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Toyota President Akio Toyoda, left, and Panasonic President Kazuhiro Tsuga at a news conference in Tokyo on Dec. 13.
Business

Toyota-Panasonic hookup could jolt Japan's electric-car sector

Titans of industry may join forces on batteries, giving nation a chance to catch up

NAGOYA -- Toyota Motor's planned partnership with Panasonic on electric-car batteries opens the door to a team effort by Japan's automotive heavyweights to refine and standardize that technology, gaining a necessary edge as electric vehicles begin to roll out worldwide.

The automaker announced Wednesday that the duo will begin exploring a tie-up on automotive batteries -- a critical piece of the effort to make electric vehicles more affordable and usable. Leaps in battery technology could help Japanese automakers catch up to foreign peers such as Volkswagen and Chinese manufacturers, which already have medium- to long-term electric-car strategies in place and are investing heavily in battery production.

"Surviving this period of upheaval requires developing competitive batteries in Japan and establishing a reliable system to supply them," Toyota President Akio Toyoda told a news conference Wednesday. Roughly 60% of the world's lithium-ion batteries are now made in China, where the government is taking aggressive steps to expand the electric-vehicle market and nurture key technologies.

Toyota and Panasonic have made clear that they intend to form a comprehensive alliance in the battery business, working to develop new prismatic batteries for electric vehicles. These will include solid-electrolyte batteries, a next-generation technology that is safer than traditional liquid-electrolyte cells that Panasonic currently makes for U.S. electric-car maker Tesla.

The Japanese partners have not revealed how the batteries will be manufactured, but this is widely expected to be a collaborative effort as well. Toyota and Panasonic already make batteries for the automaker's gasoline-electric hybrids through a joint venture, Primearth EV Energy.

Collaboration will also bring technological benefits. Prominent South Korean battery makers such as LG Chem and Samsung SDI develop their products in-house and supply them to customers as-is. By partnering with Panasonic, Toyota will be able to accelerate development by bringing their technologies together. Panasonic has been handling "everything from development to production while strengthening ties with carmakers," President Kazuhiro Tsuga said.

Broad reach

Toyota has historically centered its green-car development efforts on hybrid vehicles, sidelining electric cars because of their short range and other issues. But the company has lately broadened its strategy to include electric vehicles, as well as the plug-in hybrids it already produces. By 2030, Toyota aims to nearly quadruple annual sales of electrified vehicles -- hybrids, electric cars, plug-in hybrids and fuel cell vehicles -- to 5.5 million vehicles, or half its projected global sales total. Electric and fuel cell vehicles alone are seen selling 1 million units each year, up from nearly zero now.

These plans afford Panasonic the opportunity to both sell enormous numbers of batteries to Toyota and to peddle the fruits of the pair's joint development efforts to other customers. Production delays at Tesla are weighing on Panasonic's earnings, highlighting the risk of relying too heavily on one major buyer.

The two allies intend to use their partnership to "help electric vehicles catch on more broadly," Toyoda said. Toyota's other partners could be the first to benefit. Over the past year, the automaker has launched a collaboration with group companies Toyota IndustriesDenso and Aisin Seiki to dream up new electric-car concepts, and has partnered with Mazda Motor to develop limited-run models. Toyota has also agreed to purchase electric vehicles produced by Suzuki Motor in India.

The Panasonic alliance could bring even more players into the fold. The partners plan to reach out to a variety of automakers and other companies to collaborate in the battery field, including on reusing and recycling batteries -- a necessary step to reduce the cost and environmental impact of electric-vehicle manufacturing. Toyota has long envisioned "an all-Japan alliance including Honda Motor and other peers," according to a senior official. Honda, for its part, believes it is "critical to align ourselves on non-competitive aspects such as battery standards," an official said.

While battery performance is certainly something for automakers to compete on, teaming up on standards and recycling technologies will help advance electric vehicles overall. These vehicles' future in Japan could rest on how other automakers respond to Toyota's call.

(Nikkei)

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