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Toyota CEO Akio Toyoda to Step Down, Handing Control to Next Generation

Motor Corp. Chief Executive Akio Toyoda has said that he would hand the keys to a younger executive who he believes might have new ideas about the future of electric vehicles.

January 26, 2023
4 minutes
minute read

Tokyo-based Toyota Motor Corporation is one of the world's leading automakers. The company's products include passenger cars, trucks, buses, and motorcycles. Toyota is also involved in financial services, biotechnology, and other businesses.

Motor Corp. Chief Executive Akio Toyoda has said that he would hand the keys to a younger executive who he believes might have new ideas about the future of electric vehicles. Toyoda has expressed skepticism about an all-electric future in the past, but it remains to be seen what his successor will think about the issue.

Koji Sato, who will take over as Toyota's CEO in April, has extensive experience leading the introduction of electric and hydrogen-powered cars. He offered few details about his plans for the world's top-selling auto maker, but his experience puts him in a position to tackle the coming transformation in cars.

Mr. Toyoda believes that the auto industry is facing a once-in-a-century change, and that 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. He has been leading the company since 2009 and said he would become chairman in April.

The management switch at Toyota comes as the company navigates 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 pointed out the potential drawbacks of EVs, such as the lack of charging infrastructure in some areas, their reliance on electric power sources that may produce carbon emissions, and the high cost of EV materials such as lithium for batteries. He has said that consumers should continue to have a variety of options available to them, including hybrid gas-electric vehicles – an innovation from Toyota – and hydrogen-powered cars.

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

At the same time, Toyota 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 says it wants to sell 3.5 million EVs annually by 2030.

In 2018, Mr. Toyoda created an advanced software and technology arm called Woven Planet. He also forged partnerships with Panasonic Holdings Corp. on batteries. These partnerships have helped to make Woven Planet a leading innovator in the software and technology industries.

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, has said that this is a major goal for the company.

Mr. Sato said on Thursday that his plans for Toyota include accelerating the electrification of the company's vehicle lineup. However, he acknowledged that achieving carbon neutrality by 2050 will require more than just electric vehicles.

"We need to take a comprehensive approach," Mr. Sato said. "I will do everything I can to bring us closer to the future of mobility."

Mr. Sato has been with Toyota since 1992 and has been instrumental in the development of some of the company's most popular models, including the Corolla sedan and 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 that are already underway.

Hisao Inoue, who has written books about the car industry in Japan, said that Toyota will have to fundamentally review its product plans. He added that with a new CEO it will be easier to say that the company is now going to focus on electric vehicles.

The company has been led by members of the Toyoda family and nonfamily members over the decades. Akio Toyoda's father, Shoichiro Toyoda, now 97 years old, led the company for many years. Akio Toyoda's direct predecessor, Katsuaki Watanabe, was also a nonfamily member.

Akio Toyoda has promoted his son, Daisuke, to a prominent position at a company under the Toyota umbrella. Daisuke is still in his mid-30s, but this promotion shows that he is seen as a future leader at the company.

Mr. Toyoda has been with Toyota for over 13 years and has led the company through some tough times. He became president in 2009, just as the global financial crisis was hitting Toyota’s sales and profits hard.

At the time, Toyota was also facing problems with unintended acceleration and other issues attributed to its cars. The company recalled millions of vehicles, and Mr. Toyoda testified before Congress in 2010 to help calm the situation.

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

Mr. Toyoda said Thursday that he felt like he was just trying to survive during his early years as president of Toyota. However, he now believes that there was significance in him being president during those difficult times.

Near the end of his term, he once again began to focus on expansion—only to be met with the Covid-19 pandemic, which disrupted the supply chains of Toyota and other auto manufacturers and led to changes in the just-in-time parts supply system pioneered by Toyota.

Mr. Toyoda is handing over a company that is Japan's most valuable by market capitalization. The company made more than $20 billion in net profit in its most recent fiscal year, which is far beyond rivals including Tesla Inc.

In 2020, Toyota regained the title of world's top-selling automaker, a position it had held previously for five years. It is expected to have maintained this lead in 2021 and 2022.

Mr. Toyoda said Thursday that it took 13 years to establish the foundation, but he now believes it is strong.

Now the question is whether Mr. Sato will advocate for a quicker transition to EVs. Mr. Toyoda already hinted at possible changes in that direction this month, telling The Wall Street Journal that Toyota was exploring the possibility of introducing a new manufacturing platform specifically for EVs.

Cathy Hills
Associate Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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