At the end of 2017, several Japanese automotive companies, including Suzuki, Subaru, Daihatsu, and Toyota Hino Motors, joined forces with Toyota Motor Corporation to form a new electric vehicle research and development company. This initiative expanded into a seven-company alliance that included Toyota, Mazda, and Denso, aiming to share intellectual property and accelerate the development of foundational technologies for electric vehicles.
In recent months, Toyota has significantly ramped up its shift toward electric mobility. The company announced that by around 2030, it aims to increase the global sales of electric vehicles—from about 15% currently—to 50%. To support this goal, Toyota plans to invest 1.5 trillion yen in battery technology development by 2030. Additionally, it has partnered with Panasonic to co-develop electric vehicle battery solutions, further strengthening its position in the EV market.
As a major player in the global automotive industry, Toyota was not previously known for leading in electric vehicles. Instead, it focused on hybrid and hydrogen fuel cell technologies. However, this strategic pivot is driven by two main factors: first, competitors like Volkswagen have accelerated their EV development following the emissions scandal, with plans to launch 80 electric models by 2025. Second, global environmental regulations are tightening, with the UK planning to ban internal combustion engine vehicles by 2040, and China—world's largest auto market—pushing for greater EV adoption and considering a future ban on traditional vehicles.
Toyota was hesitant to fully embrace electric vehicles due to challenges in on-board battery technology. Current liquid batteries face limitations in safety and energy density, making them unsuitable for long-range driving. As a result, breakthroughs in battery technology will be crucial for success in the EV market.
Toyota’s partner, Panasonic, is at the forefront of battery innovation and supplies Tesla with key components. Recently, Matsushita President Tsuichi Kazuhiro stated that the transition to all-solid-state batteries could take 5–10 years through joint efforts with Toyota. These next-generation batteries use solid materials for the cathode, anode, and electrolyte, eliminating the risk of liquid leakage and offering higher safety. They can charge in just a few minutes, compared to the tens of minutes required by current lithium-ion batteries, and also provide increased range per charge.
A senior automotive consultant in Japan told a reporter that Toyota’s electric vehicle strategy presents a significant challenge. Electric vehicles require only about 10,000 parts, compared to 20,000 for traditional cars, making them more similar to IT and electronics products in terms of standardization and modular design. This shift threatens the traditional strengths of Japanese automakers in coordinating with numerous suppliers. Additionally, batteries account for approximately 60% of an EV’s cost, forcing Japanese automakers to restructure their existing value chains.
Toyota’s president recently urged Japanese carmakers to collaborate on establishing a unified battery specification to compete globally. While Japan still holds advantages in three core EV technologies—batteries, motors, and control systems—Europe, the U.S., and China are rapidly catching up. For instance, Volkswagen plans to invest 34 billion euros (about 4.5 trillion yen) in electric vehicle technology between 2018 and 2022.
Experts believe that the EV industry requires substantial investment. If Japanese automakers remain stuck in traditional thinking, they risk missing out on critical opportunities. However, Toyota Chairman Akira Uchiyama believes that pure electric vehicles still face challenges such as limited range and battery life, and that full automation may take a long time. Hybrid and plug-in hybrid vehicles will likely remain mainstream for the foreseeable future.
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