How Toyota Spent a Billion Dollars to Make One Car

The world is mundane, satisfactory, passable. Good enough every day is more like the last. Until suddenly everything changes an impact. That sends ripples through the dark waters of the automotive industry, a rip in the fabric that changes the course of history. Toyota’s 2000GT was the result of a bold attempt at making a name for oneself, spending vast resources and collecting the knowledge and steady hands of master craftsman.

It was an effort that shouted into the wind, a momentous noise that said Toyota and Japan as a whole are capable of creating moving art at the dawn of the new millennium. Toyota sought to make that noise once more, to turn away from the boring, the mundane and go further, go faster and be a hell of a lot louder in dark rooms and quiet factories.

A project was born. Its mission to create something that would prove that Toyota was still on the top. That they hadn’t forgotten their roots, and that Japan was not to be fudged with.

With the help of a few brave souls, sharpened minds and a prodigal son, a long dormant and humbled brand created an absolute work of art, one that left the world asking Why? Why did Toyota spend a decade and an untold fortune in the pursuit of the impossible? Why did one man give his life to push the limits of the car’s performance? And most importantly, why didn’t anyone buy it? Toyota’s efforts resulted in Japan’s greatest supercar the Lexus LFA rarity commands value.

Limited run supercars like the Lexus LFA are proof of that. Paris Hilton’s infamous white LFA resold for 20% over the sticker price. And if R.M. Sothebys is any indication, that was a steal.

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And now back to the show. Now, look, to get some answers to these questions, we’re going to have to understand the Japanese business philosophy. That philosophy is called Kaizen. Loosely translated, it means change good.

What it stands for, though, is to push for incremental change for the better at all times.

From sushi to textiles to cameras, it is the spirit that drives Japanese workers to perfection. Kaizen is the Japanese cycle of continuous improvement. And few companies embody this philosophy as well as Toyota does. Every person at Toyota, from the guy installing the steering wheel, the marketing team exec and even the CEO, all of them have a singular mission.

If it can be made better, if it can be done better, if you can improve upon anything, you bring it up and you fix it.

Toyota’s singular devotion to the engineering of their cars is nearly cult like. Every hand that touches a car is there to make it just a little bit better each time. And every employee at Toyota has a voice in this regard. The result is a company that has created some of the most fantastic, often boring, but certainly finest made cars in the world. The Corolla.

The Land Cruiser, the Supra. Each a distillation of decades of incremental advancement. A unified effort of thousands of hands, each taking years to perfect. But what if you want to advance just a little bit faster? Well, to do that, you’re going to have to go to a bar and have a few drinks.

We can think booze for a lot of things in our life. NASCAR was invented thanks to Prohibition.

Southwest Airlines was dreamed up over drinks. Ernest Hemingway’s blood was basically a dry martini, and the LFA origins are a little bit too the devil’s drink as well. In the late nineties, at a noisy bar in Hokkaido, Japan, two quiet gentlemen sat across from each other.

First, Haruhiko Tanahashi, one of Toyota’s premier engineers, a man responsible for the mark II the crown and the Celica. Opposite him was his boss, Tetsuo Hattori, a quiet and studious man and the top vehicle engineer at Toyota at the time.

The air at first was tense, but after a few rounds of Sake, Tanahashi begins to open up and tell his boss about a dream. He has a dream to build the ultimate sports car, something that could stand the test of time. A machine to make Japan proud.

It was overall a sloppy, inebriated exchange between coworkers late in the night. Tanahashi kind of expected that to be the end of it. A check would come. Tanahashi would stumble home and lay in bed and go back to living his regular life tomorrow. But the arc of fate bent slightly that night.

Instead, Hattori ordered more beer for the table and said, Why not? Do it. So there, in a crowded izakaya, smoke and trepidation lingering in the air.

The Lexus LFA is planned out on a few napkins, and the future of Toyota changes forever. It’s a quiet morning in Hokkaido, Japan.

A month has passed since that fateful meeting. Tanahashi eager to get rolling as soon as possible to avoid the upper management getting any cold feet. So there he stood at Shibetsu Proving Grounds, a secret facility built by Toyota at the genesis of the Lexus Project. It is a massive facility of five circuits tucked away in a quiet corner of Japan. Tanahashi is now the head of a covert enterprise at Toyota.

