Then there’s Akio Toyoda. He’s an easy one, and not just because it’s his family’s company and his (slightly modified) name is on all the cars. Since taking the reins as president and chief executive of one of the world’s biggest car companies in 2009, Toyoda proved time and time again to be the gearhead’s CEO, the enthusiast’s CEO—one who put his money where his mouth was to inject fun back into the conservative brand while safeguarding its profits, its reputation for quality and its massive global presence. But as time goes on, Toyoda has seemed increasingly on the wrong side of history in the crucial area of battery electric vehicles. In the post-Akio era of Toyota, the company’s being forced to race faster than any Supra GT4 to catch up to its countless rivals in the EV space. In case you hadn’t heard, the automaker announced that Toyoda, 66, will step down as president and CEO of the company on April 1. He will become the new chairman of the board, while Koji Sato, the 53-year-old head of Lexus and Gazoo Racing, will take the chief executive position. Toyoda’s announcement came as quite a surprise, analysts said today. The knee-jerk reaction to this news is that Toyota’s board and shareholders got sick of Toyoda’s conservative approach to electric vehicles—we’ll get to that in a moment—and wanted someone to accelerate that transformation. Reportedly, this is not the case; at 66, Toyoda is around the same age as past chief executives at the company when they moved on, and he’s been openly discussing his succession plan for a while. That it came today, however, was rather unexpected. (His son Daisuke Toyoda, in his mid-30s and an executive at a Toyota subsidiary, has also been floated as an eventual successor someday.) For a multitude of reasons, it makes sense for Toyoda to move on. The door is closing on the post-recession and bailout era of the auto industry and opening for its era of electrified mobility. Toyoda got his company through the former; the latter is now someone else’s challenge to take on. “Given the huge challenges that the industry is facing, the bottom line is probably that Akio Toyoda felt that after 13 long and difficult years, the time for change was right, and a new leader could bring new energy and ideas to Toyota,” said Julie Boot, an industry analyst, in quotes given to Reuters. With Toyoda moving on, two questions arise: what’s next for what’s either the world’s biggest or second-biggest automaker, depending on how Volkswagen is doing that quarter, and how will we all remember Toyoda’s time at the helm?
A Steady Hand
The world was a very different place in 2009 when Toyoda took over at the company his grandfather founded. Even mighty Toyota wasn’t immune to the ravages of the Great Recession, posting its first loss in 70 years in 2008. And at the time, Toyota was dealing with a crisis of its own—a scandal over “unintended acceleration” from a defect tied to at least 89 deaths. Though it was later found to be largely tied to something as innocuous as floor mats getting stuck, government officials said Toyota knew about the problem and covered it up, leading to $1.2 billion in fines and countless lawsuits. It’s hard to overstate how much damage that did to Toyota’s brand at the time, with news reports breathlessly telling tales of runaway Priuses on the highway. (Editor’s note: I remember it was my job to call all the CHP media people every time a Prius crashed. -MH) But it may be a testament to Toyoda’s leadership that it’s not well-remembered today. Even worse for the automaker was the earthquake and tsunami in 2011 that devastated the Japanese auto industry. “There was never a day that was peaceful,” Toyoda said at a news conference today of his early time running the company. Nevertheless, in more than a decade of leadership Toyoda’s Toyota stayed in the black, maintained handsome profits, clawed through COVID-19-related supply changes to get back to pre-pandemic production levels this year, and never dipped in the quality and reliability that are the brand’s most lasting hallmark. It’s hard to imagine many executives who maintained a steadier hand on their business than Akio Toyoda.
