One of the titans of corporate Japan is facing unhappy shareholders.
Toyota Motor Corp.’s current board chairman, Akio Toyoda, served as president and CEO for almost 14 years, only stepping down earlier this year. Under Toyoda’s leadership, Toyota rose to be the world’s largest automaker, first achieving that status in 2020.
But when shareholders convene on Wednesday morning Japan time, several of Toyota’s shareholders, like the New York City comptroller’s office (which manages the city’s pension fund) and the California Public Employees’ Retirement System (Calpers), will support a measure to oust Toyoda—who is the grandson of the company’s founder—from the board.
The reason: Toyota—and Toyoda’s—slow embrace of electric cars. While the company still leads in selling hybrid cars, it’s only now playing catch-up when it comes to making pure electric vehicles, both to established companies like Ford and General Motors and newcomers like Tesla or China’s BYD.
“Toyota is failing to lean, like its peers, into a timely transition to an electric fleet,” Brad Lander, New York City comptroller, told the Wall Street Journal.
The two pension funds also argue the company’s board does not have enough independent directors, and both have voted for a separate resolution calling for greater disclosure of the company’s lobbying on climate change.
While the measure is unlikely to succeed, the Wall Street Journal notes that shareholder revolts, even minor ones, are rare in Japanese corporate culture. Toyoda won renomination to the board last year with 96% of the vote.
“Even in this difficult business environment, chairman of the board Akio Toyoda has been strengthening our competitiveness from a long-term perspective,” a company spokesperson told the Wall Street Journal.
Toyota and electric cars
Unlike his fellow executives, such as Ford’s Jim Farley or General Motors’ Mary Barra, let alone Tesla’s Elon Musk, Toyoda was a vocal skeptic of electric cars in his final months as Toyota’s CEO.
Last December, Toyoda complained that public pressure was stopping executives, whom he called a “silent majority,” from speaking honestly about electric cars “as a single option.”
“They think it’s the trend so they can’t speak out loudly,” he suggested.
Then, in January, Toyota Motor announced that Toyoda would be stepping down as the company’s president, in favor of Koji Sato, then–head of the company’s Lexus subsidiary. “I am an old-fashioned person in regards to digitalization, electric vehicles, and connected cars,” Toyoda said at the time.
Sato took over as president in April, and quickly announced the carmaker would quickly expand its offering of electric cars, releasing 10 new models by 2026.
Yet investors worry that Toyota still isn’t taking the transition to electric vehicles seriously, noting that the company still hasn’t given a firm date for when it might have an all-electric fleet. A slow embrace of electric cars also means the company can’t capture growing demand for EVs in large markets like China, and also misses out from new subsidies being offered by both the U.S. And the European Union.
“Toyota’s EV strategy is simply not looking attractive,” Anders Schelde, chief investment officer of AkademikerPension, a Danish fund, told the Wall Street Journal.
Crisis of confidence
Worries over Toyota’s EV strategy are part of a broader crisis of confidence in the Japanese auto industry.
Earlier this year, China overtook Japan as the world’s largest exporter of cars, in part owing to a surge in exported EVs made in the country. Tesla produces half its cars in Shanghai, while Shenzhen-based BYD is also exploring export opportunities.
Japanese brands are also losing ground in the domestic Chinese market, as consumers flock to electric cars, whether produced by local companies or by Tesla.
It’s not just Japanese automakers that are freaking out about China. European auto executives are worried, too: Chinese-made electric cars could capture 15% of the European market by 2025, up from less than 10% last year, KPMG China chief economist Kevin Kang suggested to the South China Morning Post.
The “biggest danger” for EV prices are “the Chinese coming in,” said Peugeot CEO Linda Jackson at a Financial Times conference in May.
“They are coming in with quite competitive prices and with very good vehicles,” she said.