Key Toyota supplier appoints new leader in the heat of EV shift

One of Toyota’s most prominent suppliers and Japan’s leading auto parts manufacturer, Denso, appointed a new CEO Monday as the industry’s shift to EVs heats up globally.

Toyota, Japan lag behind the EV market

Toyota is in the midst of an identity crisis. The world’s largest automaker has stood by as the industry transformed beneath it.

Electric vehicle sales rose 60% in 2022, despite supply chain hurdles, surpassing 10 million for the first time, according to information by the IEA. Major car markets are leading the way, with over one in four cars sold in China, over one in five in the EU, and almost one in every ten vehicles sold in the US being electric.

However, one primary car market, in particular, has severely lagged behind the overall market. Fully electric vehicles accounted for just 2.1% of new passenger car sales in Japan in 2022, compared to almost 20% in Europe and China.

Toyota has played a commanding role in the nation’s reluctant approach to going all in on fully electric, zero-emission EVs.

The automaker has actively challenged the industry’s shift to electric vehicles over the past decade, working to spread misinformation and lobbying against rules that promote EV adoption.

Toyota’s first all-electric vehicle, the bZ4X, had a disappointing launch, with a recall derailing the rollout.

As a result, Toyota ranked among the world’s most obstructive companies on climate policy in 2022, with less than 1% of total sales being zero-emission (not hybrid). In addition, Toyota was found to have one of the least developed supply chains for reducing carbon emissions.

The trend may soon change with Japan’s leading auto supplier and critical Toyota vendor, Denso, appointing a new CEO.

Toyota’s auto supplier appoints new CEO amid EV shift

Denso was initially formed as a Toyota spin-off, becoming a powerhouse in the global auto parts industry and expanding to supply many automakers.

The supplier revealed on Monday it had chosen senior executive and chief software officer Shinnosuke Hayashi to take over the reins as president and CEO. The move comes shortly after Toyota also appointed a new leader.

Incumbent president, Koji Arima, told reporters at a news conference:

The foundation for management is now in place, and for Denso to take a bigger leap forward, it is necessary to have someone with different knowledge from myself, who has leadership, can create new value, and inject new wind [into the company].

When asked about what challenges he will address first, Hayashi mentioned the auto industry’s trend toward fully electric, software-defined vehicles, claiming:

We will respond by transforming our portfolio, which includes production and supply structure as well as engineers’ skills.

Toyota’s newly elected leader Koji Sato, who took over this month for 66-year-old grandson to the company’s founder Akio Toyoda, revealed plans to “accelerate” the company’s transition to EVs with ten new models and 1.5 million in sales by 2026.

Electrek’s Take

Over the past few weeks, or months, Japanese companies have one by one announced plans to boost EV development efforts.

For example, Honda announced it’s overhauling its business strategy to focus on electric vehicles earlier this year. At the same time, Mitsubishi declared it would become a “mainly BEV” brand by the end of the decade.

Despite the recent claims, Toyota is still sticking to a nontraditional approach with plans to include hybrids and fuel cell vehicles in its lineup.

While many automakers are already achieving double-digit or 100% EV sales, Toyota is still aiming for less than 15% of its total to be electric by 2026. Perhaps with its leading supplier also changing leadership, the automaker and nation can get on board with the zero-emission EV movement.