It is known to few as Project P280. Its original mission was to make a V6 powered, open top midrange sports car, something to replace the outgoing Supra and take on Honda’s new S2000.

So that morning at the Proving Ground, Tanahashi and his team were getting hands on experience with the NSX and the 300ZX Trying to figure out what made them tick and how to do it better. But somewhere in the daylight hours they’re in Hokkaido. Tanahashi gets a new directive while speaking to his boss about the possibility of a balanced drop top sports car.

His boss scrunches his face, rubs his chin and pontificates. Baby sports cars are bad. Make a grown up sports car. Simple words that essentially tell Tanahashi to dream bigger. To make something that wouldn’t just look good in a showroom, but would spend its aging years in a museum.

This wouldn’t be just some Mustang competitor, a chunky miata with a Lexus badge. This needed to be a grown up sports car. Now, what did grown up mean? For starters, this would no longer be another V6 sports car. This new project would be equipped with a ten cylinder engine capable of taking on the likes of any Formula One inspired supercar.

Those ten cylinders would need to propel this sports car to over 200 miles per hour.

Those are not exactly the kind of numbers you’d expect from Toyota. This new project would have a nearly unlimited budget, and it would be a shining star to raise the Lexus brand to meteoric heights. So a few months later, Tanahashi and his team returned to the test track, this time not with an NSX or a 300ZX, but with a McLaren F1. The experience of dissecting and handling automotive perfection with Gordon Murray’s F1 left the team inspired, inspired, but terrified.

Tanahashi knew he needed to step his game up. Toyota had made some fantastic machines, but nothing like an F1 or an F 40, and he knew he was no Gordon Murray, no Enzo Ferrari. So to build a world class car, one that could stand toe to toe with the best, he would need a world class team. Luckily, he knew a guy in the halls of Toyota’s long and storied history. A name etched in stone is Hiromu Naruse, a premier Japanese racing driver that had gotten his start driving Toyota’s shining star.

The 2000 GT. Naruse had spent his life testing and tuning Toyota’s most famous cars. If you’ve ever driven a golden age Toyota, you’ve benefited from the detailed notes of Master Driver Naruse And it was this work with Toyota that had brought them together in the first place. When Tanahashi was designing the Mark II, one of Toyota’s great drivers cars, Naruse was the one behind the wheel, telling him how to make it better. Naruse had had his hands on nearly every important car Toyota ever made and likely every thing they had ever hoped to compete with.

So when Naruse heard the call that Toyota was setting out to make a new 2000 GT, he lept at the opportunity.

Together, he and Tanahashi set about what every great car designer does. Writing a manifesto. The Gospel of the LFA was composed of 500 key points. the suspension telemetry, the power to weight ratio of the engine down to the shape of the steering wheel.

This core philosophy covered everything. No detail was left out. The problem was what was written on these pages didn’t sound like a Toyota. It sounded like a McLaren F1. And Toyota didn’t make McLaren F1’s They were going to need some help.

At this stage, the LFA project wasn’t much more than the aspirations of a bunch of dreamers. A team had been assembled at a facility in Motomachi a building now known as LFA Works. 170 people had quickly begun working on a prototype, and the dreams of those engineers faced being crushed on a constant basis.

Already, the costs of this project had been astronomical. And back at HQ, a team of accountants wanted to see them fail.

They saw this as a costly and unprofitable enterprise. Stuffy suits that oversaw the budgets of Camrys couldn’t see why their company would spend $1,000,000,000 to make a new supercar And Japan as a whole in the year 2000. Didn’t build supercars. They barely built fast cars at all. Toyota’s own, supra, was dead and the dream of powerful, long nosed Toyota sports cars was dead with it.