The Gearhead’s CEO
Toyoda was also something of a corporate patron saint for car enthusiasts everywhere, even if he didn’t start out that way. The story goes that, despite growing up steeped in his family’s business and with a lifelong love of cars, Toyoda didn’t know how to drive—really, really drive—until as a young executive he was openly scoffed at by Hiromu Naruse. Naruse was Toyota’s veteran chief test driver, race car engineer and father of the Lexus LFA, among other things. And he didn’t think very highly of the family scion; “A person like you doesn’t know how to drive a car,” Toyoda said Naruse once told him, according to Automotive News. “So I don’t want you telling me about cars when you don’t even know how to really drive one.” That’s a hell of a thing to say to your likely future boss. But to Toyoda’s credit, he didn’t ask Naruse to find a box to put his things in. He strapped himself into a race car, he shut up, and he learned what Naruse had to teach him. (Naruse tragically later died crashing at the Nürburgring at age 67, but left behind an incredible legacy of his own.) Thus began the birth of Akio Toyoda the enthusiast, the one who wanted to make his dependable but often boring cars fun again. This meant a Lexus that could compete on a more equal footing with BMW and Audi; it meant cars like the 86, later GR 86, the rebirth of the Toyota Supra, and the expansion of Gazoo Racing as a motorsports entity and marketing enterprise. It meant the GR Corolla and GR Yaris, two staid family compact cars so thoroughly transformed into thundering hot hatch performance monsters that they feel like they shouldn’t even be real at all. One got the sense Toyoda did whatever it took to pull off these passion projects; the 86 and GR 86 were and are joint ventures with Subaru, and the Supra is one with BMW. In a declining sports car market, such deals are needed to keep costs down, but Toyota under Akio made them happen while still cranking out RAV4s and Tacomas and Hiluxes as dependably as ever. Toyoda always came off as deeply sincere about making his cars fun and exciting again, and he himself was never afraid to step into the cockpit to prove it. Toyota’s website is full of photos of Toyoda in a fire suit at motorsports events all over the world, grinning ear-to-ear with his people. You always got the sense he deeply and sincerely loved racing and the cars his company built. Even in his pre-CEO days, he was seldom a stranger to racing himself, too; under the nom de guerre of “Morizo,” he competed in all sorts of endurance and rally events, much to the chagrin of company officials who fretted over the dangers of what he was doing. Seriously, how many auto industry executives would sign up for a 24-hour Nürburgring race, let alone the top guy?
A New Reality For Toyota
But the world is changing. The things that defined Toyoda’s career and passions are not the future. And as nearly all of Toyota’s competitors began a wide-scale shift to EVs, it proceeded with extreme caution. When companies like BMW, GM, VW and others promised an all-electric future, Toyota was, and is, nowhere to be found. Toyoda himself saw a future that was more heterogeneous, a mix of internal combustion, hybrids, some EVs and hydrogen—something no company has championed more than Toyota. “The enemy is carbon, not internal combustion engines. We shouldn’t just focus on one technology but make use of the technologies we already possess,” Toyoda told Reuters in 2021. “Carbon neutrality is not about one having a single choice, but about keeping options open.” The automaker pushed hydrogen cars like the Mirai for years, even if the power supply was hardly available outside of California, Hawaii, and, yes, Japan. It kept churning out hydrogen concepts that seemed to go nowhere as the fuel infrastructure never materialized outside of Toyota’s home turf. It made a huge show of H2 power at the Olympic Games in Tokyo in 2020. But where are the cars? Increasingly, hydrogen feels like a better solution for long-haul trucking, not passenger cars. For all Toyoda’s emphasis on hydrogen, outside of Japan, the moves felt like sound bites and headlines—not actual products. As global as the auto industry is, there are times when executives and board members struggle to see past their own front yards. Volkswagen wanted Americans to drive diesels like Europeans do (or did) by any means necessary, and its push to do set in motion the beginning of the end of internal combustion entirely. Ford’s board thought the guy who ran the University of Michigan’s athletics department would make a great CEO. (He didn’t.) Then there’s Akio Toyoda, who pushed back against the wide-scale adoption of EVs because he said Toyota is a full-lineup automaker (as if Volkswagen isn’t!) and said it’s hard to push such adoption in developing markets like Latin America and Southeast Asia. But his feelings on EVs, and his embrace of hydrogen, were mirrored by many Japanese auto executives and yet out of step with the rest of the world and the wider business. Honda is guilty of this, too, and now it’s playing catch-up in a big way. Nissan also admits it dropped the ball it had early on with the Leaf. Toyoda certainly wasn’t wrong about many of his EV criticisms, including their high cost and questions over where electricity is produced. But in the process, too many other competitors raced past his company.
