Toyota’s new CEO, Koji Sati, announced a new three-part plan to help make the company’s EV strategy profitable as soon as possible.
When Akio Toyoda announced that he would retire from his longtime position as CEO of Toyota, the world’s largest automaker, many investors were uncertain about the company’s future, but hoped that a new executive would breathe fire into the historic giant car And that’s exactly what happened to Toyota’s new CEO, Koji Sato, who has more aggressively pursued electric vehicles. Today, the new CEO revealed his plan to make Toyota’s EV strategy profitable as soon as possible.
Sato’s new EV plan is quite a change compared to what was previously announced by Akio Toyoda. Toyota is now planning for an annual production capacity of 1.5 million EVs by 2025 and 3.5 million by 2030. And while this shift sounds like a significant change for the previously EV-hesitant company, Sato has been tasked with make it a reality.
As part of this search, Sato outlined his new profitability plan, which Automotive News first reported.
Toyota’s profitability plan has three parts, and the first step has been completed; introduce the company’s first electric offerings in leading global markets. Following this move, which at least taught the Japanese automaker many lessons, Toyota will have to implement changes, which will come in its next round of upcoming EVs. Third and finally, by introducing its new EV platform in 2026, Toyota aims to double the range its EVs are capable of, increase its revenue streams, and halve the cost of EV development.
Toyota’s focus on profitability is undoubtedly unique for the company. As mentioned by Automotive News, Toyota has traditionally been a leader in profitability, consistently achieving margins of 10%. But with the advent 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 boost its balance sheet, but it remains unclear how customers will make the necessary changes.
As part of its second step toward EV profitability, Toyota will introduce its “Arena software system,” which will dramatically increase monetization of vehicles after purchase. Some of these changes have already been seen in newer Toyota vehicles, including a monthly subscription system for remote air conditioning and other phone controls. However, with a growing contingent of automakers looking to do the same thing, customers may have no choice but to go along.
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