Toyota locks in more than a supply of EV batteries in deal with China’s CATL

Toyota needs more than a secure and steady supply of batteries if it hopes to meet its ambitious global sales goal for electric vehicles. If it hopes to compete, the Japanese automaker will need better quality lithium-ion batteries that don’t squeeze profit margins.

The automaker is turning to Chinese EV battery supplier CATL for the answer. The companies announced Wednesday a wide-ranging partnership that covers the gamut of the battery ecosystem from developing new technology and locking in supply to improving product quality and reusing and recycling batteries.

Toyota said in June that it would partner with CATL, also known as Contemporary Amperex Technology Co Ltd and EV maker BYD for battery procurement. This new agreement widens the scope of the relationship.

The companies said the partnership was borne out of a shared belief that a stable supply of batteries is critical and that battery technology must be further developed and advanced. CATL will combine its battery development and supply capabilities with Toyota’s electrified vehicle and battery development technologies, the companies said in a joint announcement.

Panasonic already supplies Toyota with batteries for hybrids and hybrid plug-ins. That won’t be enough, however, to meet its EV goals considering that virtually every other automaker is adding electric vehicles to their portfolio mix. Tesla and Nissan, once the only two notable producers of electric vehicles, are no longer alone. Audi and Jaguar Land Rover have introduced new all-electric vehicles. Bigger acts will soon follow. Volkswagen plans to have a portfolio of more than 20 full-electric models and to sell 1 million electric vehicles annually by 2025.

Meanwhile, Toyota has said that electric vehicles will make up half of its global sales by 2025. (That means annual sales of about 5.5 million electric vehicles.) Those EV plans have extend to other Toyota brands such as Lexus as well as other automakers.

The company said every Lexus model will have an electrified version by 2025. Toyota and Subaru announced in June plans to jointly develop a platform dedicated to battery electric vehicles for midsize and large passenger vehicles and to jointly develop a C-segment-class all-electric SUV model for sale under each company’s own brand.

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