The world’s No. 1 automaker has a brand new CEO, and the transition of energy couldn’t have come at a extra pivotal time.

Toyota on Thursday shocked the market when it introduced that Lexus President Koji Sato will take over from Akio Toyoda, the grandson of the venerable Japanese automaker’s founder, efficient April 1.

Whereas Toyoda will stay as chairman, Sato, a Toyota lifer who joined the corporate greater than 30 years in the past, will probably be tasked with guiding the automaker by what may very well be probably the most difficult interval in its 86-year historical past. That’s as a result of as shoppers embrace electrical vehicles in ever larger numbers, Toyota is falling behind, in response to some critics and analysts.

Though the automaker leads in the case of the sheer quantity of vehicles it produces — anticipated to come back in at 9.2 million items for the fiscal 12 months that ends in March — it lags within the shift to electrification, a pivot spearheaded by Tesla.

Below Toyoda’s stewardship, Toyota has taken a extra nuanced method, believing autos powered solely by batteries are just one path towards a cleaner transport future. Fuel-electric hybrids and hydrogen-powered vehicles additionally may also play an element, Toyoda has lengthy argued.

As just lately as September, Toyoda stated battery-electric autos “are simply going to take longer than the media would really like us to consider.”

The corporate is on a mission to scale back CO2 emissions, however doesn’t need to restrict its focus to all-battery vehicles. “On this diversified world, in an age the place we have no idea what the proper reply is, it’s troublesome to make everybody proud of just one choice,” it stated.

Toyota’s messaging contrasts with most of the world’s legacy automakers, which have laid out largely easy ambitions to section out combustion-engine vehicles solely. Volkswagen Group has already racked up cumulative gross sales of 1.7 million pure electrical vehicles, in response to BloombergNEF, whereas Chinese language big BYD is at 2.7 million.

Elon Musk’s Tesla has offered round 3.3 million EVs.

Whether or not the main focus below Sato will shift is but to be seen. Nevertheless, with Toyoda staying on as chairman, it’s unlikely Toyota’s general method to electrification will drastically change.

In January, Sato and Toyoda appeared on stage collectively on the Tokyo Auto Salon, a showcase for modified vehicles, the place they unveiled a pair of autos transformed to run on electrical energy and hydrogen.

“Maybe the choice is much less about producing environment friendly, reasonably priced vehicles and extra about making a younger, cool picture round EVs,” Iwai Cosmo Securities analyst Shoichi Arisawa stated on Thursday.

Whereas Toyota frequently sells greater than 10 million autos a 12 months, Tesla has set a long-term objective to greater than double that quantity. For now, Toyota has loads of respiratory room from a complete car gross sales perspective. Musk stated Wednesday that Tesla has the potential to make 2 million vehicles this 12 months.

If Toyota’s reluctance to totally decide to battery-electric autos continues, Sato, a 53-year-old mechanical engineer by coaching, will run the danger of presiding over the automaker falling too far behind on the vehicles of the long run.