Background

In January 2019, Toyota and Panasonic announced they were forming a joint venture (JV), to manufacture prismatic batteries forelectric vehicles(电动汽车)。新公司,地球能源&解决方案Inc is now active.

The company, headquartered in Tokyo, will commence operations from April 2020 with 5,100 employees, including 2,400 at a subsidiary in China. Toyota owns a 51% stake in the JV, with Panasonic the rest. The aim of the JV is to mass-produce solid-state lithiumbatterieswith much higher capacities compared to those used today. This insight looks at why Toyota is forming theJVand the benefits for both companies.

Exhibit 1: Win-Win Situation

Toyota

The JV syncs well with Toyota’s plans for developing and launching its future range of fully battery operatedEVs. While Toyota ranks well globally in terms of fuel efficiency with a relatively high share of hybrid vehicles in its product mix, the company lags competitors in battery or pure electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEVs). In the last couple of years however, Toyota has become more aggressive with its BEV plans, primarily to comply with stringent emissionregulations, and more specifically to qualify for NEV credits in China, which requires automakers to manufacture a mandated share of EVs in its total production.

With Toyota having announced plans to sell 5.5 million EVs by 2030, the high cost of batteries, which accounts for around 40% of the vehicle cost, remains a pain point. In partnering with Panasonic, Toyota will not only share in the R&D investment to develop advanced solid-state batteries, but also secure competitive pricing and steady supply for its future EV models. Batteries also open a new revenue opportunity for Toyota, supplying to partners, like Suzuki and Mazda among others.

It can also pitch to other global auto OEMs through Denso, the leading Tier1 supplier, in which Toyota has around a 25% share.

Panasonic

While Panasonic is currently among the world’s leading EV battery manufacturers, it is seeing tough competition from South Korean players – Samsung SDI andLG Chem, and Chinese players, especially CATL which has won supply contracts with key automakers including BMW, Daimler,Volkswagen, and Volvo. With its assured long-term supply contract to Toyota, Panasonic can further diversify its revenues from consumer durables to the fast-changing automotive sector.

松下减少对特斯拉的依赖

Until recentlyTeslahad been the key customer of Panasonic batteries. Having relied solely on Panasonic to source its batteries since 2014,Teslahas been broadening its battery suppliers to include LG Chem and CATL. It is also considering developing and producing its own batteries, acquiring Hibar Systems, a high-speed battery manufacturing company, and Maxwell, best known for ultracapacitors. The JV supports Panasonic’s strategy to reduce long term reliance onTeslaand realize future growth opportunities in the global automotive industry.