Japanese industrial giants Toyota and Panasonic have confirmed they will proceed with a joint venture to supply prismatic batteries cells to various auto-makers, allowing Toyota to bring battery production in-house.
The new deal builds on an agreement between the two companies in December 2017, to study the feasibility of a joint automotive prismatic batteries business.
Just over two years later, both parties are satisfied that the deal will help them strengthen their foothold and stay competitive in the battery industry.
A joint press release published on Tuesday this week confirmed the joint venture would be established by the end of 2020, pending approval from the relevant competition-law authorities.
Other key points from the press release include:
- The ratio of equity participation in the joint venture will be 51 percent for Toyota and 49 percent for Panasonic.
- The scope of the joint venture’s business operations will cover research, development, production engineering, manufacturing, procurement, order receipt, and management related to automotive prismatic lithium-ion batteries, solid-state batteries, and next-generation batteries.
- Toyota will transfer equipment and personnel to the joint venture in the areas of development and production engineering related to battery cells. Panasonic will transfer equipment, other assets, liabilities, personnel, and other items to the joint venture in the areas of development, production engineering, manufacturing (at plants in Japan and in Dalian, China), procurement, order receipt, and management functions related to the automotive prismatic battery business.
- The total number of employees from both companies related to operations subject to transfer to the joint venture is 3,500 (as of the end of December 2018).
- Products produced by the joint venture will be sold to various automakers through, in principle, Panasonic.
Being able to bring battery production in-house may turn out to be a good move for Toyota, and the deal could act as catalyst to launch them right into the frame in the global electric vehicle market, a market they have yet to establish themselves as firmly as expected being one of the world’s largest carmakers.
Toyota Executive Vice President Shigeki Terashi said:
“Together with Panasonic, we want to hone our competitiveness in batteries, which represent one of the core technologies of electrified vehicles. By contributing to the popularization of Toyota’s and other automakers’ electrified vehicles, we want to help find solutions to issues such as global warming, environment-related challenges, and energy-related challenges. We have high expectations for the new company, including―as we aim to deliver ever-better electrified vehicles to even more customers―its role in fulfilling our plans for the popularization of electrified vehicles* (including achieving Toyota annual global sales of more than 5.5 million units of electrified vehicles), which we announced at the end of 2017.”
For Panasonic, the deal means they no longer have to put all their electric vehicle eggs in the Elon Musk basket, which should please investors.
Panasonic Senior Managing Executive Officer Masahisa Shibata said:
“Uniting with Toyota’s battery and production-engineering technologies provides us an excellent opportunity for being able to evolve our automotive prismatic batteries, which have an established track record of performance and safety, faster than ever. Through the electrification of vehicles, we want to accelerate our contribution to the realization of a society of mobility that is kind to the environment.”
The deal could represent one of the largest commitments to EV battery development seen by a major global car manufacturer.
Neither party has yet to confirm exactly how much money will be put in to the new company.