EV Strategy to be Accelerated by New Toyota Chief

When it comes to optimizing electric vehicle parts and manufacturing, automaker Koji Sato says it needs an 'EV-first mindset'.

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A new Toyota Motor Corporation executive called for an "EV-first mindset" in building out the company's EV lineup, calling for the development of parts and manufacturing methods optimized for electric vehicles.

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Koji Sato, who takes over from longtime leader Akio Toyoda in April, said, "We have to drastically change how we do business."

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Using an EV-specialized manufacturing platform - a basic architecture that integrates a variety of models - Toyota will develop new EVs by 2026 for its luxury Lexus brand.

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For most of its history, Toyota has mostly relied on existing technologies to produce electric vehicles. EVs are assembled on lines that produce other types of cars, and its EV production platform was partly adapted from one used for gasoline-powered cars.

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According to Mr. Sato, Toyota needs to develop its electrified lineup with an "EV-first mindset." The new strategy will be led by Lexus, but ultimately will extend beyond the automaker's own lineup. Additionally, Toyota will expand its current electric vehicle lineup beyond Lexus models.

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In 2009, Toyota's leader Mr. Toyoda, 66, died while attempting to replace Mr. Sato. A company statement announced that three executives considered leading candidates for the CEO post will receive new jobs in April.

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There are a number of prominent executives in Toyota, including Kenta Kon, the company's chief financial officer, and Masahiko Maeda, the company's chief technology officer. Woven Planet will be renamed "Woven by Toyota" in April, and Mr. Kon will be responsible for initiatives at the company's advanced technology and software arm.

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Lexus' goal of being all-EV by 2035 has previously been stated by Toyota. While Mr. Sato is in charge of Lexus until he takes over as CEO in April, he will continue to lead the company. When he officially assumes his new role, Mr. Sato will offer more information about Toyota's EV strategy.

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A longtime Toyota engineer, Mr. Sato was already considering changes to Toyota's EV strategy before he was appointed CEO.

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Toyota aims to take advantage of economies of scale by investing more upfront in EV-specific parts and manufacturing. Instead of relying solely on ready-made batteries from outside suppliers, the company plans to manufacture its own batteries and invest in the battery supply chain.

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Mr. Sato faces a challenge because some of those ideas have already been implemented by other automakers, including Tesla Inc., legacy automakers, and the Chinese car manufacturer BYD.

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China and Europe already have a large proportion of electric vehicles on the road, and more generous tax incentives in the U.S. will likely boost sales.

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As of today, Toyota dominates hybrid gas-electric vehicle sales with its Prius, which was pioneered in the late 1990s, but sales of electric vehicles are negligible. The sale of EVs by Toyota and Lexus retail outlets last year accounted for less than 1% of total sales. Approximately a third of the company's annual sales of roughly 10 million vehicles will be devoted to sustainability by 2030.

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Toyota is increasingly offering hybrids and hydrogen-powered cars to consumers, and Toyoda questions whether EVs should be the sole focus. Toyoda's assertions about the car maker's omnidirectional approach were echoed by Sato, who said the company would "continue to pursue it unwaveringly."

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During his years spent with Mr. Toyoda examining business models and thinking about how to manufacture EVs so that they are "uniquely Toyota," Sato said the new strategy to promote electric vehicles was the product of the work that they had done together.

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Our goal is to create EVs to compare with the type we've seen," Mr. Sato added. We will use a new approach to accelerate development now that the timing is right."