Toyota CFO: "Far behind" Chinese rivals in some areas, must endure a few years of "difficulties," increase investments in electric vehicles and AI

Toyota can't help but fall behind and is about to start spending money to catch up.

On Wednesday, Toyota's CFO, Hiroshi Ogasawara, stated that the company is "far behind" Chinese manufacturers in certain areas, and will have to "endure" a few years of difficulties while avoiding being dragged into price competition with local brands.

"We need to think about changing the game rules by increasing investment."

Yesterday, the world's largest automaker, Toyota, delivered an impressive financial report, with strong sales of hybrid cars and the depreciation of the yen driving a 14% year-on-year increase in revenue for the fourth quarter of the 2024 fiscal year, with a net profit of 997.7 billion yen (6.41 billion US dollars), far exceeding the expected 752.85 billion yen (4.84 billion US dollars).

However, Toyota subsequently announced that due to continued investments in electric vehicles and artificial intelligence, it expects profits to decline by 20% in the 2025 fiscal year.

Upon hearing this news, Toyota's stock price fell by 3% at one point.

Toyota stated that in order to achieve "disruptive innovation," it plans to continue investing 17 trillion yen in "rapidly growing areas" such as artificial intelligence, electric vehicles, and software, and to repurchase up to 10 trillion yen worth of shares.

Koji Endo, head of stock research at SBI Securities, stated that due to Toyota's subsidiary, Daihatsu, falsifying data in crash tests, involving a large number of Toyota's suppliers and employees, a decrease in short-term profit growth is inevitable. However, what is most surprising is Toyota's large-scale share buyback plan, reflecting the company's intention to adopt deeper reforms.

Toyota's CEO, Koji Sato, stated that the company's development focus will be on "consolidating its position" and reshaping its hardware-centric business model by integrating mobile services and software business to ensure long-term stable development.

"In this fiscal year, we will invest the necessary funds and time, determined to consolidate our position."

In late April, Toyota announced a strategic partnership with Tencent, where Toyota will leverage Tencent's AI capabilities, cloud services, digital ecosystem, and other advantages to provide users with personalized and diverse mobility experiences