Toyota has announced plans to partner with China’s CATL – the world’s largest automotive battery maker – in order to accelerate its electrification offerings, reports Nikkei Asian Review.
The automaker has disclosed that it will sign a Memorandum of Understanding (MoU) on a ‘strategic partnership’ with Contemporary Amperex Technology Ltd (CATL).
CATL is expected to supply lithium-ion batteries for Toyota-branded electric vehicles to be released in China and other markets starting next year.
Both companies have listed improving battery quality, adopting shared standards, and reusing batteries as some of their top priorities.
The CATL MoU is of much significance to Toyota as it aims to triple its annual sales of electrified autos from 2018 levels to at least 5.5 million by 2030.
Toyota mentions that hybrids and plug-in hybrids will account for 4.5 million of these, while fuel-cell and full-electric vehicles will make up the rest.
According to the Nikkei, Toyota procures batteries for its hybrids and electric vehicles from sources including subsidiary Primearth EV Energy in which Panasonic holds a stake.
Securing a sufficient and steady supply of batteries has become a challenge for Toyota as it steps up production of electrified vehicles.
Batteries have a significant effect on the performance of electric vehicles as well as their cost accounting for nearly 30% or more of the sticker price.
CATL led the global market for automotive batteries in 2017 with a roughly 16% share, narrowly beating No.2 Panasonic’s 15%, according to Tokyo-based Techno Systems Research.
Chinese government incentives for domestic automakers to use batteries from local manufacturers have helped drive CATL’s sales, letting it expand production and improve its cost competitiveness.
The company has forged relationships with other automakers, including a partnership with Honda Motor to jointly develop batteries. European giants like BMW and Volkswagen also use CATL batteries.
Apart from the CATL endeavor, Toyota also plans to ramp up production of ‘new-energy vehicles’ in China to as much as 400,000 vehicles a year by 2022.
Image and content: CATL/Nikkei Asian Review