Toyota Needs a New EV Road Map --- New leadership could herald a welcome change in the Japanese company's electric-vehicle strategy

 

"Toyota's incoming boss has a big decision to make on electric vehicles.

The world's largest car maker by sales said Thursday that its President Akio Toyoda will move into the chairman role in April, leaving Lexus President Koji Sato to run the company. The unexpected move was prompted by the decision by current Chairman Takeshi Uchiyamada to retire. Celebrated as the father of the Prius, Mr. Uchiyamada said he saw the need for "generational change."

Toyota could certainly do with fresh thinking. An internal candidate might not be the best person to bring it, but that was probably inevitable at a company whose management culture has achieved cult status as the "Toyota Way."

Until recently, the company seemed better placed than other auto makers to navigate the transition to EVs. Its pioneering hybrid technology gave it a head start in reducing carbon emissions and working with batteries. It has massive resources given its unusual global scale and the efficiency of its manufacturing. It even shone in the first phase of the pandemic-era semiconductor shortage, becoming the U.S. market leader in 2021.

But it has struggled to articulate a satisfactory response to the rise of Tesla. The U.S. company's clean-sheet approach and culture of disruption is a challenge to Toyota's heritage of incremental innovation through "continuous improvement." The stock-market advantage gained by Elon Musk's hype machine is also problematic for a company that prefers to show, not tell.

Toyota was an early investor in Tesla, but sold out in 2016, perhaps believing, like many others, that it would fail. The Japanese company appeared to start paying serious attention again when Tesla hit on its own version of Toyota's famous lean-manufacturing ethos, paving the way for profits to take off. In December 2021, Mr. Toyoda, whose grandfather took the company into car manufacturing, broke with all Toyota norms by channeling Mr. Musk in a glitzy presentation that featured a number of products under development and big commitments to EVs.

Since then, though, Mr. Toyoda has sent mixed messages, pointing out that the world will need a mix of powertrains for years, given the challenges and cost of ramping up battery production and rolling out charging infrastructure, particularly in poorer countries. While this is true, it is a nuanced argument that can come across as a self-interested effort to put the brakes on EVs -- a technology Toyota hasn't mastered. Last year, it had to recall its first true offering in the genre, the bZ4X, due to a risk that the wheels might come off.

This month, Mr. Toyoda talked about developing a dedicated EV manufacturing platform, an admission that it can't get world-class results by adapting its existing production approach. The timing is unfortunate, as Toyota has invested heavily in a state-of-the-art "new global architecture" for making cars that won't turn out to be as globally applicable as it hoped. Mr. Sato would be wise to commit to the EV platform anyway. Just about every other big car maker has already taken this path, so Toyota will be playing catch-up.

A few years ago, Mr. Sato might have been congratulated on getting to drive the world's most reliable auto maker. Instead, he now faces one of the toughest jobs in the business." [1]

1. Toyota Needs a New EV Road Map --- New leadership could herald a welcome change in the Japanese company's electric-vehicle strategy
Wilmot, Stephen.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 27 Jan 2023: B.12.