Toyota Motor targets 50% sales from electric vehicles by 2025

Toyota Camry hybrid green cars

Toyota Motor aims to get half of its global sales from electrified vehicles by 2025, and will tap Chinese battery makers to strengthen presence in electric vehicle (EV) market, Reuters reported.

Japan-based Toyota is now faced with a higher-than-expected demand for cars that use batteries, rather than gasoline, Executive Vice President Shigeki Terashi told a briefing on Friday.

Increasingly stringent emissions regulations require more lithium-ion batteries in the next five years than the automaker plans to produce, he added.

“We consider ourselves as a maker of electric vehicle batteries, going back to when we developed the battery for the Prius,” he said, referring to the pioneering gasoline hybrid.

“But there may be a gap between the amount of batteries we can produce, and the amount of batteries we may need.”

Toyota, which already makes batteries for hybrids and hybrid plug-ins, said it will partner with China’s Contemporary Amperex Technology (CATL) and EV maker BYD for battery procurement.

Toyota also announced a two-seater designed for short-distance trips, with a maximum speed of 60 km (37 miles) per hour and 100 km range on a single charge.

Terashi said while demand for EVs grows, profits will be slower in coming, given the economies of scale.

EV sales are expected to trail gasoline hybrid vehicle volumes by 2025, with the former expected to be fewer than 1 million vehicles, Terashi added.

The key to creating a profitable battery EV operation could be in combining new mobility technologies, including on-demand ride services, with battery-powered electric cars, he said.

Tapping CATL signals a widening of Toyota’s procurement pool. The Chinese firm already has relationships with other automakers such as Honda Motor, Nissan and a multi-billion dollar battery supply deal Volvo Car Group.

Toyota has been developing its own lithium-ion EV battery technology and has partnered with Panasonic to develop and make rectangular-shaped prismatic batteries.

The automaker, which launched the Prius, the world’s first mass-market “green car” over two decades ago, has led in technologies for hybrid and fuel cell vehicles (FCVs). Its cars account for more than 80 percent of the global hybrid vehicle market.

But Toyota has trailed rivals such as Nissan Motor, Volkswagen and Tesla in bringing all-battery EVs to showrooms.

Toyota is looking to partnerships with rival automakers and tech firms as it seeks to reduce its capital outlay for developing new-vehicle technologies.

On Thursday, Toyota announced it was teaming with Subaru Corp to develop a battery-electric SUV on a platform produced together as they seek to split costs.

Toyota is, however, not changing its long-held belief that hydrogen FCVs will be the ultimate zero-emissions vehicles in the future, Terashi said.