The Z had not been revived yet, and the outgoing Z 32 generation was largely dismissed. Mazda’s r X7 was breathing its last loud smoke filled breath about to be replaced with a lackluster RX8 Honda’s NSX was long overdue for an update. Its original success was marred by a decade of only minor changes. The true last stand was the R 34 GT-R, a technological powerhouse of a machine with two turbos and all wheel drive. But much to the dismay of everyone under 20 watching this video right now, even with its video game inspired powers, the GT-R couldn’t hold its own against the Italians in terms of prestige, speed or style.

So there in the dawn of the new millennium existed an empty void in the shape of a Japanese supercar. Now, the last company that you’d think would fill it is Toyota. The Toyota lineup in the early aughts was as much fun as well. it’s hard to make an analogy for boring that’s more boring than Toyota. Either way, Toyota’s pencil pushers were content to keep it that way because it was profitable.

So there then was this top secret project that was planned to be unprofitable from the get go. And every year during the budget review project 280 was on the chopping block. It had no plan to sell cars. It had no plan to make money. And to the accountants, it really did nothing for Toyota.

Thankfully, though, they had an ally, the grandson of the original founder of Toyota itself, Akio Toyoda.

Akio at the time was a senior board member and mostly in charge of operations in China. But by name alone, he had pull. Naruse himself, in fact had given Akio driving lessons years before. So when Naruse and Tanahashi needed backup.

They knew Akio would go to bat for them. They had convinced Akio of the project’s validity by inviting him to the test track. There he would drive other supercars of the time and learn what it meant to make something truly special. The experience taught Akio not to make a car that fit inside the tight confines of Lexus or Toyota, but to make something truly unique that would expand the limits of what was possible for both of them. A true Halo car.

For years, Akio would go on to fight everyone at Toyota in defense of the LFA project. Tense meetings where engineers, accountants and marketing managers begged and pleaded for the project to stop hemorrhaging money. And Akio kept them all at bay. thanks to Akio’s support Despite having no real expectations of greatness, the LFA project had a practically unlimited budget. Now what the hell were they going to do with it?

Early on it was decided that this would be a machine made not for Toyota, but for Lexus, a brand unfamiliar to the Japanese market. Toyota saw that this could be a breakthrough to selling their luxury lineup under a new name back home.

So for years, Tanahashi’s team toiled away at the LFA project and each year it got a little bit better. Still using the McLaren F1 as a benchmark, the concept of a carbon fiber chassis came up pretty early. But Tanahashi initially avoided the idea.

In the early 2000s, it was still a rare material, and Toyota had no experience working with it. Believing that he could hit performance targets using only aluminum production on an aluminum prototype moved forward.

Even in aluminum, the prototypes of the LFA were a massive technological advancement for Toyota. Toyota’s engineers had to create everything from scratch, each piece bespoke to this car. No parts been savings here.

And by 2004, they were testing at the ring. Akio himself insisted he’d be first to drive any and all prototypes. This had become his pet project, and he knew what he liked and what he didn’t like. And what Akio liked was a high revving powerplant. Initially, V8’s were considered for the LFA.

Toyota had a long record of Fantastic eight cylinder engines, but Toyota’s influence for the LFA was Formula One. A world of high revving, balanced, angry, ten cylinder engines. And so Toyota’s LFA, which would suffer no compromise, must be made with such a powerplant. The 1LR-GUE developed by Toyota was less an engineering marvel and more a work of art. It screamed with the fury of over 550 horsepower out of its 4.

8 liters, meaning that this would surpass even the McLaren F1 S70/2 by the metric of horsepower per liter.

The 1LR was one of the most powerful, naturally aspirated engines ever created. It was as small as a V8 and it only weighed as much as a V6. It had dry sump lubrication, titanium connecting rods, lightened pistons, exotic materials everywhere, and possibly the most tight tolerances of any engine made before or after. So it was reliable.

It was revolutionary. It was perfection. Most famously, though, was not how powerful or fast it was, but how it sounded. Cementing the LFA as the true successor to the 2000 GT of old Toyota, Yamaha was approached to take the 1LR and turn it up to 11. A partnership decades old, now revived to once again paint a masterpiece with sound.

Yamaha’s entire job was to ensure the engine sang and that the driver heard it.

