Toru Tokushige, was born in 1973 in Yamaguchi prefecture. After getting BA in chemical engineering from Kyushu University, he became involved in management planning in Sumitomo Marine and Fire Insurance Co. Ltd. Straight as his first career. After working in Sumitomo, he earned MBA from the Thunderbird School of Global Management in 2002. After earning MBA, he executed hands-on support of technological ventures as the president of an incubation enterprise in Silicon Valley. In 2010, he started Terra Motors Corporation. Toru is now a part of a project of the Ministry of Economics, Trade and Industry “Session for Creation of Firms in New Industry”.
The Asian Entrepreneur is priveleged to sit down with Toru today, to learn from the extraordinary experiences and insights of this incredible entrepreneur.
Founder of Terra Motors Corporation
What exactly is Terra Motors?
Terra Motors is a start-up in Japan. Terra provides pure electric motorcycles to the world. As 80% of worlds sales of motorcycles concentrates in developing market in Asian region, Terra’s products are mainly designed to be used in Asia. Terra also provides affordable three wheelers (electric Tuk Tuk).
How did you come up with the idea of Terra Motors?
When I was working in SV, many of my friends and entrepreneurs had interest in electric vehicle. As I researched on EV an automotive industry, I realized that the big shift change from gasoline to electricity will happen soon in automotive and motorcycle industry. That was when I first came up with the idea of starting EV company. In terms of investment, building automobile company required too much investment for me. However, building motorcycle Manufacturer costs only 1/10 investment. In terms of competitors, existing Motorcycle manufacturers are not willing to provide electric motorcycles yet because of their strategy and thankcost.
In terms of human resources, Japanese 4 major motorcycle manufacturers are the best in the world. I was sure that I could hire professional engineers from these companies.
In addition Japanese products, especially motorcycles, are very popular in Asian region. Therefore, I was sure that Japanese electric motorcycles would be welcomed in the region. These are the reasons that I started from electric motorcycle.
Could you walk us through the process of starting up Terra Motors?
In 2010, I started Terra Motors with my own money. The first product was made in associated plant in China. With the products, named ”SEED”, I started to sell them in Japan to acquire second investment. In 2011, Terra sold about 3000 motorcycles in Japan and became the biggest manufacturers in domestic market. At this point, I got the second investment from famous Japanese executives, such as Mr. Idei, former CEO of Sony, and Mr Yamamoto, former vice president of Apple. Since then, professional engineers from Nissan, Panasonic, and Honda have joined Terra. As the second step, I have established two foreign branches in the Philippines and Vietnam in 2011. In 2014, Terra will have new branches in India.
How has it been like managing the business since?
When I first started Terra, many people who I spoke to said that starting motorcycle manufacturer in Japan seems to be unsuccessful because the 4 biggest manufacturers of motorcycle are all in Japan. Therefore, I had hard and long time finding the initial teammates who could see the potential of electric motorcycles. Fortunately, many telented members who had professional experiences in manufacturer industry and consulting firm have joined the team. In terms of the financial management, I have fortunately come across eminent investors in Japan who support Terra. Many. Doing business in developing market in Asia is not easy as well. Terra hires local employees in Vietnam branch. Implanting Terra’s corporate culture is very difficult as they have different culture and work ethics. As to the products, providing affordable and quality products is very difficult job. However, Terra has successfully found good suppliers which can meet the standard of Terra.
Did you find anything particularly difficult during the startup?
Starting new business in Japan is especially difficult compared to doing the same thing in other countries. Japanese peoples’ quality standard is the highest in the world. Additionally, Japanese people put great trust in famous brands such as Panasonic. Therefore, getting a retailor was very tough in Japan. To prove the quality of Terra’s products needed long and patient effort. Terra’s strategy is to start selling products in famous retailors to prove the quality and novelty of the products. We were sure that placing our products in the local motorcycle shop would not be successful. However, since major motorcycle retailors are company stores, relying on Motorcycle shops is not terra’s option. Terra tried to get a sales contract with electronics retail stores. However, most of the retailors were wary of selling motorcycles in electronics stores. We managed to get the contract with one of the top retailors in Japan and that opened the windows for contracts with other major retailors.
How was the initial reaction from the consumers?
Yes and No.
Yes, sales of our products outnumbered that of our competitors such as Honda and Yamaha. Since Terra’s products are half the price of our competitors (Terra: 120000yen, Yamaha: 250000yen), customers were very satisfied with Terra’s pricing.
