The recent leadership change at Toyota Motor, the urgency for Renault and Nissan Motor to restructure their alliance, and Elon Musk’s declaration that Tesla will become the world’s leading car maker, all indicate that the centre of the global automobile industry is shifting.
This shift was marked by the announcement that Akio Toyoda, the current CEO of the world’s top-selling car manufacturer, would be stepping down on April 1. The same day, Elon Musk used a quarterly earnings call to state that Tesla had become the industry leader in profitability and manufacturing efficiency, a position that Toyota had held for thirty years.
Toyota’s new CEO, Koji Sato, has a challenging task ahead of him. He must work to quickly develop more competitive electric vehicles for the company to remain relevant in the market. However, he will face stiff competition from Tesla and the Chinese electric vehicle manufacturers, who have a technological and production cost advantage over Toyota.
Tesla earns roughly seven times more per vehicle compared to Toyota and has pre-tax margins of 17%, which is double the average for the rest of the industry. Furthermore, Tesla’s stock has seen a 28% increase in 2023 after a difficult year in 2022.
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