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New Toyota chief tech officer to radically ramp up r&d efficiency

The orders come straight from Chairman Akio Toyoda, Sweers said.

“He’s not expecting change. He’s demanding change,” Sweers said.

The challenge from rivals such as Tesla and Chinese giant BYD lit a fire under Toyota’s top brass, spotlighting the need to rethink vehicle design from scratch.

The new competitors’ cost-effective engineering and production techniques even forced an emergency overhaul of Toyota’s own EV plans. After taking office in April, CEO Koji Sato said Toyota will develop an EV platform to underpin vehicles from 2026. They will be manufactured with a host of new technologies inspired by Tesla, such as the use of giga casting.

Meanwhile, improving the business in North America, Toyota’s traditional cash cow, is seen as crucial to generating the money needed for the mighty investment into these new technologies.

Even as the Japanese juggernaut nearly doubled its operating profit in the latest quarter, lagging performance in the North American market undermined that equation. North American operating margin languished at 3 percent in the quarter, below other regions, such as 14 percent in Japan and 6.3 percent in Europe.

“We are not satisfied with an operating profit margin of 3 percent in North America, and we need to raise this more,” a Toyota official said at the time. “As we will be making battery-related investments and producing BEVs there, we will need to prepare for such spending from now. And thus, we will need cash. Our operating profit margin is not at a sufficient level.”

Change in product development will come partly through new technologies.

Advances in predictive engineering that use artificial intelligence will allow quicker and more accurate design work that better models the real-world output without having to build physical prototypes. Leveraging big data from the millions of Toyota vehicles on the road will also help.

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