That’s going to hurt Elon Musk: Battery-partner Panasonic romantically involved with Toyota

The happy couple meets the press. Picture (c) Bertel Schmitt

Tesla-chief Elon Musk should need a few extra Ambiens tonight after he hears the news from Tokyo. His Gigafactory battery partner Panasonic today announced some sort of engagement with the world’s largest automaker Toyota, with the goal of developing the best batteries for EVs, the type of batteries that definitely are not on the table in the domestic partnership between Tesla and Panasonic. Will it lead to a giga-divorce?

Officially, Toyota and Panasonic today announced a rather innocuous-sounding “agreement to begin studying the feasibility of a joint automotive prismatic battery business,” and Tesla’s propaganda arms undoubtedly will assure the faithful that nothing is to be feared from it, and that, should it unexpectedly lead to something, “Elon will have it first.”

If you went to today’s press conference on the matter, you went home thereafter with a totally different impression.  The presser was called with only four hours of notice, always a sign that something important is afoot. We were invited not to come to Toyota’s usual basement-bunker meeting room, but to the grand ballroom at Tokyo’s swank Conrad. Despite the tight timing, every seat was taken.  So enormous was the occasion, that Toyota even laid on a feature-length YouTube video.

 

The enormity quickly became evident to all present at the presser. A low-scale feasibility study of a possible collaboration would normally deserve not more than being presented by two dour corporate VPs, but into the bright lights of every Japanese news channel stepped Toyota CEO Akio Toyoda, and his colleague Kazuhiro Tsuga of Panasonic.

“To solve issues currently confronting us worldwide, such as global warming, air pollution, the depletion of natural resources, and energy security, it will be necessary to further the popularization of electrified vehicles,” Akio Toyoda intoned. “In accomplishing such, when it comes to automotive batteries, which will represent a key component of electrified vehicles, it can be said that further evolution in terms of performance, pricing, safety, and the securing of a stable supply capacity are pressing issues. Recognizing this, both companies intend to broadly study concrete areas of collaboration from automotive prismatic lithium-ion batteries to next-generation batteries such as solid-state, including procurement of the resources for such, all the way to re-use and recycling.”

If you worked your way through the monstrosity of a sentence, you have a grip on the monstrosity of today’s announcement. Toyota will throw its scale behind a drive to turn Panasonic’s cell into standard equipment for automakers. Toyota will leverage its supplier companies such as Denso, and it will cajole other companies to join the partnership.

The prismatic battery phase will have a limited lifetime of “5 or 10 years, who knows” said Panasonic’s Tsuga today, and then, time and technology will be ready for the solid state battery that has been developed at Toyota and Panasonic.

This way, Panasonic protects its considerable investments into lithium-ion batteries, and Toyota has a capable manufacturing partner once solid-state is ready to go from lab to mass production. “If we would have shift to solid state batteries all in a sudden, our investments would be wasted,”  a charmingly honest Tsuga admitted.

The scale will be brought by Toyota, which plans to electrify half its cars  by 2030, Toyoda said. His electrification  plans will not satisfy all battery purists. 4.5 million of the cars will be hybrid and plug-in hybrids, Toyoda said. Then there will be one million battery-electric and fuel cell vehicles. All of them will involve some kind of a battery, however.

The scale could easily be doubled  when Toyota brings in additional automotive partners. “We will not work behind closed doors,” Toyoda said. “We would like to offer other companies the opportunity to work together.”

The Nikkei wrote today that “Toyota subsidiary Daihatsu Motor and capital partner Mazda Motor will likely be asked to sign on as well. Such other automakers as Honda Motor could also be invited to help craft battery standards, potentially turning the partnership into a major consortium for the development of electric-vehicle batteries.”

What about Toyota’s fuel cell plans? Maybe because it is bad manners to talk about fuel cells when sharing the stage with one of the world’s most important battery manufacturers, there was very little heard about fuel cells today, and a huge lot about batteries. “Batteries are the key to electrification of the automotive vehicle” was an oft-repeated mantra today. Throughout the press conference, alleged battery-skeptic Toyota acted as if it had been in the battery camp longer than most of us lived.

Toyoda was digging deep for his company’s battery roots, espousing the great foresight of his great-grandfather Sakichi Toyoda who offered a bounty of one million yen for a battery with the energy density of gasoline. At the time, a million yen was a lot of money, equal to the capitalization of Toyota Industries, we heard today. The prize is still unclaimed, but wars and inflation have reduced the value of the prize to some $10,000. 

I wanna hold your hand. Picture (c) Bertel Schmitt

To lay it on even thicker, Toyoda recalled how he had welcomed Tsuga a few years ago into his great-grandfather’s house, that has been turned into a museum, and how he was smitten by Tsuga’s “expressions on his face, his body language, and all the things he said.” He made it sound like an industrial-grade visit of a hopeful groom to his future in-laws.

And what about Tesla, a reporter asked. An understandably uncomfortable Tsuga said that as a battery maker, he must strive to offer the best in the business to stay alive, “but the definition of best will change as time goes by. The 18650 and 2170 cells currently are the best in the business, and they are used by Tesla.”

And then, the shoe dropped.

“But if you look at the future, where do we see growth?” Tsuga continued. “Which existing car manufacturer will play a leading role? What type of battery will they require?”

Real automakers like prismatic batteries better, because they allow better use of the limited space in a car, just like a flat battery follows the shape of our cellphones. Tesla loves the little round things tghat look like AA-batteries in a transistor radio from the last century.  “Prismatic batteries are conducive to the design of a vehicle,” Tsuga confirmed, and Toyoda nodded. Tesla didn’t want the prismatic battery, and its alleged Gigafactory is built around the round cells of a bygone past.

Apparently, Panasonic does not see big growth prospects in Tesla. With Toyota, and quite possibly a number of other large automakers, there are much bigger customers for the next generation prismatic batteries, and eventually for the solid-state batteries thereafter. Panasonic found a more potent beau with a bottomless checkbook.

For Elon Musk, today probably will feel even harder than being dumped by Amber Heard. Nothing a few extra Ambien can’t fix.

P.S.: The following day, Suzuki said it might join the deal.