FAR EAST: JAPAN REPORT
Toyota Motor Corporation has announced that it will invest 1.5 trillion yen in automotive batteries by 2030. Of this amount, 1 trillion yen will be used to increase the production capacity to 200 GWh, 33 times the current level. This is an increase of more than 10% over the previous target.
The company also announced that it will invest 500 billion yen in research and development, with the goal of reducing the cost of batteries per electric vehicle by more than half. As demand for electric vehicles is sure to grow, the battle for leadership among manufacturers will intensify.
Toyota’s investment in batteries was 80 billion yen in the fiscal year ended March 31, 2021, and it is calculated to continue to exceed 100 billion yen per year until 2030. The total amount of capital investment is expected to be 1.35 trillion yen in the fiscal year ending March 2022, of which more than 10% will be allocated to batteries.
Source: The Nikkei
PSR Analysis: While batteries are said to determine the future of the automotive industry and international competition is intensifying, Japanese automakers have not made large-scale investments in the past. Northvolt is targeting a staggering 150 GWh per year increase in production capacity over the next decade, while CATL’s 2019 shipments were 32.5 GWh, and the company plans to build new plants for 52 GWh in China and 14 GWh in Germany within the next two to three years.
Toyota’s announcement is on a scale that is internationally competitive, given the size of the investment. Whether the battery production base will be in Japan or overseas is a very important point. Of course, batteries are heavy, so the cost of transporting them to the vehicle production site will be reflected in the vehicle price.
For automakers that cannot procure their own batteries or those of their own group, the only way to produce EVs is to purchase batteries from other companies or groups. Batteries procured from outside the company or group carry transportation costs and reduce profits. In addition, as long as the current seller-driven market structure continues, it will be difficult to meet delivery dates as desired.
Toyota’s battery investment, which was announced under the circumstances where this view is becoming common knowledge, is generally viewed favorably by the domestic auto industry, including other companies.
It is still unclear how this investment will affect not only Toyota itself, but also the six automakers (Toyota, Daihatsu, Hino, Subaru, Mazda, and Suzuki) that are in partnership with Toyota, led by its subsidiaries Daihatsu and Hino. But in any case, as the shift to EVs continues, the procurability of batteries is quite important for manufacturers, and this investment by Toyota may be a catalyst for reversing the reputation of Toyota’s stance on EVs, which has often been seen as reluctant compared to other companies. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
