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Toyota takes commanding lead in EV patents but no match for Tesla in sales

Japanese players must also contend with Chinese rivals' rapid growth

Toyota's technological prowess owes partly to the success of the Prius, as hybrids share many parts with electric vehicles.   © Reuters

TOKYO -- While Japanese automakers lag Tesla and Volkswagen in electric-vehicle sales, they hold an advantage in critical EV technology, with Toyota Motor ranking first worldwide based on the importance of its U.S. patents, new research finds.

Nikkei, in partnership with Tokyo-based research firm Patent Results, scored global companies on the competitiveness of their EV-related patents in the U.S. as of early July, based on factors such as how often these patents are cited or disputed.

A total of 21 Japanese companies, including parts makers like Denso, made the top 50. Honda Motor ranked third, while Nissan Motor, the maker of the Leaf EV, placed sixth.

In addition to generating royalties, patents "allow companies to squeeze the competition by seeking injunctions on production or damages," said Taro Nagashima, an associate at Uchida & Samejima Law Firm. "It allows them to maintain their competitiveness."

The top 50 included 13 American companies, with Ford Motor in second, General Motors in fourth and Tesla at No. 8. South Korea and Germany had five companies each, led by Hyundai Motor and Robert Bosch. Two Chinese players were there as well: EV makers BYD in 32nd place and Nio in 47th.

The analysis covered patents involving EV parts, like motors and batteries, as well as charging stations and other infrastructure. Toyota scored 8,363 points, followed by Ford with 6,564 and Honda with 3,849. Tesla had 1,741 points.

A look at similar patents in the European Union also supports Japan's lead in the field.

A prototype of an electric car developed jointly by Toyota Motor and Subaru: Japanese automakers hold many key patents related to EVs. (Photo by Takashi Kawakami)

Japan's competitiveness in EV technology stems from its success with hybrid vehicles. Hybrids and EVs share many of the same components. Toyota rolled out the world's first mass-produced hybrid car, the Prius, in 1997 -- before Tesla was founded. The Japanese automaker has strength in technology that controls how batteries charge and discharge, among other areas.

For Toyota and its peers, the challenge remains the same as the one faced by Japan in consumer electronics: translating strength in hardware into products that people want to buy. Without a leading position in EV sales, Japanese patent holders risk an eventual loss of their technological edge.

Tesla sold more electric vehicles than any other company in 2020, according to data on EV and plug-in hybrids compiled by EV Sales and other sources. BYD and six other Chinese companies made the top 20, accounting for roughly 20% of total unit sales.

Among Japanese makers, Nissan ranked 14th and Toyota 17th.

In terms of patent competitiveness, Tesla is close to Nissan, which has triple the number of EV-related patents in the U.S, according to the ranking. The U.S. EV maker's strength lies in thermal management technology, a critical factor in preventing battery wear. Tesla has double the patent competitiveness of Toyota in this area of technology.

Ford has an advantage in energy-efficient air conditioning technology. The company plans to make $30 billion in EV-related investments by 2025, aiming to have electric vehicles make up 40% of its global sales in 2030.

Chinese companies had applied for 36,800 EV-related patents in mainland China as of July, accounting for 67% of the total there. Though it is difficult to gauge their competitiveness with the data available, Chinese companies are expected to become an even bigger force internationally in the field.

Japanese manufacturers once dominated the global market for TVs, computers and other consumer electronics, only to be overtaken by South Korean and Chinese rivals that struck a balance between quality and low prices.

"Japanese automakers could end up repeating the same mistakes as the electronics industry unless they can swiftly connect their technology with the business side," said Sanshiro Fukao at Itochu Research Institute.

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