Toyota Chairman Akio Toyoda has warned the company faces a genuine fight for relevance, telling Japanese broadcaster NHK that “there seems to be a considerable sense of crisis within the company”. Speaking during a rare behind-the-scenes special at Toyota’s development site for the next-generation Corolla electric vehicle (EV), Toyoda framed complacency, not competition itself, as the existential threat: “If that happens, it’s over.”

The stakes are pinned squarely on that next Corolla. The nameplate has sold more than 57 million units over the last 60 years and endured 12 model changes to become the best-selling vehicle in history. Its battery-electric successor is now treated internally as a litmus test for whether Toyota can adapt fast enough. One engineer told NHK bluntly, “I think we are losing to China.” 

In characteristic fashion, Toyota is taking a multi-pathway approach to electrification with the new Corolla. The new platform underpinning it is designed to support battery-electric, plug-in hybrid, conventional hybrid and gasoline variants simultaneously, spanning sedan, hatchback, crossover and GR performance versions.

Still, the commercial case in the short-to-medium term is strong: hybrids made up roughly 42% of Toyota and Lexus’s 11.3 million vehicles sold in 2025, against just 1.9% for pure battery-electric models, while electrified vehicles—overwhelmingly hybrids—reached 47% of Toyota’s US sales. The automaker has maintained that simply pumping battery EV volumes does not guarantee emissions reductions—the ostensible goal of electrification efforts—because the energy mixes used to power such vehicles still heavily favour coal and other fossil fuels, particularly in developing regions.

Concept image of the next-generation Corolla

Looking into the longer term, however, Toyota’s present multi-pathway calculus could cut the other way. Building a single platform to fit every powertrain, rather than a dedicated BEV architecture, could lead to a loss of competitive positioning as purpose-built rivals—particularly those from China—pull ahead on cost and packaging. This concern is brought into sharper relief by Toyota’s own June cancellation of the Lexus LF-ZC. The model was intended to serve as its flagship BEV, showcasing the company’s next-generation batteries and manufacturing methods.

Chinese competition is clearly front-of-mind for Toyoda. BYD Chief Executive Wang Chuanfu remarked in June that the company aims to become the world’s largest automaker by scale within five years, having already overtaken Ford in 2025. Chinese rivals are extending advantages in software-defined vehicle features and pricing plug-in hybrids at levels which undercut Toyota’s own margins.

Critically, Chinese counterparts also boast development cycles of 18 to 24 months against Toyota’s traditional four to five years, making them more reactive to market changes than their Japanese counterpart. Should Japan cede its historic leadership in technology and affordability, Toyoda foresees dire consequences: “Unless Japan is a country chosen by every other country, it cannot survive.”

Toyoda’s crisis language is less about the Corolla’s specification than arithmetic: strong hybrid sales are real, but they measure where the market is today rather than where it is moving. The platform choice is a bet that Toyota can convert its current hybrid lead into BEV competitivity before Chinese automakers’ speed and cost advantages make that conversion too late to matter.