Despite Akio Toyoda’s re-election, there was nothing much to celebrate for the veteran in the recently concluded annual general meeting, as shareholder backing for his leadership reportedly slid for a second straight year (72%), amid certification scandals and governance concerns.

“The result marks the lowest level of backing for Toyoda, the grandson of the company’s founder, since the world’s largest automaker started disclosing the breakdown of shareholder votes in 2010,” reported Reuters.

In fact, there were recommendations by proxy advisers to vote against Toyoda’s re-election, despite the Toyota boss enjoying approval ratings of 85% and 96% in 2023 and 2022 respectively.

As per the reports, proxy advisers like Institutional Shareholder Services (ISS) and Glass Lewis had reservations with the way Toyota dealt with ongoing certification testing violations, involving the Japanese automaker and its group companies such as compact car maker Daihatsu. Daihatsu sparked a lengthy probe, after admitting in 2023 that it had rigged crash safety tests for about 88,000 cars.

Glass Lewis even recommended that Akio Toyoda should not be re-elected for a second year in a row, apart from expressing concerns about the board’s independence and return on equity.

However, Toyoda has not been new to controversies. Since joining the board of his family’s Toyota Motor in 2000, he assisted in guiding the business through two major crises: the financial crisis of 2008 and a significant safety scandal that claimed numerous lives and billions of dollars.

Early Life And Career

Akio Toyoda, previously the company’s president and Chief Executive Officer has held positions in every department related to the automotive industry, including marketing, production, and product development, both domestically and abroad.

He was employed by Toyota’s production joint venture with General Motors in California, and worked with New United Motor Manufacturing, as an executive vice president and board member, starting in April 1998.

Akio Toyoda went back to Japan in January 2000, and in June he was added to the Toyota Motor’s Board of Directors. In that role, he took on the development and management of gazoo.com, an online marketplace with dozens of virtual stores selling consumer goods and services as well as car-related information.

He oversaw operations in the Americas, production management consulting, and domestic marketing during this time as well. Akio Toyoda joined the Asia and China Operations Centre in June 2001 as its chief officer. He was promoted to managing director in June 2002.

He was appointed senior managing director in June 2003 (he changed this title to senior managing officer in June 2011). In January 2005, he was named chief officer of the Asia, Oceania & Middle East Operations Group as well as the China Operations Group. He was promoted to executive vice president and representative director in June 2005, with oversight over IT & ITS, quality, purchasing, product management, sales to Japan and other countries, and international operations. Akio Toyoda was appointed president of Toyota in June 2009. He was appointed the automaker’s chairman in April 2023.

Challenges Await The Top Boss

As per Reuters, most of the slippage in Toyota’s support is expected to have come from foreign investors which account for a quarter of the automaker’s shareholders. Those that voted against Toyoda included United States public pension CalPERS and Canadian pension investor CPP Investments.

Toyota, reacting to the development, stated that it saw the reduced approval ratings as “candid feedback” from institutional investors and that to enhance the independence of its board, it had clarified the roles and expectations of outside executives, apart from redefining the criteria for assessing independence. The venture will also start the sale of its cross-shareholdings. Critics often cite the practice of cross-shareholdings between Japanese firms as the factor encouraging lax governance by ensuring a too-cosy relationship between management and shareholders.

“The governance or holding structure side is where we expect changes to accelerate. Obviously, that has been the focus of the shareholders, and shareholders have been demanding faster changes there,” said James Hong, head of mobility research at Macquarie.

Akio Toyoda, despite his approval slippage, has remained popular in the global automobile circle and among Japanese retail investors, given Toyota’s record business results under his watch. However, the automaker has been under fire in recent days, due to its reluctance to adopt battery-electric vehicle standards. The venture follows a “multi-pathway” strategy, where it heavily invests in hybrids and hydrogen fuel cells, instead of going fully electric.

In 2023, the venture reportedly benefited from its strong hybrid line-up as growth for battery EVs in major markets slowed on relatively high prices and worries about the lack of charging infrastructure. The company recorded sales of 10.3 million for its most recent fiscal year.

