Toyota’s new CEO, Koji Sati, has announced a new three-part plan to help make the company’s EV strategy profitable as soon as possible.
When Akio Toyoda announced he would be retiring from his longtime CEO role at Toyota, the world’s largest automaker, many investors were uncertain about the company’s future, but hoped that a new leader could breathe fire into the historic car giant. And that’s precisely what happened with Toyota’s new CEO, Koji Sato, who pursued electric vehicles more aggressively. Now the new CEO has announced his plan to make Toyota’s EV strategy profitable as quickly as possible.
Sato’s new EV blueprint is quite a change from 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 the move seems like a big change for the previously hesitant company, Sato is now tasked with making it a reality.
As part of this quest, Sato presented his new profitability plan, which Automotive News originally reported.
Toyota’s profitability plan has three parts, and the first step has already been taken; present the company’s first electric offers on the main world markets. Following this step, which to say the least provided the Japanese manufacturer with many lessons, Toyota must implement changes, which will come in its next series of electric vehicles to come. Thirdly and finally, by introducing its new electric vehicle platform by 2026, Toyota aims to double the range of its electric vehicles, increase its revenue sources and halve the cost of developing electric vehicles.
Toyota’s focus on profitability is undoubtedly unique to the company. As noted Automotive News, Toyota has always been a leader in profitability, consistently achieving a 10% margin. But with the advent of Tesla’s now industry-leading margins of around 20%, Toyota is under renewed pressure to improve.
Fortunately, the company’s projected increase in revenue streams should rejuvenate its balance sheet, but it remains unclear how customers will embrace the required changes.
As part of its second step towards EV profitability, Toyota will introduce its “Arena software system,” which will dramatically increase vehicle monetization after purchase. Some of these changes have already been seen on new Toyota vehicles, including a monthly subscription system for remote air conditioning and other telephone controls. Yet with a growing contingent of automakers looking to do the exact same thing, customers may have no choice but to follow suit.
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