Next Toyota CEO says reforming EV strategy is his new team's top priority

TOKYO — Toyota’s next CEO, Koji Sato, is pledging to “drastically” revamp the carmaker’s slow-going electric vehicle strategy with a new leadership team he just unveiled to reinvent the world’s largest automaker as a mobility company in a challenging new era of industry upheaval.

While announcing the new roster Monday, Sato said the accelerated EV rollout would center around a next-generation platform, expected to arrive around 2026.

The ramp-up comes amid mounting criticism among some investors, environmental activists and EV enthusiasts that Toyota Motor Corp. is falling behind in the global race for battery-powered cars. Sato appointed a new top executive to steer the push, starting from Lexus.

“Lexus is going to have a leading role for that,” Sato said.

Toyota’s new management lineup keeps some executives in place and elevates younger ones as the 85-year-old automaker taps fresh blood and flexible thinking. Sato, 53, said he is prioritizing a three-pronged strategy after he succeeds Akio Toyoda, 66, as CEO on April 1. The approach includes:

1. Ramping up the carmaker’s EV strategy
2. Strengthening the company’s Woven-related software-first initiatives
3. A focus on achieving carbon neutrality in Asia

Sato said Toyota would stick with the diverse powertrain strategy pioneered by his predecessor, in which the Japanese automaker develops its trademark hybrid, plug-in hybrid and hydrogen-powered cars in addition to pursuing EVs.

“I don’t think a one-size-fits-all solution works,” he said.

But Sato also promised big change, signaling a new sense of urgency in the boardroom.

He said the company's doubled-down focus on EVs is not a reaction to changes in the competitive landscape as new rivals from Silicon Valley and China pile into a rapidly growing segment and old-school players such as General Motors and Volkswagen announce increasingly aggressive investments.

Rather, Toyota sees this as the time to strategically develop a next generation of EVs that better channel its brand identity and its prowess as a low-cost, efficient manufacturer.

“The competitiveness and cost of BEVs is going to be a very big challenge,” Sato said.
 
'Drastic' EV change

The incoming CEO, who currently leads Toyota's Lexus premium brand and the Gazoo Racing motorsports arm, said rethinking the company's battery-electric product plans is a top priority.

"The first is business reform starting with next-generation BEVs," Sato said. "To deliver attractive BEVs 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."

Sato said more details will likely be announced in April after he takes office.

But the overhaul, he said, will lead off with Lexus, which already has a brand goal to be fully electric worldwide by 2035 and to sell 1 million EVs globally in 2030.

Toyota, as a whole, is targeting global sales of 3.5 million EVs in that time frame.

Getting there will require a rapid climb. In 2022, Toyota sold only 24,466 pure electric vehicles worldwide. That compares with 2.60 million hybrids moved in the same period.

Masanori Kuwata, currently the company’s chief compliance and risk officer and an executive vice president, will be in charge of electrification at the Lexus premium marque.

Kuwata, an economics major who also heads up global human resources, will become an executive at Toyota’s Lexus manufacturing hub in Kyushu as part of the job. He is tasked with restructuring operations for efficient EV production.

“It is inevitable to streamline and reform the manufacturing process,” Sato said.

The EV overhaul will focus on new engineering and new manufacturing for the vehicles in an attempt to give them a uniquely Toyota brand character and make them cost-competitive.

Thermal management, electricity management and aerodynamics are all areas of study.

"We are trying to find a characteristic unique to Toyota," Sato said. "We need to go to the next step. We are going to accelerate specific and concrete activities."

In announcing the management shuffle last month, Toyoda said fresh perspective is needed.

"The new team under upcoming President Sato has a mission to transform Toyota into a mobility company," Toyoda said. “He has youth and like-minded colleagues. I expect this new team to go beyond the limits that I can’t break through.”

Youth and diversity

The new leadership team brings youth and some measure of diversity to the company. Like Sato, several of the newly promoted leaders are in their early fifties, young by the standards of old-guard corporate Japan. 

Global Design Chief Simon Humphries, 55, assumes a new role as chief branding officer, in addition to the U.K. native's current duties guiding worldwide styling.

