New Toyota boss tackles profitability for electric cars with renewed power
New Toyota CEO Koji Sati has announced a new three-pronged plan to help make the company’s EV strategy profitable as soon as possible.
When Akio Toyoda announced that he would step down from his longtime position as CEO of Toyota, the world’s largest automaker, many investors were uncertain about the company’s future, but still hopeful that a new leader could breathe fire into the historic auto giant. And that’s exactly what has happened with Toyota’s new CEO, Koji Sato, who has been pursuing electric vehicles more aggressively. Now the new CEO has announced his plan to make Toyota’s EV strategy profitable as quickly as possible.
Sato̵[ads1]7;s new EV plan is quite a shift compared to the one previously announced by Akio Toyoda. Toyota now plans an annual production capacity of 1.5 million electric vehicles by 2025 and 3.5 million by 2030. And while this shift sounds like a significant shift for the formerly EV-hesitating company, Sato is now tasked with making it a reality.
As part of this quest, Sato has outlined his new profitability plan, which Car news first reported.
Toyota’s profitability plan has three parts, and the first step has already been completed; introducing the company’s first electric offering in the best global markets. After this step, which at least has given the Japanese automaker many lessons, Toyota must implement changes, which will come in the next round of upcoming electric cars. Third and finally, by introducing its new EV platform by 2026, Toyota aims to double the range its EVs are capable of, increase revenue streams and halve the cost of EV development.
Toyota’s focus on profitability is undoubtedly unique to the company. As noted by Car news, Toyota has traditionally been a leader in profitability, consistently achieving a margin of 10%. But with the introduction of Tesla’s now industry-leading ~20% margins, Toyota is under renewed pressure to improve.
Fortunately, the company’s planned increase in revenue streams is set to rejuvenate the balance sheet, but it remains unclear how customers will take the necessary changes.
As part of its second step towards EV profitability, Toyota will introduce its “Arena software system”, which will dramatically increase the monetization of vehicles after purchase. Some of these changes have already been seen on newer Toyota vehicles, including a monthly subscription system for remote air conditioning and other phone controls. But with a growing contingent of automakers looking to do the same, customers may have no choice but to follow suit.
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