At Toyota, Changing Of Guard Promises New Path

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"TOKYO -- Toyota Motor Corp. Chief Executive Akio Toyoda, who has expressed skepticism about an all-electric vehicle future, said he would hand the keys to a younger executive who he said might have new ideas.

Koji Sato, a 53-year-old engineer who will take over as Toyota's CEO in April, offered few details about his plans for the world's top-selling auto maker. But his experience leading the introduction of the first fully electric Lexus and working on hydrogen-powered cars puts him in a position to tackle the coming transformation in cars.

"We're facing a once-in-a-century change in the auto industry," Mr. Toyoda said Thursday. "Younger people should be placed in the right job so they can come up with the answer to what the future of mobility should be."

Mr. Toyoda, 66, is the grandson of the man who started Toyota's car business before World War II and has led the company since 2009. He said he would become chairman in April.

Toyota has been navigating the transition toward electric, autonomous and internet-connected cars. While several of Toyota's competitors have announced plans for a fully electric lineup, Mr. Toyoda has staked out an unusual position in the industry by questioning whether EVs should be pursued exclusively.

He has at times spotlighted what he sees as the downsides of EVs -- such as the lack of charging infrastructure in some regions, their reliance on electric-power sources that may be carbon-emitting, and the high cost of EV materials such as lithium for batteries. He has said consumers should continue to be offered a variety of options including hybrid gas-electric vehicles -- a Toyota innovation -- and hydrogen-powered cars.

EVs made up less than 1% of Toyota and Lexus retail sales in 2022 through November.

At the same time, the car maker under Mr. Toyoda's watch outlined plans to spend tens of billions of dollars on EVs through the end of this decade, including an EV battery factory in North Carolina that is set to receive $3.8 billion in investment.

Toyota has said it wants to sell 3.5 million EVs annually by 2030.

Mr. Toyoda created an advanced software and technology arm, Woven Planet, in 2018, and forged partnerships with Panasonic Holdings Corp. on batteries.

And the company has set a date of 2035 by which its luxury Lexus brand is set to go all-electric. The head of the Lexus business: Mr. Sato.

Mr. Sato said Thursday, without giving details, that his plans for Toyota include accelerating the electrification of the auto maker's lineup.

Still, in a nod to Mr. Toyoda's position, he said that for the globe to achieve carbon neutrality by 2050 -- meaning no net emissions of carbon -- it would need more than just EVs for transportation.

"We have to take a 360-degree approach," Mr. Sato said. "I will give my all to bring us closer to the future of mobility."

Mr. Sato joined Toyota in 1992 and has worked on developing vehicles including Toyota's popular Corolla sedan and a car with a hydrogen-powered engine.

Car-industry observers said that with Mr. Toyoda staying on as chairman, Mr. Sato was unlikely to directly challenge his old boss's policies but might accelerate changes.

Toyota "will have to fundamentally review its product plans. This must be done regardless of the change of president," said Hisao Inoue, who has written books about the car industry in Japan. He added, "With a new CEO it'll be easier to say we're now going to do EVs."

The company has been led over the decades by several members of the Toyoda family including Akio Toyoda's father, Shoichiro Toyoda, now 97 years old. Nonfamily members have also served at the top, including Akio Toyoda's direct predecessor, Katsuaki Watanabe.

Akio Toyoda has promoted his son, Daisuke, to a prominent position at a company under the Toyota umbrella, but Daisuke is still in his mid-30s.

During his more than 13 years at Toyota's helm, Mr. Toyoda has led the auto maker through a number of bruising episodes. He took over as president in 2009, just as the global financial crisis was pummeling Toyota's sales and profits.

Toyota at the time was also in turmoil over unintended acceleration and other problems attributed to its cars. Toyota recalled millions of vehicles, and Mr. Toyoda testified before Congress in 2010, helping to calm the fury.

Mr. Toyoda also led the company through a period of severe flooding at its plants in Thailand, and a 2011 earthquake and tsunami in Japan that upended Toyota's supply chains. He often described his role in those years as cleaning up problems caused by past efforts to expand too quickly.

"My feeling was that I was trying to survive, each and every day," Mr. Toyoda said Thursday, reflecting on his early years as president of Toyota. "But now I think there was significance in myself being president in those kinds of situations and times."

In the latter part of his term, he shifted again into expansion mode -- only to run into the Covid-19 pandemic, which hit the supply chains of Toyota and other auto makers and led to changes to the just-in-time parts supply system pioneered by Toyota.

Mr. Toyoda hands over a company that is Japan's most valuable by market capitalization and made more than $20 billion in net profit in its most recent fiscal year -- an amount far beyond rivals including Tesla Inc.

Toyota overtook Volkswagen AG in 2020 to become the world's top-selling auto maker, the first time the Japanese company took the top spot in five years. It took the No. 1 position again in 2021 and is likely to have done so in 2022, once figures for the full year are available.

"It took 13 years but now I strongly believe that our foundation has been established," Mr. Toyoda said Thursday.

The question now is whether Mr. Sato will push for a faster shift to EVs. Mr. Toyoda already hinted at changes in that direction this month, telling The Wall Street Journal that Toyota was looking at rolling out a new manufacturing platform designed specifically for EVs.

In Thursday trading in New York, Toyota's American depositary receipts edged down 0.5%." [1]

1. At Toyota, Changing Of Guard Promises New Path
Davis, River.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 27 Jan 2023: A.1.