Toyota’s EV Problem
So where are Toyota’s big EV plans now? That’s still deeply unclear; it hauled some vague concepts out of a vault at the end of 2021 but it’s still moving considerably more slowly than most rivals in getting them on the road. It has the electric bZ4X and the Lexus RZ, another joint venture with Subaru, but the reception to that couldn’t be more tepid. Forget Tesla, VW and GM for a second; what Toyota’s probably really afraid of is China’s BYD, an EV powerhouse now and increasingly a global one. (For now, the two are working together on EVs for China, but one assumes they will be at odds eventually.) Toyota must also figure out crucial questions like autonomous driving, connected cars and overall mobility challenges. As for Sato, he’s an encouraging pick for a few reasons; he’s relatively young as far as CEOs go, and he’s also got a background as a powertrain engineer—at one point even the chief engineer for Lexus. It’s more than fair to say that car companies run by actual engineers tend to perform and offer better products than those run by bean counters or random executives from other industries who know nothing about the car business. He also apparently drives a hand-me-down Toyota Supra, which is encouraging. But he’s got his work cut out for him. Already, the headlines are clear: he must “navigate the shift to clean energy,” as Reuters put it, the implication always being that the company that gave the world the Prius is behind in that department. “Toyota, from the overseas investors’ perspective, has been seen as sluggish in the electrification race because the company has deployed a variety of options, not just electric vehicles but hydrogen and existing gasoline-powered cars,” said analyst Daiju Aoki, in the Reuters story linked above. “This personnel change can be an opportunity for Toyota to cast off its backward image if they can show a focus on businesses based on the next-generation energy, including electric vehicles.” Toyoda leaves the CEO post with a company that’s profitable, produces the same bulletproof-reliable cars as ever, managed to bring back a cheap rear-wheel drive sports car and the Supra, and somehow even made the Prius sexy. It’s also a company that’s being relentlessly trolled for not being green by groups like Public Citizen—an unfathomable outcome for the company that put hybrid cars on the map in the first place—and one now playing catch-up as the industry triples down on battery power. Which of those things will prove to be the more defining aspect of Akio Toyoda’s legacy? Support our mission of championing car culture by becoming an Official Autopian Member.
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You see a similar-ish approach with the new Mustang and the new Z: they’re not all-new cars, just heavy updates of existing ones. But if that’s what it takes to get them out there, so be it.
If hydrogen does move in as the final boss after a couple decade EV revival, we could see the same thing happen in the opposite direction.
“The enemy is carbon, not internal combustion engines. We shouldn’t just focus on one technology but make use of the technologies we already possess,” Toyoda told Reuters in 2021. “Carbon neutrality is not about one having a single choice, but about keeping options open.””
Someone is going to have to explain to me exactly what’s incorrect in this statement. The idea that Toyota is “behind” anyone else is a media creation. Sales are strong. Profits are strong. It’s a real problem if the auto (or financial) media feels it’s somehow its duty to hold Toyota to account for not diving gung-ho into EVs as fast as the media wants it to.
That said, I actually think focusing on PHEVs (which seems to be what Toyota is actually doing, regardless of what he says) is the right path forward at the moment. If he had just said “Listen, we don’t think most of the world is ready for full EVs so we’re going all-in on PHEVs” I’d be more inclined to defend his stance.
Plus Toyota knows batteries. Hybrids use batteries too. They’re supposedly close to making solid state a reality. They’ll be fine if they determine battery EVs are what the market demands.
