Toyota Motor and Panasonic announced they will set up a 51-49 percent joint venture next year to make electric vehicle (EV) batteries.
The joint venture reflects the aim of the Japanese companies to become a bigger global player in the EV battery industry.
The two companies will pool part of existing battery-related equipment and engineers to the joint venture. Panasonic will also transfer its manufacturing capabilities in Japan and China for its thin, rectangular-shaped prismatic batteries.
The two companies will transfer a total of 3,500 employees.
Batteries produced by the joint venture will be sold to various automakers.
Panasonic, one of the world’s biggest EV battery suppliers, is facing competition from South Korean makers Samsung SDI and LG Chem, and CATL of China.
Panasonic is currently Tesla Inc’s exclusive battery cell supplier, but Reuters reported that the U.S. EV maker has been in discussions with other companies including China’s Tianjin Lishen to supply batteries for its new Shanghai car factory.
Toyota and Panasonic already operate a joint venture called Prime Earth EV Energy, which manufactures batteries mainly used in gasoline hybrid vehicles.
The new joint venture shows that Toyota is expanding into development and production of EV batteries just as many rivals have been stepping away from their development due to the heavy costs involved.