Toyota’s Internal Inertia Stifles Digital Transformation Effort

Inside Toyota Motor Corp., a group of employees are worried about the company’s future in an era when a car’s software matters just as much as its sheet metal.

The world’s biggest automaker is known for churning out reliable cars like clockwork, but it’s been struggling to keep up with Elon Musk’s Tesla Inc., China’s BYD Co. and other frontrunners in the industry’s shift toward electric vehicles with sophisticated software.

A somewhat obscure Toyota business unit called the Digital Transformation Promotion Department aims to change that. Established four years ago at the behest of then-Chief Executive Officer ...