According to Toyoda, the electric car segment will only ever account for a maximum of 30% of the market. He presented the Japanese automaker’s manufacturing plan to the media in Tokyo in March 2024, fielding questions and sharing his opinions on the global EV market.

“The enemy is CO2, proposing a multi-pathway approach that doesn’t rely on any particular powertrain. Customers, not regulations or politics should make the decision on what path to rely on,” Toyoda said further.

Toyota still plans to use a combination of internal combustion engine, hybrid, and hydrogen drivetrain cars as well as battery-electric vehicles (BEVs) in order to lower emissions. Toyoda predicted that these additional models would eventually account for 70% of the market.

However, safety has been the Achilles heel for Toyota. In 2024, Toyota admitted to rigging safety tests on seven car models, three of which were still in production. The misconduct reportedly affected 1.7 million vehicles.

Japan’s ministry ordered Toyota to suspend shipments of the affected models and raided its headquarters in Aichi Prefecture. Toyota has decided to extend the suspension by a month, until at least 31 July, according to a report by Japan’s public broadcaster NHK.

Japanese investigators have found issues involving 64 models from the automaker, suggesting the massive magnitude of the scandal that resulted in Daihatsu halting shipments of all of its vehicles in December 2024.

Toyoda’s Reaction To The Crisis

In June 2024, Toyoda issued an apology for the revelations of extensive cheating on certification tests for seven vehicle models. Toyota also suspended the production for three of the affected models: the Corolla Fielder, Corolla Axio, and Yaris Cross.

The misconduct allegedly involved a range of issues, including the use of inadequate/old data in collision tests, incorrect testing procedures for airbag inflation and rear-seat damage in crashes, and falsification of emissions tests.

Toyota has also assured its customers and the general public that the safety of existing vehicles, including the popular Corolla subcompact and Lexus luxury vehicles, remained unaffected.

While the revelations marked a significant setback for Toyota, renowned for its production finesse and corporate culture focused on quality and innovation, the company’s prompt response, led by Toyoda himself identifying the cause behind the crisis (in the form of the rush to complete tests amid a proliferation of model varieties), apart from the company’s senior executive Shinji Miyamoto announcing about the initiation of Toyota’s internal probe, gives hope to both its customers and investors that the company is taking its commitment towards quality and innovation seriously and will soon course-correct itself.

The post Business Leader of the Week: Challenges await Akio Toyoda as he gets re-elected as Toyota boss appeared first on International Finance.

The report listed factors including ownership concentration, the dilutive effect upon exercise, and the “excessive size” of the pay arrangement. It also mentioned Elon Musk’s “slate of extraordinarily time-consuming projects,” which has grown since his well-publicised acquisition of Twitter, which is currently known as X.

The Tesla board of directors, which has faced criticism for its close relationship with the billionaire, suggested the compensation package. The benefits are contingent on Tesla’s market value increasing to as much as USD 650 billion over the course of ten years beginning in 2018 and do not include a salary or cash bonus. LSEG data indicates that the company is currently valued at approximately USD 571.6 billion.

Judge Kathaleen McCormick of Delaware’s Court of Chancery revoked the initial compensation package in January 2024. Afterwards, Elon Musk attempted to have Texas replace Delaware as Tesla’s state of incorporation.

Additionally, Glass Lewis blasted the proposed relocation to Texas, saying it would expose shareholders to “uncertain benefits and additional risk.”

Tesla has requested that its investors confirm that they are in favour of the pay.

In a Financial Times interview this month, Robyn Denholm, the chair of Tesla’s board, stated that Elon Musk is deserving of the compensation package because the company has exceeded its high sales and stock price goals.

In 2008, Elon Musk took over as the CEO of Tesla. Over the years, he has played a key role in enhancing the company’s performance, leading to a significant improvement in financial outcomes. As per a report on the Vote Tesla website, the company went from a USD 2.2 billion loss in 2018 to a USD 15 billion profit, and the production of vehicles has increased sevenfold.