In the interim, they should be applauded for offering more fuel efficient options than anyone else. Any other 40 mpg minivans out there? I see a ton of Highlander Hybrids in my area. RAV4 Prime still can’t be found on a dealer lot. The Prius will be the same for a bit. Every one of those is reducing fossil fuel consumption.
Why would you wager your company by going all-in on just one sector with a huge number of uncertainties? Does Toyota need a BEV or two in their lineup? Yeah, probably, but it’s not a huge hit to their bottom line that they don’t have them at the moment, and they have plenty of time to develop them. Unsurprisingly, the media is living in a bubble where everyone has access to chargers all of the time, and all of their driving is within the charge distance of today’s BEVs. This is not in fact the case for the majority of automotive buyers, and those are the same people who Toyota serves.
Despite lofty claims of reducing CO2 through multiple fronts like hybridization, in the US in 2017, Toyota’s fleet-average efficiency was 25.3 mpg (351 gCO2e/mi) compared to 29.4 mpg (302 gCO2e/mi) for Honda and 26.5 mpg (335 gCO2e/mi) for VW. Toyota’s hybridization efforts are good publicity, but they’re just not paying off compared to other companies.
It’s estimated that alternative fuel vehicles (including electricity, hydrogen, biofuels, etc) currently comprise 17.8% of the global market by dollars (11% marketshare by volume for EVs, 5% for PHEVs). By contrast, only about 2% of Toyota’s vehicle sales run on alternative fuels. Despite talking big about the importance of PHEVs and fuel cells, Toyota just doesn’t sell them in the volumes that everyone else does.
As a nail in the coffin, multiple investigations have rated Toyota among the top ten corporations for lobbying against emissions regulation. Not just against EVs — against the phaseout of fossil fuels in general. They’re up there with the oil companies, and recently had to publicly apologize to investors for it.
So basically, Toyota talks the talk, but they don’t walk the walk. In a diversified decarbonization game, they are way behind most manufacturers, and that’s not a media fabrication, those are just the numbers.
I’m also highly dubious of measuring alternative fuels by dollar share, wouldn’t unit share be a better proxy for emissions? Toyota’s average transaction price is quite a bit lower than say, Tesla’s. Should a Model S really be weighted as much as 4 Prii?
I’m not a Toyota shill by any means, but I do appreciate their measured approach.
Toyota keeps saying: “Instead of taking 100x kWh of battery and producing 100 EVs, let’s make 10000 hybrids which will save more fuel.” OK fantastic! Let’s see if they’re trying to do that.
Estimated battery in kWh put in vehicles sold in the US by Toyota in 2022:
2.1M total x 24% hybrid x 2kWh per veh = 957600 kWh
Estimated battery in kWh put in vehicles sold in the US by Tesla in 2022:
536000 x 50 kWh per veh = 26800000 kWh
So a relatively new company is managing to put 30x more battery to use in their cars to eliminate gas use than Toyota is. This is after using Toyota’s bigger 2kWh battery (Sienna not RAV4), and the smallest Tesla battery (Model 3 not Model Y). The difference is larger IRL.
That’s why everyone thinks Toyota is BSing with their “Hybrids are better use of scarce batteries” speil. I’d admit they’re honest if they were putting say – half the kWh into their cars as Tesla is, but they’re not.
https://pressroom.toyota.com/?generate_pdf=81834
https://www.goodcarbadcar.net/tesla-us-sales-figures/
When, in the multi-decade history of the company, has Toyota been successful by being first to do anything? They are the biggest automaker in the world by aggressively NOT doing that.
Could they be burned by their stance? Yeah, it’s possible. They could be the arrogant GM of the 60s and 70s who doesn’t see the iceberg ahead. But at the same time, the virtues Toyota is known for (safety, reliability, dependability, low running costs) don’t go out of style. As long as they stay true to those, I think they will have loyal buyers, whatever the powertrains are.
