Shares of Toyota Motor (TM 0.60%) were lower in early U.S. trading on Monday. The Japanese auto giant said that it will buy out Panasonic's stake in a long-standing battery-making joint venture as it prepares to ramp up electric vehicle (EV) production in Japan.
As of 11 a.m. ET, Toyota's U.S.-traded shares were down about 2.7%.
Toyota is taking full control of a key battery supplier
Toyota is buying out Panasonic's stake in Primearth EV Energy, a joint venture originally established 28 years ago to make battery packs for Toyota hybrids like the Prius. Primearth expects to begin production of lithium-ion batteries for EVs and plug-in hybrids in 2026, at a new factory now under construction near Tokyo.
Toyota sold only about 104,000 EVs last year, but it plans to ramp up to 1.5 million in 2026. Image source: Toyota.
While Panasonic originally had a 60% stake in Primearth, Toyota has gradually assumed more and more control over the years. The automaker currently controls 80.5% of Primearth.
The deal to transfer Panasonic's remaining stake to Toyota is expected to close by the end of March.
Toyota currently buys its EV batteries from Korea's LG Chem, Chinese makers CATL and BYD, and Prime Planet Energy and Solutions, another Toyota-Panasonic joint venture based in Japan. Toyota owns 51% of Prime Planet Energy.
Like it or not, Toyota is going big on EVs
Toyota has historically preferred to have its key suppliers under close control, or to own them outright. While Toyota has been lauded for its emphasis to date on hybrids over full EVs, the decision to take full control of Primearth is further evidence that it plans to ramp up EV production in a big way over the next few years -- from about 104,000 globally in 2023 to a planned 1.5 million in 2026.
Toyota's 2024 fiscal year will end on March 31. It's expected to report its full-year financial results in early May.
