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The Prius-Hacking Silicon Valley Star Shaping Toyota’s Future

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(Bloomberg) -- James Kuffner once reprogrammed a Prius to turn it into a driverless vehicle for Google. Now, he’s a top executive at Toyota Motor Corp., charged with hacking the very way it approaches the business of carmaking.

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Handpicked by President Akio Toyoda, the 50-year-old tech-industry veteran’s mandate as chief digital officer is to keep the world’s No. 1 automaker on top as cars become more like computers.

The shift to electrified, autonomous vehicles is a disruptive force sweeping the industry, with Apple Inc. and other Big Tech challengers muscling in. At stake for Toyota is a global manufacturing empire churning out more than 10 million vehicles a year. After showing the world a path away from gasoline with the Prius, Toyota is doubling down, betting billions of dollars on everything from hydrogen and battery-powered vehicles to entire cities built around self-driving cars. Key to it all is Kuffner.

“The potential for technology to change the landscape of mobility is breathtaking,” he said in a recent interview, calling it “the absolutely most exciting time to be working in this area.”

In terms of experience, it’s clear what drew Toyota to Kuffner. The jeans-loving, patent-wielding executive co-founded Google’s robotics division and helped develop the tech company’s self-driving car project that eventually evolved into the autonomous unit Waymo. He earned a Ph.D. from Stanford University and taught at Carnegie Mellon University, two institutions renowned as global leaders in autonomous-vehicle research.

Despite Kuffner’s experience, what remains to be seen is the extent to which Toyota can handle disruption, Silicon Valley-style. He’s the 84-year-old company’s only non-Japanese inside board director.

That’s why, for the time being, Kuffner is leading the charge at arm’s length, leading a wholly owned unit called Woven Planet Holdings. The somewhat strange name harkens back to Toyota’s roots as a textile-loom maker, and ties it with the idea of stitching together cars, robots, cities, data and computing power.

Woven Planet’s mission might not be easy to grasp, but the idea behind it is relatively simple. Kuffner and Toyoda are betting on a future when the biggest leaps in automotive technology come not from mechanical advancements, but as lines of code.

That approach is embodied in Arene, an automotive platform being developed by Kuffner and his team. Like operating systems for iPhones or personal computers, Arene is designed to work as software within cars but also connected to a bigger cloud network.

While Tesla Inc. and others are already deploying new features over-the-air to vehicles to improve battery performance or autonomous systems, Arene aims to go beyond that. The ultimate goal is to have cars gather and share massive amounts of data, which in turn can be used to improve performance, an approach Kuffner pioneered in the field of robotics. Arene will also be offered to rival automakers.

“We’re really trying to create the world’s best programming mobility ecosystem,” Kuffner said. “Woven Planet’s ambition is really beyond Toyota.”

To achieve that goal, Kuffner and his team have been developing the Arene platform even before there are any vehicles to run it. This “software-first” approach is what Kuffner sees as the future of automobile design and assembly — designing the mechanics of a car around its underlying software, as opposed to writing code for a largely finished product.

This represents a fundamental departure from the way Toyota has built cars for almost a century. The company practically invented modern car manufacturing through concepts such as “kaizen,” or continuous improvement, and just-in-time assembly.

And there’s no shortage of new entrants betting that the industry’s seismic shift will create new opportunities. Not only are Tesla and Google parent Alphabet Inc. intent on popularizing electric, autonomous vehicles, Apple is also working in secret to claim a slice of the $5 trillion global auto market.

It’s going to be a bumpy ride. Volkswagen AG’s bug-ridden release of its flagship ID.3 electric car last year underscored the fact that, even for Toyota’s biggest rival, decades of manufacturing experience doesn’t always translate into a competitive advantage.

“You need to strengthen your software push quickly; the value of your product is changing,” Lei Zhou, a partner at Deloitte Tohmatsu Consulting, said of legacy automakers. Recruiting top talent from Silicon Valley is one way they’re seeking to adapt, he said, seen most recently when Ford Motor Co. hired away the head of Apple’s car project.

Woven Planet is also adopting the playbook of its Silicon Valley counterparts: acqui-hires, or buying smaller startups for their technology and talent. This year alone, Woven Planet has invested in or acquired five companies including the $550 million deal it struck in April to buy Lyft Inc.’s self-driving division.

Given that Woven Planet’s vision goes beyond cars, the in-house upstart embarked on one of its largest and most ambitious projects yet, breaking ground in February on a smart city it’s building at the base of Mount Fuji. Following an initial opening around 2025, the city will become a test bed for autonomous vehicles that will transport people, deliver packages and act as mobile storefronts for the city’s thousands of residents.

Read more: Toyota Is Building an Entire City to Test Its Self-Driving Cars

To pay for all of this, Toyota has also taken a new approach. Earlier this year, the automaker issued $4.7 billion of “Woven Planet Bonds” to fund the project as well as next-generation research and development activities.

Kuffner’s Prius escapade eventually evolved into Waymo, the unit that’s now leading Alphabet’s charge into the autonomous transport sector. If he succeeds at making Woven Planet’s vision a reality, that would be the ultimate hack: transforming Toyota into something new.

With that, the youngest member of Toyota’s board could become a strong candidate to lead the company one day, although Kuffner is careful to downplay the possibility.

“We’re trying to take an already existing, profitable business and completely flip upside down how we’re doing development,” Kuffner said from Woven Planet’s plant-filled offices in central Tokyo. “I’m going to work as hard as I can in whatever capacity I can to try and make a difference.”

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