Autobot Toyota’s “new strategy” sets sail

Toyota is speeding up its entry into the new energy business in a planned way, and its plans are spread out from the long term to the medium to near term. This is the difference between Tsuneji Sato and Akio Toyoda, and it is also due to changes in the situation.

Article / "Car Man" Li Ye

Major actions of front-line car companies rarely carry out sudden attacks, and are announced months in advance. Never pursuing news per se means valuing stability and predictability more.

On April 1, Toyota Motor officially realized the leadership change that was announced more than 2 months ago. It’s not just Akio Toyoda who became chairman and Tsuneharu Sato who took over as president, but also a major change in the entire senior management team. The executive changes of as many as 26 people, as well as the explanation of the "2026 Strategy" on April 1, were announced in February.

Sure enough, on April 7, one week after Tsuneharu Sato took office, Toyota held a "new structure policy briefing meeting."

This is the first press conference since the launch of the new management structure led by Sato Tsuneharu. In Sato Tsuneji's view, Toyota's electric strategy does not leave a "strong" impression on people, mainly due to the problem of external information release. "As for the suggestion that we are making slow progress on the battery electric vehicle project, I think about half of it is a communication problem."

Solving the 'other half'

Meanwhile, Tsuneharu Sato The management under the company has further revised the new energy strategy, which is obviously to solve the "other half" problem, that is, to speed up the implementation of the new energy strategy.

This is obvious. Since 2018, Toyota has been pressing the "accelerator button", but it is still criticized by the outside world for being conservative.

It needs to be pointed out that there is no real standard for radical and conservative. Public opinion has only seen that some Chinese companies and Tesla have made great gains in the new energy business, and even studiously. However, there are only two types of brands in 100's new energy business: one is born with new energy genes; the other is that the traditional automobile business has nothing to miss. Toyota is neither of these.

It cannot be ignored that Toyota is a highly globalized company. From a global perspective, the fuel vehicle business and even HEVs are still highly profitable.

In the first three quarters of fiscal year 2023 (April 1 to December 31, 2022), Toyota Motor’s revenue was 27.46 trillion yen (approximately 1.44 trillion yuan), a year-on-year increase of 18.01%; Net profit was 1.9 trillion yen (99.319 billion yuan), a year-on-year decrease of 18.10%.

While the traditional business is still quite profitable, it is obviously not rational for the entire group to go into the renewable energy business (according to the financial report, the gross profit of Tesla electric vehicles is 7 times that of Toyota's pure electric models). Therefore, Toyota does not have a strong sense of strategic urgency in transforming into new energy sources and needs to control the pace of transformation.

As new energy R&D, production and supply chains are gradually put in place, Toyota is leaning more towards new energy business. Prior to this, large amounts of R&D expenses were being invested, which was the strategic basis for transformation.

So we can see that although the two generations of Toyota presidents have subtly different styles, they are consistent in controlling the rhythm and not planning to invest all employees in electric vehicles at this stage.

However, at the "Policy Briefing Meeting" on April 7, it was still clear that Toyota is speeding up its entry into the new energy business in a planned way. Its plan has been spread out from the long term to the medium and near term. The specific road map has been With it, the practicality is greatly enhanced. This is the difference between Tsuneji Sato and Akio Toyoda, and it is also due to changes in the situation.

Accelerate the pace of new energy strategy

At the beginning of 2023, Toyota plans to launch 30 EV models by 2030, with EV sales reaching 3.5 million vehicles. This plan is greatly accelerated compared to the plan in 2021 (total sales of EVs and FCVs is 2 million units in 2030) and the plan in 2018 (total sales of EVs and FCVs is 1 million units in 2030).

Now, Sato Tsuneharu has proposed a mid-term goal for the 2030 strategy, that is, launching 10 EV models before 2026 and reaching global annual EV sales of 1.5 million vehicles.

This is equivalent to 60 times EV sales in 2022 and will be achieved in four years (still using the fiscal year plan that starts on April 1).

