According to The Nikkei Asian Review, Toyota Motor is entering the electric car market at full force, an area it was one step behind in, with technological help from battery partner Panasonic, as it shores up its presence in the world's largest auto market of China.
The companies on Tuesday announced plans to set up a joint battery venture by the end of 2020, with Toyota taking a 51% stake and supplying 500 staff. Panasonic will own the rest and provide 3,000 people. Sales of batteries produced by the new entity will be handled by Panasonic.
Toyota is forming the partnership with an eye on China, as government policies there drive rapid growth in the field. Japan's top automaker was initially cautious about foraying into electric vehicles given technological and cost hurdles, but China's state-led drive to become the global leader in the field has forced its hand.
Toyota's bread-and-butter hybrids do not count toward a new quota that China has set from this year, requiring automakers to produce and sell a certain number of electric or fuel cell vehicles.
The promise of the massive Chinese market has spurred the world's top automakers to shift toward electric vehicles. Volkswagen has broken ground on a Shanghai factory capable of producing 300,000 electric cars that will begin operations in 2020. China's BYD and Beijing Automobile Works have expanded their electric vehicle offerings thanks to government subsidies.
Toyota also plans to release its own electric car in 2020 but still lags behind competitors on commercialization and mass production. The partnership with Panasonic will also give Toyota an edge in an attempt to make its batteries the industry standards.
Although China's Contemporary Amperex Technology surpassed Panasonic to become the world's top shipper of lithium ion car batteries by volume in 2017, the Japanese company still remains No. 2. Rivals in Japan like NEC, meanwhile, have pulled out of the battery business due to tight margins. Panasonic has built up mass production techniques by supplying batteries to Toyota for hybrids and to Tesla for electric cars.
Toyota also plans to develop next-generation solid-state batteries that improve range, among other technologies. "Panasonic is a step ahead" of Chinese and South Korean upstarts in high-capacity batteries that increase travel distance, said Tang Jin, head of Mizuho Bank's international business relations department.
In addition to seven technology partners, including Mazda Motor, Suzuki Motor and Subaru, Toyota is also trying to persuade Honda Motor to buy the new joint venture's batteries. The automaker will also pitch Western rivals on the batteries as it seeks to reduce costs from economies of scale and standardize battery packs for easier reuse and recycling.
There are no standard sizes or specifications for batteries used in electrified vehicles. Even the square prismatic batteries jointly produced by Toyota and Panasonic have varying specifications, keeping production line equipment costs high. The companies are racing to lay the foundation for standardization by creating a generic battery that can be adopted by many automakers.
For Panasonic, the partnership will enable it to share massive upfront investments with Toyota, but its 49% stake in the new venture means its share of sales and profit will go down accordingly.
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