Toyota's next CEO makes reforming EV strategy top priority for new team

Toyota’s next CEO, Koji Sato, said he will “drastically” revamp the carmaker’s slow-going electric vehicle strategy with a new leadership team as he seeks to reinvent the automaker as a mobility company in an era of industry upheaval.

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

The ramp up comes amid mounting criticism among some investors, environmental activists and EV enthusiasts, that Toyota 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 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.

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

Sato said Toyota would stick with the diverse powertrain strategy pioneered by his predecessor, in which the 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 board room.

Sato said the redoubled focus on EVs is not a reaction to changes in the competitive landscape as new rivals from Silicon Valley and China pile into the 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 Toyota’s 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,” he said.
 
'Drastic' EV change

Sato, 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."

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 of going fully electric worldwide by 2035 and selling 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 electrics worldwide. That compares with 2.60 million hybrids moved in the same period.

Masanori Kuwata, 52, 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 global human resources, will become an executive at Toyota’s Lexus manufacturing hub in Kyushu as part of the job.

There, Kuwata will be 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 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 said 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 youth and 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 assumes a new role as Chief Branding Officer on top of his current duties guiding worldwide styling.

New Lexus task-master Kuwata is another of the up-and-coming youthful leaders.

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 and is also being appointed as the company’s new chief production officer.

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

American James Kuffner, the CEO of Woven Planet, will be among those giving up his seat on the board in the shuffle. He will keep his job as head of the rechristened Woven by Toyota.

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 will become deputy.

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.

Kon and Maeda will join Kuffner in leaving the board.

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.

Toyota also announced new executives to succeed Sato at Lexus and Gazoo Racing.

At Lexus, 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.

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 Sato: "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.

Sato echoed the soccer analogy at the Tokyo news conference.

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

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