Toyota Shareholder Revolt

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When all you have to show for an electric offering is a toy car, then it is no wonder you have a shareholder revolt. Despite consistently producing and selling 8 million cars a year for the past 20 years, Toyota’s future doesn’t look as rosy as it used to, and shareholders are worried that they are missing out on the profits to be made from the electric vehicle revolution currently underway.

At a recent auto event, a local Queensland dealer had a toy BZ4 on display. In conversation, he defended Toyota’s timing but appeared disappointed that he had no electric cars to show or sell. Now the shareholders are also upset.

Some shareholders are planning to vote to remove long-time leader Akio Toyoda from the board over the automaker’s EV stance. Toyoda, grandson of the company’s founder, has recently stepped down as CEO but still holds a place on the board of directors. The next annual shareholder meeting will take place on June 23 and Toyota hopes its newly released technology strategy will serve to soothe investor anxieties. As expected, the board is rallying support.

Toyota has lobbied against strict fuel efficiency standards in Australia and worldwide and is one of the top three funders of lobbyists against 100% battery electric vehicles (BEVs). Various Toyota executives have sent mixed messages about the future ascendency of hydrogen-powered cars, the efficacy of mild hybrids vs. BEVs, and a future BEV strategy based on solid-state batteries. None of these technologies have proven their worth yet, and I wonder if these messages are merely a ploy for Toyota to maintain its current hybrid vehicle (HEV) dominance and profit margins.

Toyota says it believes different markets will take “different paths” to decarbonization, and has committed to offering a wide range of “eco-friendly” vehicles that include EVs and its popular hybrid technology.

The Danish pension company AkademikerPension said last year that through Toyota’s lobbying, the car company has reputedly sought to “weaken legitimate attempts by governments around the world to phase out internal combustion engines, and to phase in fuel economy standards and, critically, pure electric vehicles.”

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“In our view — and in the view of many other investors — the lobbying work undertaken by Toyota Motor has given the company a global laggard status on climate action within the auto sector,” said AkademikerPension CIO Anders Schelde. “Public statements, increasing pressure on national governments to weaken EV policies, and behind the scenes advocacy through business associations has been repeatedly obstructionist towards the bans on cars that are not purely electric. This is jeopardising Toyota’s valuable brand to the detriment of shareholder interests.”

Danish pension fund AkademikerPension is part of a group of three shareholders, including Norway’s Storebrand Asset Management and Dutch pension investment company APG Asset Management, who are calling on Toyota to review its climate-related lobbying. Collectively, the group owns $400 million in Toyota stock. United States shareholders, including the New York City comptroller’s office and the California Public Employees’ Retirement System, have said that they plan to vote to oust several board members, including Toyoda.

Greenpeace has also weighed in on the conversation. “Toyota’s own shareholders share our concerns that the carmaker is blocking progress on electric vehicles through its fossil fuel lobbying, despite clear demand from consumers for cleaner, more affordable electric vehicle options both at home and abroad,” Greenpeace Australia Pacific campaigner Joe Rafalowicz said today.

Toyota “published a new technology strategy on Tuesday, June 13, listing numerous innovations to improve its EV lineup and accelerate output. The brief includes plans to build next-generation, cost-effective batteries with driving ranges of 600 miles by 2026 and 900 miles by 2028. An electric vehicle from Toyota’s Lexus brand will be the first to feature the upgrades when it launches in three years. The automaker is also planning a facility overhaul based on Tesla’s ‘gigafactory’ design, allowing it to streamline and increase production.”

East Peterson-Trujillo, clean vehicles campaigner with Public Citizen’s Climate Team, issued the following statement: “Automakers without a robust EV strategy are automakers in trouble” and that “Until Toyota stops fighting the electric vehicle future and commits to a 100% zero-emission vehicle line-up, shareholders should remain sceptical and continue to push for accountability.”

The electric rEVolution will go ahead with or without Japanese automakers. Progress would be much faster if they were involved, and the repercussions to the global and Japanese economy should they lose their massive market share would be catastrophic. In order to maintain market share, Toyota needs to commit to offering a credible range of decent EVs and do so quickly.

China, the world’s largest car market (and the world’s largest producer of electric vehicles) is going BEV fast. Toyota cannot compete in a market which is offering quality electric cars at a reasonable price if the majority of its production is ICE vehicles. Recent stats from China show that no Toyota models make the top ten in the electric market. What will happen next year when stricter emission standards are introduced on fossil fueled cars? The Chinese government is demanding a reduction of between a third and a half of carbon monoxide, nitrogen oxide, particulates, and other pollutants. Currently, Toyota sells about 2 million cars a year in China (25% of its global production and sales). Without a credible EV, built in sufficient quantities, these sales numbers are a severe risk. No wonder shareholders are revolting.

I just hope Toyota’s announcements of a “new technology strategy” aren’t simply smoke and mirrors to calm shareholders and once again delay a move towards battery electric vehicles. Some shareholders are calling for a date when Toyota will abandon gas-powered vehicles. Many car companies have already set target dates for full electrification. Toyota has come a long way under its new CEO, Koji Sato, with the announcement of plans, goals, and investments in BEV vehicles. Will this be enough to satisfy shareholders? After years of delay and obfuscation, will it be believed? Can we have more than a toy car, please?