The campaign website also suggested that shareholders vote against Kimbal Musk, the billionaire’s brother, for board re-election, while recommending the re-election of former 21st Century Fox CEO James Murdoch.

The row over the USD 56 billion compensation package comes at a time for the automaker, as it recently trimmed down its goal of delivering 20 million vehicles a year by 2030, another sign the company was moving away from electric cars as it shifted focus to robotaxis.

Elon Musk said in 2020 that Tesla aspired to sell 20 million vehicles by the end of the current decade, twice as many as those sold by Toyota, the world’s largest automaker. It had reiterated the goal in its 2021 and 2022 impact reports.

However, the company has changed its tack, dropping plans to produce an all-new model that was expected to cost USD 25,000, while touting autonomous driving technology as its main source of growth. It plans to host a launch event for its robotaxi on August 8.

Robotaxis and Tesla’s humanoid robot Optimus will be “incredibly profound” for Tesla, Elon Musk said through a video link at the annual “Viva Technology” conference in Paris.

Elon Musk said in April 2024 that Tesla planned to bring forward the launch of new models, including affordable cars by the year-end. However, the automaker now plans to use the current product lines for new affordable vehicles instead of new facilities, making a strategic change that would result in smaller cost reductions than expected and modest volume growth.

The post Tesla shareholders advised to reject Elon Musk’s USD 56 billion pay appeared first on International Finance.

As we enter 2024, the industry is abuzz with a breakthrough product called the ‘Solid State EV Batteries’, with automobile giants like Toyota, Tesla, Volkswagen, Hyundai and others ramping up their research and development activities in this particular innovation.

Investments Galore

Toyota is aiming to roll out its next-generation solid-state batteries by 2027, a move which will help the venture to double its vehicle range and lower charging time.

The Japanese automaker is eyeing to launch battery electric vehicles with existing lithium-ion (li-ion) and a second range with the Japanese automaker’s new and pricier solid-state batteries, as per the media reports.

Toyota announced the “breakthrough” in its solid-state battery efforts in 2023 and plans to mass-produce the product by 2028. These batteries will counter concerns such as extended charging time and the risk of catching fire associated with traditional Li-ion batteries.

Toyota, in October 2023, entered into a partnership with Tokyo-based petroleum company Idemitsu Kosan to jointly produce the solid-state battery material called sulphide solid electrolyte. The partnership will mass produce and establish a supply chain for solid electrolytes.

Since the electrolyte is a solid element, it allows ions, which convey electricity, to move faster, thus enabling shorter charging times, increased cruising ranges, and higher power output for electric vehicles. Solid-state batteries are also resistant to temperature changes.

Solid state batteries have drawbacks like cracks caused between the cathodes and anodes and the solid electrolytes, due to repeated charging, which ultimately affects the product’s performance. Idemitsu conducted the development of elemental technologies for solid-state batteries, which resulted in the creation of a highly flexible, adhesive, and crack-resistant solid electrolyte. And now the venture’s partnership with Toyota is set to redefine the EV industry practices, when it comes to battery usage in the vehicles.

By combining Idemitsu’s new solid electrolyte with Toyota’s cathode and anode materials and battery technologies, the Japanese automaker is all set to redefine the performance and durability of solid-state batteries.

Following Toyota, automobile giants like Volkswagen and Hyundai have become proactive in their solid-state battery plans.

US, China Enter The Game

Chinese EV company Nio put its new semi-solid state batteries to the test on a 14-hour, 650-mile journey in December 2023, as the venture’s CEO William Li drove the ET7 sedan from Shanghai to Xiamen, without stopping to charge along the way.

Nio’s industry peer Changan formed a strategic partnership with Ganfeng Lithium in 2023 to work on the development of solid-state batteries. The state-owned carmaker plans for mass production of solid-state battery EVs from 2025.

According to Academy of Sciences member and Tsinghua University professor Ouyang Minggao, China will be at the forefront of the solid-state battery market penetration effort as the nation’s EV companies have set up 130 GWh of solid-state battery factory capacity for 2025, and this will be further scaled up to over 500 GWh by 2030.

