Japan to Fund Toyota Solid-State Battery Development with $853 Million Subsidy

According to the news story from NIKKEI Asia The Ministry of Economy, Trade and Industry has designated battery cells as a crucial part of Japan's economic security and has secured $330 Billion Yen in supplementary fiscal budget to support the Japanese sector.

Beneficiary of this is that $120 Billion Yen or $853 million dollars will go to Toyota Motor Corporation to support their R&D in developing the 900-mile solid-state battery that Toyota talked about in their revolutionization of the auto.

Toyota New Technology to Revolutionize the Future of Autos - Toyota - Cheers & Gears (cheersandgears.com)

This financial aid comes as China, Korea, Europe and the U.S. governments have decided to invest in R&D to support home grown battery production. Japan currently holds less than 10% of the automotive battery industry with the bulk of this being Tesla supplier Panasonic, while Chinese suppliers' control over 50% and the remaining 30ish percent is from Korea, Europe and the U.S.

Toyota has had to commit yen to yen to qualify for this state aid. Toyota has stated that this subsidy will go into expanding the Prime Planet Energy & Solutions, a joint battery venture with Panasonic, Japan's leading EV battery manufacturer.

Toyota says that the battery R&D will allow them to increase their range on all Hybrids almost immediately as well as develop class leadership in EV battery packs for EV production in 2026 or 2027.

The Ministry also stated that $160 billion yen will go to Honda Motor and GY Yuasa for their battery investment plans. 

These investments will cover about 1/3rd of the capital investments for building the new assembly lines and about half of the R&D costs.

Japan once led the automotive battery industry with over 50% market share at the end of 2015 but have now been replaced by Chinese and Korean companies that have greater production and supply for the EV segment. Japan currently relies on raw materials from China and finished cells from Korea to build their battery cells for use in EVs.

China leads the world in lithium iron phosphate (LFP) batteries. Toyota is working on Bipolar LFP technology, which is seen as a alternative to the Chinese cells.

The U.S. Inflation Reduction Act signed into law last year includes incentives aimed at bolstering the EV supply chain in the U.S. which is seeing massive investment from South Korea with global Automakers as they ramp up to take advantage of the IRA benefits.

This has Japan trailing Korean, European and U.S. auto companies that have or are currently moving EV production to the U.S. to take advantage of these financial benefits.