Toyota Soars on Optimism Over EV Plans, Shareholders’ Meeting

Nicholas Takahashi and Tsuyoshi Inajima
·4 min read

(Bloomberg) -- Toyota Motor Corp. posted its biggest two-day gain in three years, fueled by an aggressive messaging campaign around the Japanese carmaker’s electric-vehicle strategy, a drama-free shareholders’ meeting and a broader global stock rally.

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Shares in the world’s largest carmaker are up 12% since Monday, their biggest jump since March of 2020, with the reappointment of Chairman Akio Toyoda adding to the buoyant mood. While Toyota stood out, it was a broadly a good day for automakers in the region following gains by peers in the US, where Tesla Inc. has climbed for 13 straight days.

In a well-timed move just before the annual meeting, Toyota released details from a day of technology briefings held last week at its research facility near Mount Fuji. Analysts and journalists were given a day of test drives and presentations aimed at bolstering confidence in the company’s ability to sell 1.5 million battery EVs annually by 2026, and 3.5 million by 2030.

Read More: Toyota’s Tech Chief Lays Out a Path to Selling Millions of EVs

The public-relations offensive contrasted from years of Toyota executives speaking cautiously about how quickly car buyers will be ready to go all-electric. The manufacturer’s management team talked about innovations in the pipeline for next-generation EVs, ranging from longer-range batteries to slicker aerodynamics and more efficient production processes.

“Foreign investors with lower familiarity with Japan are looking for stocks to put money in and Toyota is very big, liquid and cheap — and has underperformed over the last year or so,” said Mio Kato, analyst at LightStream Research. “The news flow on its EV efforts and solid-state batteries has also been positive.”

While Toyota pioneered electrifying vehicles with the hybrid Prius, it’s now playing catchup to Tesla and China’s BYD Co. in selling cars powered entirely by batteries. Toyota is still espousing a multipronged approach to reducing vehicle emissions — it remains a believer in the potential of hydrogen and carbon-neutral fuels — but new Chief Executive Officer Koji Sato has championed an EV-first approach. Wednesday’s shareholder meeting was his first since succeeding Toyoda as CEO in April.

Read More: Toyota’s Shift to Electric Future Rests on Koji Sato’s Shoulders

Even so, Toyota’s EV goals represent massive steps from the 38,000 EVs that Toyota sold in the fiscal year that ended in March.

“What Toyota is trying to do, in terms of where its management and technological development is heading, has been recognized,” said Bloomberg Intelligence analyst Tatsuo Yoshida. “This has also led to a sense of security.”

The AGM had become a referendum of sorts on the Japanese carmaker’s electric-vehicle strategy. A small but growing list of shareholders opposed the reappointment of Toyoda as chairman, arguing that Toyota has fallen behind rivals because of his approach of offering customers various options by selling gasoline and hybrid cars while investing in EVs, hydrogen and carbon neutral fuels.

Some are also demanding transparency on lobbying over climate policies that appear to favor EVs, or seek to ban cars that burn fossil fuels.

Corporate shareholder meetings in Japan have long been pro forma affairs, with company-backed directors winning solid majorities more often than not. While individual investors can attending are often vocal — both in their support and criticism of management — the annual gatherings are now becoming a forum for institutional shareholders to draw attention to issues of climate change and corporate governance.

“The biggest difference between this year and past shareholding meetings is that such proposals were made at all,” said Koji Endo, managing director at SBI Securities Co.

Two of the biggest pension funds in the US — the California Public Employees Retirement System and the New York City Comptroller’s office — said they planned to vote against Toyoda.

Toyota has pushed back against assertions that it’s dragging its feet. After announcing a ¥4 trillion ($28.7 billion) commitment to accelerate its shift into EVs in late 2021, the company still faced criticism for arguing that the transition will take longer than people expect.

“Even in this difficult business environment, Chairman of the Board Akio Toyoda has been strengthening our competitiveness from a long-term perspective,” a spokesperson for the company said in a statement.

In May, proxy advisory firm Glass Lewis & Co. urged shareholders to vote against Toyoda as well as three nominees for auditors, citing concerns over a shortage of independent directors and non-male board members.

Toyota said it abides by the Tokyo Stock Exchange’s requirement that independent directors must account for a third of the company’s board.

“We are determined there’s no concerns regarding the objectivity, independence and ability to conduct appropriate oversight as stated in a report by Glass Lewis,” the company said in a statement.

Although the shareholders meeting was mostly free of drama despite the challenges to management, Toyoda, grandson of the carmaker’s founder, shed tears — as he has done before — while describing his efforts to lead the company.

--With assistance from Supriya Singh and Aya Wagatsuma.

(New headline, first paragraph on share move, news flow.)

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