This was a true partnership with nothing off limits. As the 1LR climbed from idle to red line in a mere 6/10 of a second. It resonated its growls and vibrations through a surge tank at the top of the motor. The tank itself was inspired by wind and string instruments, a chamber where sound would mix and deepen the engines, individual throttle bodies pumping and howling beneath it, echoing out of sound unlike anything anyone had heard before.

But Yamaha’s hands weren’t just confined to the engine bay. They influenced the very design of the car itself. To truly hear the engine’s chorus. Yamaha had Toyota designed specifically made chambers between the engine and the driver, effectively creating v ten powered surround sound. Engine tones were delivered through multiple openings throughout the cabin.

Each specifically tuned to add richness to the experience of revving the 1LR and connect the driver more clearly to how the car was responding to its inputs. The 1LR screamed so violently and so quickly, in fact, that it set a record. It would become the world’s fastest revving production engine so fast, in fact, that its specially designed digital dash had to be engineered just so the driver could keep track of it all.

That 9000 RPM redline came so quickly. Analog gauges could no longer keep up.

Now, with its chassis ironed out and its powerplant nestled between the front arches of the Detroit Motor Show in 2005, a production prototype of the new LFA was unveiled to the public, and the reception would be nearly as loud and as beautiful as anything Yamaha could create. there in Detroit. Onlookers at the Lexus booth stood with mouths agape.

This was unlike anything they’d seen from the brand, or for that matter, anyone from Japan. This was a supercar.

to the public, Toyota said It was just a design study, but the press and public put that idea to bed shortly. Demand skyrocketed. This wasn’t another Camry. Hell, it wasn’t even a supra. It was an exotic car made entirely of aluminum and sporting an engine developed for Formula One.

The early prototype, a.k.a. the LF-A was unveiled to the public at the Detroit Auto Show. Now, why was it called LF-A?

Well, that’s actually out of procrastination. There are a lot of theories on the name LFA. And if you want to listen, the marketing team at Lexus, they’ll tell you all kinds of bullshish reasons. But Tanahashi himself admitted that the name came from a lack of inspiration. The LF of LFA was simply the two letter designation of all Lexus concept vehicles similar to LS or ES or RC.

And in a last minute moment, Tanahashi struggled to come up with a proper name for the car and just settled on a it was the first thing that came to his head. And so the prototype was called LF-A And in 2009, the dash was dropped for the production car. And there it was. It had a name. It had an engine.

And it had an audience. All in 2005. But the public wouldn’t get their hands on one until six years later. The delay would be both the reason the LFA became a legend and also why it became a failure. Lexus could have wrapped up prototyping and released the LFA upon the world shortly after that Detroit reveal.

But then that would have betrayed the Kaizen spirit. That indomitable mantra that says, When you see a way to improve something, do it. You see, the LFA prototype of 2005 was fashioned out of aluminum, but that was out of fear. Tanahashi had driven carbon fiber laced supercars inspiring machines like Nicola Materazzi’s Bugatti EB 110, Horatio Pagani’s Zonda and of course, Gordon Murray’s F1.

And the writing was on the wall.

Carbon fiber was what fast cars were made of. Tanahashi, though, was afraid he wouldn’t know how to use it, wouldn’t want to spend the money in the time to make it happen. But then Toyota’s head of R&D, Kazuo Okamoto, would put a stop to that. He tapped Tanahashi on the shoulder, looked him in the eyes and told him, Get over it. Go with carbon fiber.

That suggestion was enough to convince Tanahashi to delay the production of the LFA for years in pursuit of making the LFA a truly next generation supercar. Now, this was no easy task. Toyota refused to outsource anything for the LFA, so the Motomachi plant would need its own autoclave. Their staff would need to learn how to make carbon fiber and at a level high enough for their brand’s billion dollar supercar project.

Experts suggested Toyota take ten years to develop an in-house carbon fiber process, but Tanahashi did it in just one year.

The process would change not only how Toyota made cars going forward, they change how carbon fiber was made and used in the industry forever. This decision to use carbon fiber would add three years to the development of the LFA, but in hindsight it may have been the best decision Tanahashi ever made. The LFA had been driving the dangerous curves and hills of Germany’s finest racetracks since 2004. It was thanks to Naruse that the LFA was bred on the painted asphalt of the Nurburgring.

