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

TOKYO — Toyota’s next CEO, Koji Sato, has named key members of a new leadership team to reinvent the automaker as a mobility company for a challenging new era.

The new roster, unveiled at a Feb. 13 news conference, keeps some current 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 the next CEO on April 1.

1. Ramp up the carmaker’s moribund EV strategy.
2. Strengthen the company’s Woven-related software-first initiatives.
3. Focus on achieving carbon neutrality in Asia.  

Sato pledged Toyota Motor Corp. 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. But Sato also promised big change.

‘Drastic’ EV change

The new CEO, who currently leads the Lexus premium brand and the Gazoo Racing motorsports arm, said it is a top priority to rethink the company’s battery electric product plans.

“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.”

The overhaul, he said, will lead off with Lexus, which already has a brand goal of going fully electric worldwide by 2035 and selling 1 million EVs globally in 2030.

But the overhaul will focus on new engineering and new manufacturing for the vehicles in an attempt to give them a uniquely Toyota-brand character as well as make the 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 was needed.

“The new team under upcoming President Sato has a mission to transform Toyota into a mobility company,” Toyoda last month while announcing the shuffle. “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 injects not only youth, but some measure of diversity. Like Sato, several of the newly promoted leaders are in their early 50s, young by the standards of old-guard corporate Japan.  

Among the executives tapped is global design chief Simon Humphries, 55, who will assume a new role as Chief Branding Officer on top of the UK native’s current duties guiding worldwide styling.

The new leadership injects not only youth, but some measure of diversity. Like Sato, several of the newly promoted leaders are in their early 50s, young by the standards of old-guard corporate Japan.  

Among the executives tapped is global design chief Simon Humphries, 55, who will assume a new role as Chief Branding Officer on top of the UK native’s current duties guiding worldwide styling.

Also advancing is Masanori Kuwata, 52, currently the company’s chief compliance and risk officer. He will become in charge of electrification at the Lexus premium marque.

Still, Toyota’s top management will remain mostly male and Japanese. Toyota has only one female operating officer, Chief Sustainability Officer Yumi Otsuka. She 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, current 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, current chief competitive officer, keeps that job while also becoming the company’s chief financial officer 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 a new executive vice president.
• Kazuaki Shingo, 53, current president in charge of compact cars, continues in that role will also being appointed as the company’s new chief production officer.

Toyota’s current executive vice presidents will also be tasked with new oversight duties.

Departing CFO Kenta Kon will focus on Woven Planet, charged with accelerating the development of the new Arene automotive operating system software. He will also become CFO of the digital mobility spinoff, which changes its name to Woven by Toyota Inc. starting April 1.

Masahide Maeda, the departing chief technology officer, will focus on carbon neutrality in Asia as well as the roll out of advanced safety, electrification and connected technologies there in a newly created role as Asian Region Chief Executive Officer.

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

Captian 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 has increasingly been centered around himself as a top-down leader. But as Toyoda steps back as chairman from 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 bit 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 electric vehicle race.

Also on the to-do list: addressing the avalanche of change wrought by software defined cars, autonomous driving, and connectivity, as well as new rivals from Silicon Valley, China and beyond.

Nagata  said he did not know when Captain Sato would announce his team’s new formation.

Just for the record, during the World Cup held late last year in Qatar, the Japan national team pulled off stunning upset victories over heavyweights Germany (2-1) and Spain (2-1) to advance into the Round of 16. There, it lost in a shoot out finish to eventual third-place finisher Croatia.

Production cuts, again

Among other headaches facing Sato will be the ongoing global semiconductor shortage.

In announcing quarterly financial results, Toyota again trimmed its global production target for the current fiscal year ending March 31, this time by 100,000 vehicles, citing tight chip supplies.

Toyota now expects to make 9.1 million Toyota and Lexus brand vehicles.

The new target is down from the 9.2 million announced in November, when Toyota cut the outlook from 9.7 million. But it still represents an increase over the previous year’s 8.57 million. 

Toyota is triaging supply constraints by reconfiguring the vehicle specifications for chips that are in more plentiful supply and by trying to use more low-spec chips, Nagata said.

Business in the crucial U.S. market have been especially hard hit by the semiconductor shortage because the Toyota sells a lot of high-end, large-size vehicles there that require a lot of chips.

Supply constraints there, as well the impact of foreign exchange rates and inflation, drove Toyota’s North American business to a regional operating loss in the October-December quarter.

As for when chip supplies will return to normal, Nagata said: “God only knows.”