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Toyota and Panasonic to build electric car batteries together

Japanese duo eyes pole position in field crucial to auto industry's future

Panasonic supplies lithium-ion batteries and solar panels for Toyota's Prius plug-in hybrid.

NAGOYA, Japan -- Toyota Motor and Panasonic plan to set up a joint venture in 2020 to manufacture batteries for electric vehicles, joining forces to compete more effectively on cost and scale with rising Chinese players in a key area for the future of the auto industry, Nikkei has learned.

The venture, in which Toyota is to hold a 51% stake with Panasonic owning the rest, will be announced as soon as this week. Panasonic will shift five automotive battery production facilities in Japan and China to the new company, though the U.S. plant it operates under a partnership with American automaker Tesla will not be included.

In the early 2020s, Toyota and Panasonic will look to launch mass production of batteries with 50 times the capacity of those now used in hybrid vehicles, aiming to bring down production costs through higher volume.

The plan is to supply to Mazda Motor, a Toyota partner on electric car technology, as well as Toyota subsidiary Daihatsu Motor and Subaru. The joint venture will encourage Honda Motor, which uses Panasonic batteries in hybrid vehicles, to adopt the new cells.

Panasonic and Toyota will also team up to develop next-generation batteries, an undertaking that requires enormous cash outlays and significant technical expertise. Projects will include solid-state lithium batteries, which have a high capacity -- a must for improving the range of electric cars -- and are safer than existing options. The two companies had reached a deal in 2017 to explore a tie-up in the field.

While Toyota has been an industry leader when it comes to fuel efficiency, thanks mainly to its hybrid vehicles, it has lagged behind Volkswagen and Chinese rivals in bringing electric cars to market. Battery costs remain the biggest hurdle to achieving the Japanese automaker's goal of roughly tripling annual sales of electrified vehicles to 5.5 million by 2030, but Toyota hopes to overcome this through the Panasonic partnership.

For Panasonic, teaming with Toyota will help it save on investment costs and reach a broader network of customers. The industrial conglomerate will also gain easier access to vital resources such as metals and recyclable batteries.

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