Toyota keeps saying: “Instead of taking 100x kWh of battery and producing 100 EVs, let’s make 10000 hybrids which will save more fuel.” OK fantastic! Let’s see if they’re trying to do that.
Estimated battery in kWh put in vehicles sold in the US by Toyota in 2022:
2.1M total x 24% hybrid x 2kWh per veh = 957600 kWh
Estimated battery in kWh put in vehicles sold in the US by Tesla in 2022:
536000 x 50 kWh per veh = 26800000 kWh
So a relatively new company is managing to put 30x more battery to use in their cars to eliminate gas use than Toyota is. This is after using Toyota’s bigger 2kWh battery (Sienna not RAV4), and the smallest Tesla battery (Model 3 not Model Y). The difference is larger IRL.
That’s why everyone thinks Toyota is BSing with their “Hybrids are better use of scarce batteries” speil. I’d admit they’re honest if they were putting say – half the kWh into their cars as Tesla is, but they’re not.
https://pressroom.toyota.com/?generate_pdf=81834
https://www.goodcarbadcar.net/tesla-us-sales-figures/
That said, after reading the entire thing, I find this article’s lack of magic space snakes to be…disappointing.
Seems legit.
Oh, you mean that the same company which, along with Honda and Datsun/Nissan, drove the gas-guzzling rear-drive V8 malaise-mobile into extinction in the 1970s and 1980s?
I would love to know if there is a way to measure how much cleaner this tectonic shift in automaking and buying has made our atmosphere. Kiss my ass, Public Citizen.
If the money goes elsewhere, you can be right but it won’t matter.
https://www.zippia.com/advice/largest-car-companies/
I’m a scientist, hard-core environmentalist, and believer in global warming being caused by carbon emissions. If we want to survive, we need to stop burning stuff for power. But the harsh reality is that the whole EV thing has become something of a woke purity test. To question the holy sanctity of EVs as being the incontrovertible saviors of the planet is considered blasphemy, and just not allowed by many people and sites. What happened to science and fact-based discourse?
Maybe, just maybe, Akio Toyoda might know more than we do. Maybe he just might be right about questioning the lemming-like blind embracing of all things EV. Maybe a more enlightened perspective just might be that the enemy really is carbon.
FWIW, a friend of mine is a recently retired Executive V.P. from one of the major U.S. car companies. He tells me that internally, they deeply question whether EVs are the be-all, end-all answer to Everything That We Need. But, they’re afraid of being perceived as being ‘left behind’, as some accuse Toyota of, and are going along with ‘electrification’ mostly because everyone else is doing it (and because most of the senior executives making the decisions right now will long be retired before the jury is on on their actions).
As George Patton said, “If everybody is thinking alike, then somebody isn’t thinking.”
I think history will look on his time running the company kindly. We may complain about Toyotas being appliances and all that, but they’ve been massively successful selling appliances (most of which sell well because they’re really good, if unexciting, cars), and they still have some enthusiast vehicles too. I think the hydrogen thing will be seen as a misstep, too early to the game at the very least, but they seem to have pivoted away from that somewhat lately. It hasn’t prevented them from building a lot of really good PHEVs, which in the short to mid-term are going to have a bigger impact on reducing emissions than full BEVs anyway. It might not be as sexy as a Rivian, Lucid, or Tesla, but I suspect when we look back we’ll see it was at least as important as those companies.
That’s what my crystal ball says anyway. 😉
This article kinda leads me to believe that the pressure is going to be on for Sato to abandon all of that.
It’ll be a sad day.
I have a feeling that the current era of lithium-ion BEV production is going to be looked at in the same way we look at coal-gas lighting in victorian houses now. It was the solution they had but the danger level was absurd compared to what we have now – even modern natural gas.
Taking a slow, carefully researched and engineered approach to BEV’s seems like the sensible choice. It’s the same thing with how everyone was chasing Tesla’s range – and Porsche released something like “we don’t use the entire battery for the health and longevity of the unit, we could get more range if we wanted to treat a $20,000 structural element of the car like a consumable part” in relation to the Taycan. Weird how Tesla’s seem to have big range but shitty battery longevity and health.
