According to media reports, Japan will provide approximately 120 billion yen (equivalent to $854 million) to Toyota to support the company's plans to invest in lithium-ion battery production for electric vehicles in Japan, aiming to mitigate supply chain risks.
Toyota has recently developed a comprehensive plan for electric vehicle development and has undergone a thorough redesign of its factories. This is the clearest signal to date that Toyota intends to gain a larger share in the rapidly growing electric vehicle market. Additionally, Toyota has announced breakthroughs in battery technology and plans to produce both lithium iron phosphate batteries and solid-state batteries. It is reported that Japan intends to cover one-third of the capital expenditure and half of the technology development for Toyota's battery production.
The Japanese Ministry of Economy, Trade, and Industry has designated storage batteries, including automotive batteries, as a critical aspect of national economic security and has allocated 330 billion yen in the second supplementary budget to support domestic battery supply and development.
Japanese companies were previously leaders in the automotive battery field, holding approximately 50% of the global market share in 2015. However, data from SNE Research shows that companies led by Tesla's supplier Panasonic, currently have less than a 10% share in the automotive battery market, while Chinese suppliers hold over half of the market share. Japan has become increasingly reliant on raw materials and finished batteries from suppliers in China and South Korea.
The Japanese government sees improving domestic battery supply as a critical priority as the automotive industry transitions to electric vehicles. However, other countries have recognized this as well. The United States previously enacted the Inflation Reduction Act, which includes incentives to support the electric vehicle supply chain. European countries have also taken measures to support domestic battery production.