On the other hand, United States-based start-up EnergyX unveiled its proprietary SoLiS electrolyte for new solid-state EV battery technology, which will offer a longer lifespan, better range and charging performance, and less cost.

Another start-up named Factorial, saw its new solid-state EV battery called FEST (Factorial Electrolyte System Technology) garnering interest in 2021. Factorial’s new EV battery is a quasi-solid-state one, different from a full solid-state EV battery. In 2021, the technology made its market debut with the launch of a 40 Amp-hour version of the FEST battery.

Another US start-up Ion Storage Systems has come up with its “Ceramic Brain”, which, as per the reports, deploys powder provided by the materials specialist Saint-Gobain.

Colorado University spinoff ‘Solid Power’ announced in 2021 about expanding its electrolyte production capacity by adding a second factory in the Denver area. The facility is expected to quadruple the venture’s production footprint, as the latter’s goal is to produce 30 metric tons of electrolyte annually at the Thornton facility, or enough for roughly 200,000 cells for EVs.

In January 2024, Solid Power upgraded its relationship with the Korean battery maker SK On, which included an R&D commitment, apart from setting up a new production line at one of SK On’s Korean facilities, which will start functioning in 2025. SK On will use Solid Power’s electrolyte to validate the line, upon which the Korean venture will buy eight metric tonnes of electrolyte from Solid Power through 2030.

Is Technology a Game-Changer?

While most companies are using lithium batteries to power their vehicles, solid-state batteries are also regarded as safer as they do not need the flammable liquid that is required in traditional lithium-ion batteries, reducing the fire risk in vehicles. These batteries are also lighter than their traditional counterparts and require a shorter charging time.

“These batteries are expected to vastly improve the performance of EVs, allowing them to run over longer distances. However, there are some drawbacks. While solid-state batteries may perform better, their lifespan may be shorter, as they can eventually form cracks and need replacing,” said OilPrice.com.

A solid-state battery in an EV should charge to full capacity in around 10-15 minutes. As of 2024, lithium-ion cells usually guarantee 80% of their original capacity after 1000 charge cycles. Solid-state cells should significantly improve on that score.

Challenges Are Aplenty

Since most of the solid-state battery projects are in their initial stages, they will be only undergoing small-scale productions, which means that costs will be elevated. Only with these initial lots proving their practical worth, large-scale manufacturing will follow, which will then drive down the costs.

“Solid-state is a great technology. But it’s going to be just like lithium-ion was in terms of the length of time it will take to hit the market. And lithium-ion took a long time to get there” noted Bob Galyen, owner of Galyen Energy and former chief technology officer for the Chinese battery giant Contemporary Amperex Technology Ltd. (CATL), while interacting with the IEEESpectrum.

In December 2023, Chinese automaker NIO announced about introduction of a 150-kilowatt-hour “semi-solid-state battery” that would theoretically offer a 1,000-km range. Experts pointed out that the product was not a solid-state one.

“This is in fact a fairly conventional NMC (nickel manganese cobalt) cell with a gel electrolyte that has been in production for 15 years and is typically referred to as lithium-polymer,” noted Sam Abuelsamid, principal research analyst for Guidehouse Insights, while speaking to IEEESpectrum.

“Technically the gel is considered a semi-solid because it has properties of both a solid and liquid. But in a cell, it lacks the properties of a true solid-state electrolyte,” Abuelsamid stated, while issuing the caution about semi-solid-state battery cells being punctured on impact.

Galyen further cited five “golden rules” of EV batteries: safety, performance, life, cost, and environmental, before the product gets commercially adopted by the industry.

“Most of the solid-state battery companies fall short on at least three of the five golden rules. I haven’t seen anyone publish life numbers that make any sense. And I haven’t seen cost numbers that are even close to competing with liquid-state, lithium-ion batteries,” Galyen stated, while admitting that Solid-state costs were about “where conventional lithium-ion batteries were a decade ago”.

As per Galyen, automakers still need to verify the performances of solid-state batteries on three crucial fronts, temperature, altitude, and shock and vibration.