Was Toyota too slow to enter the EV space in a meaningful way and stubbornly clinging to hydrogen for passenger vehicles when it mostly makes sense for things like long-haul trucking? Perhaps. But I don’t think he’s wrong in his assessment that the overall goal should be CO2 reduction, and the most efficient way to get there isn’t necessarily switching everything over to a BEV as quickly as possible. I’m rooting for the transition but there seems to be A LOT of wishful thinking and hyping, and not nearly enough planning and work to actually get us there as quickly as advocates claim. My guess is that their bet to keep making PHEVs is going to look pretty smart in 10-15 years if other manufacturers actually stick to their goals of eliminating ICEs by 2035.
PHEVs are included as part of the 2035 EV mandate, at least as far as California goes.
But there’s no denying that the company is way, way behind the 8 ball in more ways than one. While to me it seems apparent that there’s an inherent sort of cultural conservatism in Japanese car manufacturing in general, all of the Japanese Big 3 are pretty inexcusably behind at the moment. As you mention, Honda is already lagging severely on EVs and, just like Toyota, is selling ICE cars that are essentially 5-10 years old new. I get that that’s what their customers want, but as their core demographic continues to age out it’s definitely not sustainable. Younger folks who are reaching car buying age don’t want a manual-only sporty Civic variant, a thirsty NA V6 powered truck adjacent product, or even a hybrid NPC mobile. For better or worse they want electric.
Nissan has been fighting for their lives for years and is still selling products that are non-competitive in most sectors other than their cheap EVs and NPC mobiles. But I digress. There’s a part of me that understands the hesitation of Toyota and other Japanese carmakers around EVs. While I am generally pro electrification and think the potential benefits outweigh the risks, the way governments are already deciding it’s THE ONLY WAY FORWARD when the products are in their infancy is short sighted.
We have A LOT of work to do if we’re truly aiming for large scale electrification that I think gets swept under the rug too easily. The technology still isn’t suitable for a lot of applications and it isn’t as simple as “everyone go buy an EV”. However, that’s not an excuse to just ignore it altogether, hope it goes away, and continue to sell dated products that appeal to enthusiasts and older buyers who want simple cars they’ll never need to do any work on.
To make a long story short, I’m not sure if this is necessarily an Akio problem or if it’s just the attitude of the Japanese car industry in general, but it’s still not a good look. Do I think it’ll be enough to tarnish his legacy? Ehhhh….hard to know. Obviously there’s a small but exceedingly vocal minority that just hates everything but electric cars and doesn’t want to have the difficult discussions that come with them. They’ll hate him forever, but they also hate every manufacturer that isn’t fully EV already. Enthusiasts will always love him for obvious reasons. Ultimately I think he’s an older gentleman who’s aged out of his position and has some views that are perhaps a little dated.
And honestly…that seems to happen to the best of us. I think the brand will benefit from some new leadership but it’s hard to look at Toyoda’s tenure as anything but a success, even if the last few years come with an asterisk or two.
Maybe they want electric but can they afford electric? Something outside of a compliance special?
This may or may not have been the right strategic choice. I’m just suggesting it might have been more about timing and sequencing over the next decade or two rather than “EVs: Yes or no?”
Like it or not, EVs are currently not the answer for everyone. Charging infrastructure stinks, not everyone has a place to charge at home, and they are generally not inexpensive.
They know all of this a lot better than I do.
Eventually I’d imagine you start recycling materials and OEMs begin to have more control over the chain, but right now you’re begging for raw materials.
Also, he killed the manual non-GR Corolla hatch on his way out, so there’s that 😛 (the take rate was 12% on that car)
It would’ve been nice if they had brought the Corolla wagon back here, Much more fun than any crossover yet still reliable and useful.