New Lexus taskmaster Kuwata, 52, is another up-and-coming youthful leader at the company.

Still, top management at Toyota remains mostly male and Japanese. Chief Sustainability Officer Yumi Otsuka is the only female operating officer at the company. Otsuka stays on in that role, but will be called a senior fellow, instead of an operating officer.

Other key members of the new team:

• Tetsuo “Ted” Ogawa, 63, CEO of Toyota's North America Region, keeps that role but will be promoted to an operating officer at the parent company level.
• Yoichi Miyazaki, 59, chief competitive officer, keeps that job while also becoming the company's CFO and a newly appointed executive vice president.
• Hiroaki Nakajima, 59, president of midsize passenger and commercial vehicles, retains those responsibilities while becoming the chief technology officer and a new executive vice president.
• Kazuaki Shingo, 53, president of compact cars, continues in that role and is also being appointed as the company’s new chief production officer.

Humphries, Nakajima and Miyazaki become new directors on the board, pending shareholder approval at the company’s annual shareholder meeting, usually held in June.

American James Kuffner, CEO of Woven Planet, is among those giving up his seat on the board in the shuffle. Kuffner keeps his job as head of the digital mobility spinoff, being rechristened Woven by Toyota April 1.

New Europe, Lexus bosses

Yoshihiro Nakata takes over as CEO of Toyota’s Europe region. He is currently deputy CEO. He swaps roles with current regional CEO Matthew Harrison, who is becoming deputy.

Toyota's current executive vice presidents are also being tasked with new oversight duties.

Departing CFO Kenta Kon will focus on Woven by Toyota as CFO of the subsidiary, charged with accelerating development of the new Arene automotive operating system software.

Masahide Maeda, departing chief technology officer, will focus on carbon neutrality in Asia and the rollout of advanced safety, electrification and connected technologies there in the newly created role of Asian region CEO.

Kon and Maeda join Kuffner in leaving the board.

Executive Vice President Kuwata will spearhead the rollout of a full-electric lineup at Lexus while overhauling the manufacturing system to make EVs in a new, more efficient way.

Toyota also announced new executives to fill Sato’s shoes at Lexus and Gazoo Racing.

At Lexus International Co., the current head of Lexus’ electrification division, Takashi Watanabe, will become president. At Gazoo Racing Co., current boss of vehicle development, Tomoya Takahashi, will succeed Sato as president.

Captain Sato

Last week, Chief Communication Officer Jun Nagata likened Sato to the coach of a World Cup soccer team who is reordering the player formation to take on a new opponent.

"Compare it to soccer," Nagata said.

"The Japanese soccer team for the World Cup took different formations depending on their opponent teams — Germany or Spain," he said. "Likewise, our new management team will adopt various formations in managing the company. President Toyoda thinks the company has reached a stage where a younger team can run it in a different management style."

Added Nagata: "Toyota will be led by Captain Sato's team."

Toyoda, the grandson of the carmaker's founder, has led Toyota through a centralized management style that increasingly revolved around himself as a top-down leader. But as Toyoda steps back as chairman beginning April 1, he said teamwork will be key to Sato’s success.

In announcing Sato’s appointment on Jan. 26, Toyoda said he had an important piece of advice for the current Lexus International chief: "Don't try to run the company on your own, but as a team."

Challenging era

At last month's management announcement, Sato gave a sneak peek at the big picture.

"Our new team, under the theme of 'inheritance and evolution,' will implement product-centered and region-centered management, while valuing the philosophy of our company’s founding and will endeavor to fully redesign Toyota into a mobility company,” he said.

Among Sato’s challenges will be determining just exactly what a "mobility company" is, in addition to ramping up Toyota's competitiveness in the global EV race.

Addressing the avalanche of change brought about by software-defined cars, autonomous driving and connectivity, and gearing up to face new rivals from Silicon Valley, China and beyond are also on the to-do list.

Sato echoed the soccer analogy at the Tokyo news conference.

“The management team of Toyota is like a soccer team,” he said. “The formation has to be flexible depending on the challenges we’re facing.

“My role as president will be to maximize the strength of the team as captain.”