The validation process alone will be time-consuming, as the product needs to be tested in real-world conditions. Also, EV manufacturers need to build dedicated solid-state battery factories, which may take two years, followed by the half-year running of prototype products and distributing them to customers, who will put these batteries through their duty cycles.

Galyen sees an extended period of seven or more years for the build-out, production, and validation of solid-state batteries.

The Final Verdict

Solid-state cells are the inevitable future of the electric vehicle industry, especially when it comes to raising the vehicles’ safety and energy-related parameters, apart from ensuring faster recharge times.

Given these advantages, automakers are eager to embrace the product. However, just like any innovation undergoing bumps from its prototype run to the commercial adoption, solid-state batteries too will take their sweet time to be mature enough for commercial usage. Will the industry be patient enough to deal with the fact? We have to wait and watch.

The post IF Insights: ‘Solid State’ of battery affair awaits electric vehicle industry appeared first on International Finance.

The share sale, as reported by Reuters, will be Japan’s second biggest deal-making activity in 2023 and the largest in the global auto industry in more than a decade, as per the London Stock Exchange data.

Denso, known as the world’s second-largest maker of automotive components, will buy back some of its shares in the open market.

“For investors, the deal has reinforced expectations that Japan’s most influential company could accelerate sales of shareholdings in affiliates and partners, a practise known as cross-shareholding. Investors, particularly foreign ones, say it hinders governance and hampers returns,” the report commented.

While companies operating in Japan have reportedly been slowly unwinding their holdings, the trend gained momentum after the Tokyo Stock Exchange in March 2023 urged ventures to “make better use of their capital”.

“We know it’s going to free up some of the capital being locked within the Toyota balance sheet. What’s important is how they’re going to utilise this freed-up capital going forward,” said James Hong, the head of mobility research at Macquarie.

As per Denso, Toyota and its group companies, Toyota Industries and Aisin, will sell their shares in the company to investors. They intend to sell some 256 million shares, worth 589.1 billion yen (USD 4 billion), representing some 8% of Denso.

Following this, Denso will buy back some 125 million shares, to offset the market impact of Toyota’s move.

Toyota’s latest move comes after the automaker’s October 2023 global vehicle production hit a record.

The world’s largest automaker by sales reportedly produced 900,285 vehicles worldwide, up 16.7% from the same period in 2022.

“Overseas productions hit a record high for a single month, rising 8.7% at 617,590. Global and overseas sales reached record highs for October, increasing 7% to 890,241 and 5.2% to 756,245 respectively,” Toyota informed in its market note.

Toyota also sold over 8.46 million vehicles during the first 10 months of 2023, including its luxury Lexus brand.

The post After hitting record global output, Toyota to now sell 8% Denso stake appeared first on International Finance.

Toyota has the current capacity of producing 1.16 mn cars in China annually, and has sold 1.3 mn there last year for an overall 4.5% market share. Volkswagen AG and General Motors on the other hand, delivered more than 4 mn each.

This foray comes at a time when Chinese officials are warming to the hybrid technology that Toyota pioneered with the Prius—amid a realization that electric vehicles along would probably not be able to achieve Beijing’s ambitious environment targets, said two of the people. The government is aiming for a fifth of car sales of its so-called new-energy vehicles by 2025—which will include EVs and plug-in hybrids. Stringent quotas for NEV production are also set into going into force from next year.

The company is hoping to accelerate growth and be competitive with the top manufacturers in the country’s market, which include VW, GM and Geely, a local manufacturer controlled by billionaire Li Shufu—who overtook all its Japanese rivals and became China’s third-largest automaker by sales this year.

While the China push is one way Toyota is adapting to fast changes in the car market, a focus on self-driving vehicles is another. On Tuesday, Toyota said it is investing $500 mn more in Uber Technologies Inc. and that it plans to manufacture minivans loaded with the US company’s software– with testing slated to begin on Uber’s ride-sharing network in 2021.

Toyota sold more than 2.4 mn vehicles in the US last year, almost twice as many as in China.

The post Toyota aims to triple China output over next decade appeared first on International Finance.