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Toyota-Panasonic JV Receives European Commission's Approval

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Toyota Motor Corporation (TM - Free Report) and Panasonic Corporation’s joint venture (JV) has been approved by The European Commission. The JV, set to come into effect from the next year, will be involved in the manufacturing and sale of prismatic automotive batteries along with research and development activities. The collaboration is in addition to the already existing agreement with Panasonic that offers lithium-ion prismatic batteries for Toyota’s vehicles.

Notably, Toyota will own a 51% stake in the JV while Panasonic will own 49%. The JV will provide Toyota with more advanced batteries, thereby ramping up vehicle production to expand its presence in the EV market. The JV also aims to supply batteries to Toyota's EV technology partners, Mazda Motor Corporation (MZDAY - Free Report) and Subaru Corporation.

The deal will capitalize on the strengths of both companies, wherein Toyota will contribute know-how and market data related to EVs while Panasonic will contribute high-quality and extremely safe technologies.

Under the new collaboration with Toyota, Panasonic will transfer its prismatic battery manufacturing equipment and facilities to Japan and China. The shift will be cost-efficient and advantageous for Panasonic, aiding it to grow efficiently in the fast-growing EV market.

The arrangement will help Toyota to deal with the challenge of securing high-quality batteries and boost Panasonic's profit margins.

Toyota is using Panasonic batteries, designed for Tesla (TSLA - Free Report) electric cars, in its plug-in hybrids for the China market. The batteries have been installed in the new Corolla and Levin sedans that Toyota rolled out in China this year. Reportedly, Toyota ordered around 50,000 batteries that boosted Panasonic's battery plant in Osaka to full capacity.

While Toyota’s focus on electric and self-driving vehicles bode well, amplified labor costs, increased raw material costs and declining sales, particularly in North America, remain concerns for this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Toyota Motor Corporation Price and Consensus

 

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