefore be affordable. “To achieve that, a major reform of the industry is needed,” Shingo said. “It would be difficult to start with that in the small car segment.”
The new management strategy should help to spread the new ideas and technologies quickly. Each of the three new executive vice presidents will focus on one area: the integration of software, a strategy for electric mobility in Asia and electrification including the restructuring of Lexus production.
More: Tesla posts record profit in 2022 as deliveries grow 40 percent