Toyota-Panasonic deal offers EV fast track for auto, battery majors

The news that Toyota, the world’s second largest car manufacturer, and Panasonic, the world’s fourth (or second largest lithium ion battery manufacturer depending on how you look at it) are forming a joint-venture is about as significant as the electric vehicle (EV) industry could have hoped to start the year with.

Toyota and Panasonic will form a joint venture (51:49) company to develop and produce lithium ion, solid state and other next-generation battery technologies for the automotive industry.

In essence, it will see both companies develop new, more energy dense lithium ion cells and battery packs in Toyota’s bid to catch up with the rest of the EV world.

This could mean higher nickel cathode chemistries and a quicker move towards NCM 811 (a nickel, cobalt, manganese battery cathode with a ratio of 8:1:1) which has proved challenging to date. Or it could result in a more rapid adoption of the solid-state battery, which is currently slated for to be introduced to the EV world post-2026. It could also mean an entirely new EV battery chemistry – high manganese perhaps?

It is also the first major deal in a trend that is seeing the automotive sector and lithium ion battery space become increasingly integrated.

In a world where multi-million and multi-billion dollar battery contracts are becoming more commonplace, Panasonic has played the defining role in Tesla’s successful Gigafactory 1, operating the cell production side of the world’s biggest integrated lithium ion battery plant.

Not only has this partnership resulted in an entirely new lithium ion battery for the Model 3 (2170) but has proved that battery megafactories can be built and operated at scale in a fraction of the time expected by the industry. It has taken Tesla and Panasonic only 3.5 years from breaking ground to producing 20GWh of cells a year.

EV boost for both majors that have dragged heels 

For Toyota and Panasonic, the synergies are clear for the two companies who have dragged their heels in the lithium ion powered EV race.

For Toyota, the world’s second largest auto producer in 2018, it is a rapid route into the EV space after spending so many years pushing for fuel cell technology. Whether this can been seen as a fuel cell retreat or an expansion into another new energy technology is a matter of perspective – Benchmark Mineral Intelligence sees it as the latter.

For Panasonic, the deal ties them in with a major auto producer that manufactures in the tens of millions of units per year and also reduces its reliance on Tesla.

It is also a needed boost for Japan, having conceded ground to both Korea and China in EV production and lithium ion battery capacity buildout.

Korea’s LG Chem, and China’s CATL and BYD are all ahead of the once world leader, Panasonic, in terms of production capacity due to a spate of expansions over the last 18 months.

Panasonic, which has focused on quality cell production, had decided to rely solely on Tesla to provide it with volume, which means that no wholly-owned Panasonic lithium ion battery plant sits in the top five battery megafactories.

In fact, Panasonic only makes an entry at number 9 in the Benchmark Minerals’ Lithium ion Battery Megafactory Assessment.

And even with this battery plant in tenth position (Suminoe in Japan) it is still 100% reliant on Tesla, as it produces all of Tesla’s 18650 cells for the Model 3 and Model Y.

Together with Tesla and now Toyota, Panasonic has fast tracked its EV chances of becoming a major tier one lithium ion battery supplier to the EV industry and, for now, has reduced the chances of LG Chem and CATL taking its business.

As the global battery arms race continues, a route into a major automotive demand base such as Toyota cannot come fast enough for Panasonic.

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WATCH: Toyota outlines its EV masterplan 

 

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