He believed that all great sports cars were separated from the merely good by conquering those 170 turns.

And he believed that there was no greater research team than a racing team. So he started one in 2007. Naruse opened up gazoo racing. Yes, that gazoo racing. Every great decision at Toyota would have Naruse somehow involved gazoo or GR had one purpose to enter the grueling 24 hours of Nurburgring race with specially prepared LFA prototypes.

The hope was that the competition would teach them everything they needed to fix about the car before it went into full stage production. Under Naruse’s direction, the team prepped a pair of near complete LFA’s and fielded a diverse team of racing drivers to enter the race. Among those drivers was a name that no one expected. Akio Toyoda himself. So committed to this project was Akio.

that he had to be one of the pairs of hands that pushed the LFA to its limits himself. But he had to do so in secret.

And so in 2009, among the entrance listed, his drivers for the team was a name no one knew. Master driver Maurizio Kinoshita a pompous name to hide the true identity. Akio Toyoda in a wig had the board members of Toyota known that their leader was out there driving an untested car in a potentially deadly race.

He’d have been torn to shreds. Now, thankfully, Maurizio, I mean, Akio survived the race.

The GR team didn’t win, but that was never really their intent. They were there to learn a cycle of testing and improving that had taken years, finally came to an end. It’s hard to imagine a project taking as long as the LFA did, but every time the LFA was almost ready, the Kaizen spirit would interdict.

Someone would find something to improve that V 10 would be overhauled multiple times. They had to develop a digital dash. The Yamaha Partnership. Aluminum give way to carbon fiber. And then of course, racing.

Incremental change for the better. A continuous cycle that, if left unchecked, would mean that development could be in limbo forever. Fortunately for the world, there was something of a time limit. Akio was defending Yellowface development, but as years passed, it got harder and harder to justify. Eventually, they were told to wrap it up and in 2009, finally, after nine years, it was time to show the production LFA to the world.

At the Tokyo Motor Show, Akio Toyoda lifted the curtain on their new supercar personally.

The result stunned the entire world. Automotive history had changed. Lexus had made the ultimate road car miles ahead of it. Okay.

Yeah, I’m lying. Look, I want to say that the result of nine years of incremental improvements stunned the world. But it didn’t. Yes, the LFA was fast. Yes, the LFA was beautiful, but there was a problem.

Two years earlier, Nissan had released the R 35 GT-R, a brutally fast car Full of space age tech and downright affordable. It was a true revolution, and with it the world had been convinced that Japan could build a fast car. So a Lexus being fast would come as no surprise. And while it was a monumental task to get carbon fiber made in a Toyota facility that was no longer rare or unique, even Lamborghini had fully carbon fiber supercars. Its looks were cutting edge when they were revealed in 2005, but the modern world of sports cars was moving at a breakneck pace.

And by 2010, the LFA was almost understated. Now that doesn’t mean that it was any less brilliant.

Every single LFA was a handcrafted masterpiece. Each one came with a tome of build sheets and certificates, and in every single way was a perfect product worthy of being a true halo car. Tanahashi’s team’s efforts were visionary.

Together, they had made a truly spectacular car with aerodynamics built into everything so advanced that even the mirrors would help the car stay planned into the ground. Race bred components like brakes and subframes, a fusion of carbon fiber and aluminum, lightweight and rigid, fast and balanced. A car capable of screaming past 200 miles per hour and getting there fast. The high revving ultramodern V10 that delivered power consistently. The LFA was and is one of the best driving cars on the road.

A modern masterpiece that again only got a lukewarm reception. It’s problem was that they simply took too damn long to make the thing. And by the time it was in the public’s hands, the things that made it revolutionary, like the digital dash and the act of aerodynamics, were commonplace.

Which would be fine if it were a McLaren or a Ferrari. A very competent supercar that just does everything right is still a phenomenal car.

But this was a Lexus. A $300,000 Toyota. No. One, and I mean no one was willing to pay a third of $1,000,000 for a Toyota and even if they wanted to. Lexus had a bizarre lease to own system that made it difficult to buy one.

