Selling Toyota’s electrification strategy will be job No. 1 for Koji Sato, the 53-year-old taking over from Akio Toyoda.
(Bloomberg) —
Toyota Motor Corp. has struggled to effectively convey its strategy of spreading its bets between hybrid, hydrogen and battery-electric vehicles to investors, consumers and environmental groups.
The approach has opened the world’s No. 1 carmaker up to criticism that it isn’t embracing an all-electric future. On one hand, that’s valid — Toyota sold fewer than 25,000 battery-electric vehicles last year, when Tesla Inc.’s cumulative deliveries passed the 3 million mark.
On the other hand, Toyota has been making hybrids for more than two decades, with its flagship Prius alone racking up more than 5 million total sales. The Japanese giant argues that it’s doing its part to reduce emissions, is playing the long game, and will be among the businesses with the resources, technology and tenacity to pull off the transition to zero emissions that will take many years.
Up until now, the job of convincing stakeholders of this line of attack mostly fell to Akio Toyoda, who announced last week that he’ll step down as CEO and become chairman effective April 1. Among the key questions for Koji Sato, the 53-year-old former Lexus chief who’s taking over, are whether this battle plan needs some fine-tuning, and how effectively he can communicate it.
As the grandson of Toyota’s founder who oversaw the manufacturer’s rise past Volkswagen AG in annual sales, there was arguably no one better placed to explain the carmaker’s approach.
Yet at times, Toyoda was an imperfect messenger. In 2021, as he was explaining the merits of developing engines that burn hydrogen rather than gasoline, Toyoda quipped that “the enemy is carbon, not internal combustion engines.” To Toyota’s critics, that kind of talk comes across as oddly defensive of combustion.
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Given Toyota’s nature as a family business, criticism of its strategy isn’t just professional; it’s personal. Toyoda’s son Daisuke works for Woven Planet, the Toyota subsidiary doing the advanced development work on software and automated driving that will be critical to the 85-year-old company’s next 85 years.
While it would be surprising to see Toyota turn on a dime with respect to EVs, given Toyoda’s ongoing involvement as chairman, the 66-year-old alluded to Sato’s youth and ability to “go beyond the limits that I can’t break through” when announcing last week that he’ll pass the baton.
As the head of Lexus, Sato oversaw robust sales growth. For the past two years, he also served as chief branding officer for the entire company. He’s an engineer by training and smiles a lot. You can see why the founder’s grandson tapped him.
When asked by a shareholder during Toyota’s annual meeting last year about succession, Toyoda said whoever follows him must have an “unshakable conviction on why Toyota exists,” and that he would seek to rejuvenate management with any appointment.
When Toyota unveiled its ¥4 trillion ($31 billion) EV strategy in late 2021, it shared a video of Sato and Toyoda riding together in an electric Lexus prototype. In retrospect, this was as clear a sign as any that Sato was destined to take over.
Toyoda grumbles early on in the clip that the vehicle feels a bit heavy.
“What happens if I were to go faster?” he asks.
“Be my guest,” Sato replies.
“Wooooooo!!” they both exclaim as the vehicle takes off.
Now, the new chairman and CEO just need to get everyone to say the same for Toyota’s EV strategy.
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