According to several news sources, Toyota is considering an agreement to manufacture batteries for electric vehicles (EVs) with Panasonic. The Japanese automaker has been under increased pressure to deliver on its promise to have its EV product line comprise half of its total global sales by 2030. In a press conference earlier this week, Toyota executives acknowledged the company would have difficulty meeting that goal considering the current state of battery technology. A partner like Panasonic could make that ambition more of a reality over the next dozen years.
While competitors such as General Motors and Volkswagen have charged ahead on electric car research and development, Toyota has been scrambling to catch up in the EV race. As Bloomberg reiterated in a profile last month about the automaker’s strategy, Toyota’s bet on zero-emissions vehicles was placed on hydrogen fuel cell technology. But in recent years, electric charging infrastructure has scaled, EV range keeps improving and battery prices keep falling to the point where electric cars could reach cost parity with gasoline- or diesel-fueled vehicles within a decade.
The strong possibility of a deal with Toyota is a shot in the arm for Panasonic, which has already enjoyed a long relationship with Tesla. The company manufactures batteries at the EV automaker’s gigafactory outside of Reno, Nevada, and earlier this year introduced a line of sleek rooftop solar panels that could integrate with Tesla’s Powerwall battery units.
Moreover, scoring an established global automaker such as Toyota as a steady customer would help strengthen Panasonic’s business prospects for the long term. While its association with Tesla has earned it copious amounts of press coverage in recent years, that attention may not necessarily translate into a steady and sustainable revenue stream. Tesla has yet to become profitable, and in recent months has struggled with “production hell” while struggling to deliver the much-anticipated Model 3. While Tesla and its CEO, Elon Musk, are adept at generating eyeball-catching headlines with news such as the rollout of the Tesla Semi, plenty of competitors lurk also in that space.
Becoming a key supplier for a leading automobile manufacturer will dramatically improve Panasonic’s prospects – not to mention for the future of EVs at large.
“This is important news because we can tell which automaker is most serious about the mass production of electric vehicles by looking at which ones are seriously working to secure battery supply,” wrote Fred Lambert for the blog Electrek.
Panasonic’s battery manufacturing capacity will be crucial for Toyota, as it is determined to rejoin the EV market in 2020 with launches in India and China.
Image credit: Toyota Global