The result was a car that only a handful of nerds with money to burn, but your average supercar buyers passed on them.

Due the Lexus Badge. and Japanophiles bought a GT-R for a third the price. Your average person saw a pretty car, knew nothing of what it took to make it, and said, Huh, that’s a nice Lexus. Despite being exclusive, limited, and entirely unique, Lexus wasn’t able to initially sell the 500 LFA as they had built.

Nevertheless, Akio Tanahashi and Hiromu were proud of what they had made, and sales failures are not.

They didn’t stop racing the LFA. They didn’t stop trying to improve it. Ever since that 2009 race. The Lexus LFA never left the Nurburgring.

Its spirit was born there and its soul, sadly, would die there. Back home in Japan, the LFA was struggling to sell, but in racing form it was doing exactly what it was supposed to do, proving that Lexus could build a fast fugging car, each lap faster than the last. And in the expert hands of Naruse Under the guidance of Kaizen, the LFA continued to improve. It almost ceased being a Japanese car. Its birthplace was truly the Nurburgring.

The LFA was the result of so many hands. But at the center of it all were the wizened palms of Hiromu Naruse gripped tightly to the controls of the LFA.

He breathed life into the legend, as he had done so many times before. Naruse had taken something from Toyota, a soulless, bland, engineering focused company, and given a color, given it heart, given it soul, nearly 70 years old. His passion for pushing cars to its limits never waned.

His entire being was driven for a singular purpose, to drive fast and to find ways of driving faster. It was with his hands that he gave the world his greatest gift. The LFA. It was with his indomitable spirit that he would improve it and give us the Nurburgring edition LFA. But sadly, it would be his parting gift on a fateful afternoon in June of 2010.

Naruse was driving an early LFA Nurburgring Edition prototype near the German racetrack, and his car veered into oncoming traffic. The resulting accident would take his life and close one of the most storied and important chapters in Toyota’s history. The story of a man who quietly, humbly made everything better the next year, despite the loss or perhaps in honor of the sacrifice Lexus unveiled Naruse’s swansong. The LFA Nurburgring edition, the pinnacle of Japanese engineering and the car that would change Lexus forever. It would cement Haruhiko tanahashi in history among his contemporaries like Gordon Murray and Enzo Ferrari.

As if guided by the spirit of Naruse himself, Japanese racing driver Akira Iida drove a bone stark Nurburgring edition LFA onto the complicated and undulating curves of the green hell and went on to set the fastest lap of a production car ever.

Naruse’s sacrifice, tanahashi’s vision and Akio’s drive all laid bare for those 7 minutes and 14 seconds. A Japanese legacy etched into the hills of Germany for all time. It took a full day to produce just one LFA. Thousands of Corollas could be made in the same amount of time.

And in 2012. One last day was spent. The last LFA rolled off its assembly line and Aichi, Japan one full day. A commitment by Toyota to give each and every one of its 550 LFA its time to be made. Right, because perfection shouldn’t be rushed.

This was a commitment that started 12 years before. The result was a no rules masterpiece, the likes of anything Italy or Germany could ever create. A Japanese McLaren F1 no compromises pure in its intent and direct in its delivery. The LFA was brilliance, a creation that transcended Toyota itself and gave the entire country of Japan something to be proud of. Today, it’s been more than a decade since that 550th car left the plant.

And looking back, we can see how wrong we all were about the LFA.

It may have struggled to sell, but selling was never its purpose. Its purpose was to innovate and to inspire, to push a slow, stuffy corporation to dare to dream again. Like the 2000 GT had done so so many years ago, the LFA was a monumental task that took the hearts and minds of hundreds of people. The constant toil of ten years of continuous improvement.

And what is likely to be well over a billion dollars And ultimately the life of a great man.

All to fulfill the dreams of a couple of engineers sharing drinks and dreaming. Make the ultimate sports car. We sometimes forget as little humans on this pale blue dot that numbers rarely tell the whole story. The greatness can’t be distilled down to sales figures or RPMs or lap times.

To truly know greatness, one must see it. One must feel it. And one must hear it. You look nice today. Thanks for watching.

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