Toyota, Panasonic create an EV-battery spinoff company

New joint venture would produce much higher-capacity batteries for a cheaper price

Toyota's President Akio Toyoda (L) shaking hands with Panasonic's President Kazuhiro Tsuga

Panasonic, Tesla’s battery cell partner, has reportedly agreed to set up a joint-venture company with Toyota to manufacture electric car-batteries and eventually solid-state batteries, too. According to a report from Japan’s Nikkei, In the EV battery cell venture Toyota would hold a controlling 51 percent stake, while Panasonic would transition five of its car battery production plants in China and Japan to the new spinoff company. More details deal are expected to be unveiled "as soon as this week" by the Japanese manufacturers.

What is known for now is that the joint venture would become operational "in the early 2020s," and would start producing "batteries with 50 times the capacity of those now used in hybrid vehicles, aiming to bring down production costs through higher volume." More precisely the partnership would result in Panasonic producing a large number of cells for the automaker. But as it's been reported so far,  the produced EV batteries are intended to supply not only both Toyota's Daihatsu brand, but also outside companies like Mazda and Subaru. The companies are also reportedly hoping to court Honda as it dives into EVs.

The news outlet also said that the joint venture would be used to push forward the technology used in solid-state batteries. Solid-state batteries don't exist in commercial production yet, but in theory they are supposed to be lighter, safer, and have a more competitive energy density than existing lithium-ion batteries. Toyota has been working on such solid-state battery research for years, hoping to commercialise them by 2022, but until now no significant progress has been reported.

The partnership between the two Japanese companies is not big of a surprise since it follows their 2017 agreement to explore such a the tie-up. Furthermore, each side has strong incentives to team up. On one side, Toyota has been comparatively slow to get started in EVs, and only recently started ramping up its plans, so such a venture could help it catch up in style by ensuring that it has access to affordable, mass-produced batteries, eventually helping the company reach its goal to sell 5.5m electric cars by 2030

For Panasonic, on the other hand, it would represent shifting an important part of its battery cell production capacity to Toyota’s electric vehicle programs. Between this and the Tesla pact, it could then become a dominant force in the EV world.

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