The CEO of the world’s biggest car company is stepping aside after his more than a decade-long reign in steering the firm through a supply-chain crisis brought on by natural disasters and a pandemic. Under Akio Toyoda’s leadership, Toyota Motor Corp has never taken the straight electric route like its peers and has avoided promoting EVs as the future. Did it mess it up and leave the Japanese company on its back foot? not enough. Toyoda, who is likely to continue as chairman, may have just played a masterstroke.
Nervous in Tesla’s shadow, global carmakers hurriedly talked up massive investments and electrification plans. They released and recalled models while running into early troubles despite EV profitability struggling. But Toyota focused on reducing emissions as its endgame. It added that clean cars “will only help if they come into widespread use.” To do this, low-key but effective measures were taken, including working with suppliers and improving existing technology. Sadly, they don’t get investors and analysts excited.
The carmaker’s EV efforts have been understated and long-standing: It established an EV division in 1992 and launched its electric RAV4 four years later. This was withdrawn in 2014 because charging times were too long, unless customers traveled long distances for faster top-ups. Toyota launched small EVs in the 2000s, investing more than $7.7 billion, and has made more than 19 million batteries over the past three decades. In 2021 it invested more in powerpack. When Toyoda laid out its EV strategy with Koji Sato, his successor and chief branding officer, he said 35% of the firm’s vehicles would be fully electric by 2030.
Toyota couldn’t convince the world that it wasn’t reluctant on EVs, partly because of Toyoda’s straightforward approach. He highlighted insufficient clean energy and charging infrastructure as limitations. It will take time, he said. Now, as EV batteries have become a geopolitical flashpoint, the challenge of securing supplies has increased.
Toyoda has a point. Despite diplomatic tensions, carmakers are still working on supply agreements and turning to China. While EV sales have grown under regulatory pressure and subsidies, battery technology has kept costs high. Charging infrastructure is scarce and cars remain unaffordable for most. This is also the case in an advanced market like the US.
Nevertheless, Toyoda’s approach has yielded results. Between 2019 and 2021, his firm committed to reducing direct and indirect greenhouse gases. In 2021, Toyota’s 18.1 million hybrids with reduced emissions (due to lower fuel consumption) will have as many as 5.5 million EVs. Compared to some other large automakers, its emissions-per-vehicle are low, as is the energy used to produce each vehicle.
Sure, critics often view it with some skepticism. However, isn’t clean air why the world got into electric vehicles in the first place? To reduce emissions? It wasn’t just about making a fancy new car in the name of innovation. Expensive technology rarely outstrips practical alternatives used by the public. At best, they co-exist. The invention and death of the supersonic Concorde aircraft is an example of extremely costly endeavors that ultimately become difficult to justify. Or, put another way, ceiling and floor fans are still in place (Dysons at their best), even if air conditioning came along.
Perhaps Toyoda realized that the world’s largest car company needed to continue its branding exercise in order to stay afloat globally. Especially after Toyota’s massive failure to launch the bZ4x electric vehicle. Toyoda, a self-described rally-racing “car guy,” was never able to sow high hopes in the breathless marketing field. ,” adding that the firm was pursuing “all options.”
Toyota’s new CEO has a different record. Sato’s efforts at Lexus set the brand up to target 100% battery EV sales by the end of the decade in some regions. Perhaps Sato will begin to focus the firm’s broader future mobility strategy toward EVs and hybrids, and show that to investors. Now that the company is making EVs in China, it is likely to benefit as a part of its global total as well. With the US Inflation Reduction Act giving a big boost to its various plug-in hybrid offerings, the earnings could give Toyota wiggle room with its EV plan. The Japanese carmaker won’t be Tesla anytime soon, but it will remain the dependable drive most consumers want and importantly can afford.
Playing the role of a martyr and transforming himself was Toyoda’s clearest message ever. If Sato can really tell an exciting brand story, Toyota may finally be able to shed its backward image.
Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia Pacific.
catch all business News, market news, breaking news events and breaking news Update on Live Mint. download mint news app To get daily market updates.