The Asian Elon Musk? The Visions of Akio Toyoda

Mr. Akio Toyoda, unlike the founder of Toyota, Kiichiro Toyoda, is a third-generation entrepreneur who has received a good Western education. He is fluent in English and fully familiar with the culture, norms, and order of Western countries’ capital and business world. He was educated in Boston, the cultural center of Western capitalism, and primarily attended Babson College in the southern part of Boston. 

On January 26, 2023, Toyoda unexpectedly announced that he would step down as president and CEO of Toyota Motor Corporation on April 1, but would assume the position of chairman. The role of president is now taken over by Koji Sato, who has previously led Lexus to become a well-known luxury car brand in the United States.

Interestingly, after stepping down as president, Toyoda seems to have sparked a public storm. He stands at the forefront, boldly expresses his views, and quickly becomes a rare iconic figure in the Japanese business community.

Shortly after the start of 2024, a debate over the future discourse of electric vehicles unfolded between two giants in the automotive industry. The protagonists of the virtual “battle of words” were Toyoda himself with Elon Musk.

At the outset, Toyoda expressed pessimistic views on electric cars, stating that he thinks that electric vehicles (EVs) will only ever make up 30 percent of the auto industry, with hybrids and hydrogen tech making up the rest. 

Soon, these remarks caught Musk’s attention, who responded with a single word “sigh” on his X, formerly known as Twitter, expressing his frustration. It appears that Musk is very annoyed by Tesla’s current sales performance in Japan falling short of expectations. Musk blamed this on the Japanese “lack of awareness”, which he says he heard from Japanese friends. He had previously warned that if traditional car companies did not quickly transition to EVs, they would be abandoned as was the film giant Kodak in the digital age.

Since stepping down from his position as president of Toyota Motor Corporation, Toyoda appears to have become his true self, showing a determination and stance to battle against EVs to the end.

Toyoda pointed out the insufficient charging infrastructure for electric cars. He considers EVs to be environmentally unfriendly and low-quality products. He also sees that the batteries of EVs rarely last more than 10 years, and the disposal of used batteries could lead to environmental pollution. It is worth noting that Toyoda once again mentioned the original intention that is being forgotten in the global automotive industry: the true mission of the automotive industry, including Toyota, is to reduce carbon emissions. However, in reality, this has been distorted to mean that only electric cars can achieve this goal, completely ignoring the existence of other mature technologies.

Toyoda’s continuous attacks on EVs are not without reason. Tesla’s performance in the Japanese market can be described as a complete failure. Import volumes of Tesla in the Japanese market have not only failed to grow but have also decreased by 6.8%. In addition, Tesla’s announced performance also falls short of the ideal. The situation of EVs is quite bad, with Tesla’s gross profit margin in 2023 being 18%, the lowest since 2019, and a year-on-year decrease of 7.35%. Musk’s self-explanation is that Tesla is between two growth waves, and sales in 2024 will significantly slow down.

While EVs are still being raved about in the global market, as I predicted at the end of 2023, EVs, as a type of new energy vehicle, are already in decline, and future market trends will be downward, even sharply so. The specific reasons, I believe, are mainly threefold. First, technological breakthroughs are difficult to achieve. Although there is continuous “good news” in terms of technological entertainment, including technologies like “solid-state batteries”, its practical mass production is still far from realization. Second, EV subsidies and support policies in various countries around the world are being withdrawn one after another, eliminating the space for policy arbitrage. As a result, car prices will rise or production will suffer significant losses. Third, the industrial technology is simple, mainly consisting of the “three-electric” system: motor, battery pack, and electronic control. Overcapacity in assembly is easy to achieve, leading to price suppression. Therefore, in today’s automotive manufacturing industry, although most people are still part of the “silent majority”, the industry bubble is gathered in the field of new energy vehicles, and the risks are concentrated there as well. 

In contrast to reality, in the public opinion arena, Musk still holds a dominant position globally. Not only in the automotive manufacturing industry but also in other areas, including even the situation regarding the Ukraine conflict, he holds such a major sway in public opinion. In our current world, no global entrepreneurs can compare with Musk, but even among the wealthy global capital and investment sectors, no one can be mentioned in the same breath as him.

Akio Toyoda could be the only exception.

Toyoda’s views which are contrary to popular ones, are difficult for the public opinion arena to digest. This sparks intense debates, some of which may even escalate into a sort of gambling. We can see that Toyoda is vastly different from traditional Japanese entrepreneurs. Not only does he manage and control massive assets, but he also embodies the symbol of Toyota, holding a prominent position in the automotive manufacturing industry with a strong background in modern corporate culture. I foresee that in the future, he can be regarded as a symbolic figure representing Asian businesses capable of competing head-to-head with Musk.

Written by Chan Kung.
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