Toyota, the world’s largest automaker by the number of cars sold, is speeding up its shift to electric vehicles under incoming CEO Koji Sato, who is set to replace Akio Toyoda, a grandson of the company’s founder Kiichiro Toyoda, on April 1.
Speaking in public for the first time as Toyota’s new leader at a press conference in Tokyo today (Feb. 13), Sato said the 85-year-old carmaker will focus on battery electric vehicles in the future with its Lexus brand launching a new electric model by 2026. Sato was the chief executive of Lexus for seven years before being named as Toyoda’s successor in late January. Toyota owns four auto brands: Toyota, Lexus, Daihatsu and Hino.
“To deliver attractive BEVs (battery electric vehicles) to more customers, we must streamline the structure of the car, and—with a BEV-first mindset—we must drastically change the way we do business, from manufacturing to sales and service,” Sato said.
Toyota’s confusing EV strategy
Toyota has often faced criticism for being slow to embrace electric technologies, compared with its rival auto giants like Volkswagen and General Motors. The Japanese company has argued BEV isn’t the only path to achieve carbon neutrality. Instead, it has focused on producing hybrid electric cars, including the popular Toyota Prius. Toyota is also a pioneer in experimenting with hydrogen-powered passenger cars. It debuted Mirai, a mid-size sedan powered by hydrogen fuel cells, in 2014 and has sold more than 20,000 units so far, including more than 10,000 in the U.S., mostly California where there are enough hydrogen fueling stations to support its regular use.
Toyoda, who has led Toyota since 2009, is an advocate for providing consumers with a wide variety of EV options, from hybrids to plug-ins to hydrogen cars, even at the expense of investor disapproval. “We are losing when it comes to the share price, but when it comes to products, we have a full menu that will be chosen by customers,” Toyoda said at an event in November 2020.
Despite selling more than 10 million vehicles a year, including 2.7 million electric ones, Toyota’s market capitalization is only a third of that of Tesla, which sold just 1.25 million electric cars last year.
The impression that Toyota doesn’t have a strong EV strategy is largely a result of miscommunication, Sato said at today’s event. “To the point that we have been slow at battery EV projects, I think around half of it is a communication issue.”
In September 2022, Toyota announced plans to invest roughly $70 billion in electric vehicles before the end of the decade. About half of that investment will go into battery EVs. Sato said Toyota plans to sell half a million BEVs annually by 2025 and increase that number to 3.5 million by 2030.
For now, Toyota only has one BEV available in the U.S. market: the bZ4X SUV, a direct competitor of Tesla’s Model Y and Volkswagen’s ID.4 crossover. Toyota introduced bZ4X in May 2022 and a smaller sedan version called bZ3 in October. But that model isn’t available in the U.S. just yet.
