The agreement could pave the way for even greater cooperation between the two companies as Toyota looks to step up in electrification

The agreement could pave the way for even greater cooperation between the two companies as Toyota looks to step up in electrification

Toyota and Panasonic have announced an agreement to begin studying the feasibility of a joint automotive battery business.

This agreement between the two companies aims to help find solutions to 'pressing societal issues such as global warming, air pollution, the depletion of natural resources and energy security'. Furthermore, this agreement is intended to address growing demand and expectations for electrified vehicles. In order to realise these objectives, Toyota and Panasonic target further advancements in automotive batteries, which are crucial technologies in electrified vehicles.

Since Toyota and Panasonic began their business relationship in 1953, the two companies have been challenging each other with the goal of mutual improvement, particularly in honing their manufacturing capabilities (monozukuri). With the business environment undergoing drastic change, the companies say they have 'realised the importance of collaborating with trusted partners and looking past conventional boundaries to contribute to the world through monozukuri and creating new value'.

Panasonic has positioned automotive lithium-ion batteries as one of its key businesses, and its automotive batteries are used by many automakers worldwide. Panasonic's technological capabilities which achieve various requirements for such batteries are well regarded in the market. The company is making efforts to further enhance the safety and capacity of its automotive prismatic batteries, making use of its accumulated technological knowledge in the battery business.

The collaboration could help Panasonic to reinforce its market leadership in automotive powertrain batteries. Panasonic is the exclusive supplier of batteries for Tesla's Model S, Model X and upcoming mass market Model 3, and plans to contribute US$1.6bn to Tesla's $5 billion battery factory. Tesla said in August 2017 that it is to offer US$1.5bn in corporate bonds to strengthen its balance sheet as it looks to ramp-up production volumes on the Model 3.

20%

Market leader Panasonic's estimated market share for lithium-ion automotive batteries