Correspondingly, short-term planning is also speeding up. In 2024, two additional "locally developed" EVs will be launched in China. This seems to imply that Toyota will take the path of localizing EV research and development and jointly promoting it with strategic partners. Toyota's strategy of leveraging China's EV industry and wisdom and being rooted in China's EV supply chain shows signs of increasing its investment.

For the US and European markets, the bZ series will continue to strengthen and add models. In emerging market countries, pickup trucks and new small cars will be launched.

In this way, Toyota has formulated a "three-tiered" specific layout for the new policy. The Chinese market will play a more important role in the development and production of EVs. Because it is rare for a group-level "general policy" to be specific to specific models in specific markets. This may also correspond to what Tsuneji Sato calls the concept of "strengthening communication."

Inheritance and evolution

It is impossible for Toyota to virtualize the world's largest automobile business, so Tsuneji Sato proposed a policy theme of "inheritance and evolution." The former is very clear that it will take over all the group's existing businesses without giving up any of them; the latter is essentially strengthening the EV strategy.

During Akio Toyoda’s era, he repeatedly emphasized the need to implement new energy businesses with carbon reduction as the standard, that is, a strategy of simultaneously advancing EV, FCV and hydrogen internal combustion engines.

In the narrative led by Tsuneharu Sato, it is still the "all-round strategy" of new energy. However, the EV track has been elevated to a major position. This is not just rhetoric. The group’s investment of trillions of yen is enough to show that Toyota’s strategic revision is serious.

To realize the commercial value of FCV, Tsuneji Sato proposed to promote it centered on commercial vehicles. This is more in line with the current efforts of Chinese companies, and the two sides are exploring the possibility of cooperation (such as with FAW Jiefang).

As the successor of Akio Toyoda, Tsuneharu Sato has only been in office for a short time, and his governance style has not yet been seen, but he already has his own clear proposition, which is "Toyota Mobility", which he has focused more on. Concept (TOYOTA Mobility Concept)”.

This is a new concept. The current description is not enough to get a full picture. It roughly proposes the standard of "value expansion" from three aspects: automobiles, mobility and social services. Toyota will rely on a cloud-based Internet service (called "Arene") that can remotely provide vehicle safety services, as well as an in-car OS that runs across platforms.

Chinese companies are conducting research and development on many of these technologies, and some of them have already been deployed. Toyota raised this point to show that it is trying to add value to the brand with the help of the data capabilities of the Internet and the cloud.

Some of the contents of this briefing were released to the media earlier this year. But only from the words of Toyota's new generation CEO can we truly understand that Toyota's new energy strategy endorses the entire group's resources and bets on the group's future destiny.

Sato Tsuneharu’s actions are both swift and bold, showing that his operations are supported by Chairman Akio Toyoda and the veteran faction. Otherwise, there would be no major reorganization of the top management. The latter is obviously to adapt "Sato's New Deal."

This Toyota revolution in which EV becomes a pioneer will start with Lexus, and Toyota’s main brand will quickly follow up. The 3 million vehicle production capacity in several major markets around the world will undergo complete changes (most of which should be new production capacity in the next few years).

To this end, Toyota needs to vigorously transform the supply chain until it can provide sufficient parts demand for this production capacity plan. Among them, battery production capacity deployment will be the focus. In addition to the traditional Panasonic, Toyota will seek to finalize medium- and long-term cooperation with Chinese battery suppliers. Next, Toyota will be seen making substantial contact with the latter.

A powerful behemoth is difficult to defeat head-on. What threatens it is short-sightedness and ignorance of environmental changes. Sato Tsuneharu's move has shown that he understands the changes in the current automobile industry structure and is much faster than Toyota taking decades to build an empire.

He is determined to make full use of these powers that he has just begun to control, to catch up and gain new vitality.

Toyoda Akio said: "The new team can do things that I can't do." This short sentence contains a lot of imagery worth pondering.

The "Policy Briefing Meeting" on April 7 marked the beginning of the new Toyota strategy marked by Tsuneji Sato. This time, it may only take a short time (for example, one or two years) to see the effects of the New Deal. Copyright Statement: This article is an original manuscript of "Autobot" and may not be reproduced without authorization.

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