No, many of Terra’s customers need more spec. 40km per full charge, 7-9 hours to full charge, and nonremovable battery are not enough to satisfy customers. Terra is now developing new products which can meet the needs of customers.
How have you managed to stay relevant in this industry?
We have gathered important resources as a basis of our business, namely, human, financial, technical resources, and experiences in Japan.
Our main competitors are both Japanese Motorcycle giants and Chinese manufacturer about chinese company, they are have big strength for price. as we said our main market is developing countries. so, it can be really strong point. But in any market, chinese company already failed. For example in Vietnam in 2008, chinese electric motorcycle company enter that market and they sold really well. But after one year, nobody buy it. Because of quality problem and no after parts and no after service neither.
We already did this kind of things in most customer oriented market(Japan). So, we have well know-how to do this, and we have enough engineer from Yamaha, Honda and so on. Quality is also really fine.
To Japanese giant, they will not enter electric motorcycle market so fast because, they have there own and big infrastructure for gasoline motorcycle. They have lot of engineer, parts supplier, and engine infrastructure. If they change to electric suddenly, they have to cut these things. It is so difficult and even main stream become electric, they should be slow to change.
Against them, we have to have enough speed and motivation to conquer this market as pioneer and if customer know our brand as No.1 electric motorcycle brand in the world, even for japanese giant, it is really difficult to get market share.
What can you tell us about the industry? Have you developed any industry insights that you could share?
Technically, electrification of motorcycle should be easier than that of automobile. Therefore, electric motorcycle should have reached to the market sooner than automobile. However, there are fewer news on electric motorcycle than electric vehicle. This is because Major motorcycle manufacturers are not making shift from gasoline motorcycle to electric ones yet. The reason of not going into electric industry at this point is that major manufacturers do not want to make a drastic shift of their strategy. Their strategy at this point is to expand their market to Latin America and Africa. Electric motorcycles are probably the next step after they saturate these market. They have already done many investment in these regions. Making electric motorcycle require drastic change in investment and human resource. Therefore existing large company are not willing to provide affordable electric motorcycle. Same thing happened in automobile and Tesla took the chance. Terra can be Tesla in motorcycle industry.
What are your future plans for Terra Motors?
At this point, our medium term goal is to be a Tesla motors in motorcycle industry, especially in Asia. Our long term plan is to provide Terra’s products to other developing markets such as Africa and Latin America.
If you could start all over again, would you change anything about your approach? If so, what?
No. I still believe that starting from electric motorcycle was and is the best way into motorcycle and automobile industry.
What do you think about startups in Asia?
In Japan, we need more supportive attitude toward startups. Japanese culture of putting to much trust on traditional and large company should be removed. In China and Taiwan, there are many startups blooming. Possible future competitors will come from these region.
In Other parts of Asia(South East and South Asia), I think it takes a while until startups can become bigger. Number of professional personnel is not enough. The power of government is too big. Company which cannot collaborate with government are not likely to success. This is not good for startups which normally do not have many credentials.
What are some personal principles or personal values that guide you and your career?
When I was in University, I read quite a lot of books written by Japanese entrepreneurs such as Morita Akio, the founder of Sony, and Honda Soichiro, the founder of Honda Motors. Around that time, I set up my mind that I will follow these three values, to achieve a great deed, to be an entrepreneur, to enjoy my life. These are my personal values.
What is your definition of success?Success is accumulation of the past failures.
Why did you decide to become an entrepreneur?I had a great influence from books written by Japanese entrepreneurs. I was particularly amazed by the scale of their thought and their belief to contribute to better life for the people in Japan. I really thought that I wanted to be person like Akio Morita someday.
What do you think are the most important things entrepreneurs should keep in mind?
Passion and logic. I think that Entrepreneurs without passion and logic cannot be successful. You need to have right balance of passion and logical thinking.
In your opinion, what are the keys to entrepreneurial success?Passion and logical thinking. I think that Entrepreneurs without passion and logic cannot be successful.
Any parting words of wisdom for entrepreneurs out there?
Entrepreneurs should think of their business in the global market. There are plenty chances when you look around the world, especially in emerging market. I usually spend half a month in Asian countries and the other half in Japan. I am always amazed by the speed of the development and energy in countries like Vietnam.
Facebook Page: http://www.facebook.com/TerraMotors.jp?ref=ts&fref=ts