The wonderful poet and philosopher, the late Maya Angelou, famously said, “When people show you who they are, believe them.” Superb advice.

When car companies show you who they are through their products and how they develop, sell and support them, believe them, too. Which brings me to Toyota Motor Corp.—the world’s richest (about $100 billion in cash on hand) and biggest car company by all the most important measures: sales, revenue and market cap.

Toyota Mirai

In the next two weeks, I will test Toyota’s $32,990 Prius Prime plug-in hybrid (40 km range on battery alone; combined 1,035 km range), followed by the zero-emissions Toyota Mirai hydrogen fuel cell vehicle (500 km range). The latter represents Toyota’s long-range vision for the future of mobility, while the former stands as Toyota’s bridge to that future.

If you trust in Angelou, believe that Toyota is committed to hybrids and plug-in hybrids for now and hydrogen fuel cells for the future. There is a place in Toyota’s universe for battery electric cars, but they are just part of the bridge to a hydrogen world. Toyota does not see battery cars as a long-term transportation solution. Too many barriers to entry, adoption, maintenance and scrappage.

This is, of course, in sharp contrast to Tesla Inc., the darling of an investment world which is always searching for the next disrupter. Telsa, the argument goes, will crush legacy car companies such as Toyota, just as Apple’s innovations supplanted Nokia when the iPhone arrived in 2008.

The iPhone, they contend, signalled a “domain” change, not a technological innovation. That is, the iPhone created a world of smartphones which are really nothing less than handheld computers. Nokia, in 2008 the world’s largest mobile phone maker, and its ilk (Motorola comes to mind) were still making “dumb” phones and wedded to them when the iPhone changed the world just a dozen years ago.

Today, the theory goes, legacy car companies that make “dumb” cars are Nokia, metaphorically. Tesla is Apple and the Model 3 is the iPhone 3G. Perhaps this will prove to be true. Perhaps the world’s second-most valuable car company, Tesla, will become the Apple of personal transportation.

The future?

Toyota, however, is not Nokia, nor Motorola. Toyota may not be the first company you think of for disruptive product and process development, but perhaps it should be, note lean product development experts James Morgan and world-renowned lean guru Jeffrey Liker writing in Designing for the Future: How Ford, Toyota and other World-Class Organizations Use Lean-Product Development to Drive Innovation and Transform Their Business.

Let’s start with the Mirai. It is is a bold push into the next 100 years of automotive innovation, not a quick stock play or a flash reaction to the urgent demand for cleaner and greener transportation. Toyota has long argued that it wants to be a pioneer and a leader in the shift to a hydrogen economy.

The Center for Automotive Research (CAR), argues that the “Mirai is Toyota’s most challenging development project yet because it requires not only breakthrough product, but the transformation of entire global infrastructure. Yet they are approaching it with the same process of a challenge, deep learning, experiments, and hard-working teams taking incremental steps toward a compelling vision.”

Between now and 2030, however, Toyota has great plans for hybrids and various battery-electric cars. The best and most immediate impact Toyota and other carmakers can have on emissions and pollution is to continue refining the efficiency of internal combustion engines, move hybrids along further and further, and carefully add batter-electric vehicles to the mix.

Toyota is not discounting the role of battery cars. But if you gave Toyota’s leadership team truth serum, I suspect they might suggest that it’s Tesla that is Nokia, not Toyota. Here, it’s worth repeating: Toyota does not see pure battery cars as its long-term vision of sustainable, functional, affordable and enjoyable transportation for the masses. Hydrogen, the true disruptor, is the answer for all that.

So, Tesla or Toyota? Perhaps that is a bit simplistic. Nonetheless, Toyota is not to be underestimated. As Morgan and Liker note, while Toyota is “not known for rock star executives or hyperbolic and grandiose proclamations about the future,” the company is most definitely a disruptor (lean manufacturing) and an innovator (hybrids, the patents to which Toyota has opened up, just like Tesla did with its patent portfolio).

In terms of actually showing what Toyota is, inside, Akio Toyoda, Toyota’s CEO, was remarkably candid about where his company is now and where it’s headed during the most recent earnings call. Yes, yes, Toyota is doing all the normal corporate things, such as shrinking fixed costs, expanding into more profitable market segments and boldly making profit, sales and production guidance for investors. Yes, sales in the current downturn will suffer and profits will fall.

But what I found most fascinating was Toyoda’s calm emphasis using the present to drive change and growth for the future. Success will not be based, he suggested, on a feverish response to crises that are ongoing and inevitable. Rather, success comes from a deep belief that survival and progress – and the ability to meet challenges such as the last financial crisis and the current COVID-19 pandemic – are based on the idea that “labor and management at Toyota share a common foundation, which is the company hopes for the happiness of its employees, and its employees and the labor union hopes for the growth of the company.”

Toyoda talked extensively not about legacy, but succession – that he wants to “be able to pass the (leadership) baton to the next generation in a way that I consider ideal.” His vision for Toyota is of one that has strong alliances (with Mazda, Subaru and others) that make the group stronger, not just Toyota. He sees Toyota not as a car company, but a mobility supplier. To be successful, he noted, Toyota must support its employees, its alliance partners and its suppliers.

Here, it’s important to understand monozukuri. “Making better products at a lower cost, this is the foundation of monozukuri,” he said. “However, I think that only aiming to make something at a lower cost” is a mistake, he added.

“There is another basic element to monozukuri. It is making things means making people. People are not costs. People are the source of continuous improvement and the driving growth for the growth and development of monozukuri.”

Toyota the car company – or perhaps now it’s time to call is the mobility company – I believe has a formidable corporate culture, an enduring one, and that’s why it is well worth thinking that a hydrogen future, not a battery-electric one, is not just possible but perhaps even likely. If nothing else, consider how Toyoda articulated his company’s priorities: “first, the safety; second, the quality; and third, volume; and fourth, profit-making.”

From any other company, this would be spin. But for decades, Toyota has shown us what it is as a company and an entity — by going about its business based on these priorities. Perhaps we should, indeed, believe it.

Comments are closed.