Toyota uses the same batteries as Tesla for rechargeable hybrids in China

Nikkei learned that Toyota Motor was using Panasonic batteries designed for Tesla electric cars in its own plug-in hybrids for the Chinese market, highlighting the difficulty of finding a stable supply, even if demand increased.

The batteries were installed in the new Corolla and Levin sedans that the Japanese manufacturer has deployed in China this year. Toyota is believed to have ordered about 50,000 batteries, which are of the same cylindrical type as that used by Tesla.

This arrangement not only helps Toyota meet the challenge of guaranteeing high quality batteries, but should also increase Panasonic's profit margins. With this additional order, the Panasonic Suminoe factory automotive battery production lines in Osaka would operate at full capacity.

Panasonic had provided electric vehicle batteries exclusively to Tesla, although the relationship between the two was tense. Nikkei announced in April that it had put an end to the capacity building projects of its gigantic Gigafactory joint venture in the United States.

At the same time, Panasonic has supplied Toyota with prismatic or rectangular hybrid batteries, and the two companies announced the creation in January of a joint venture for the production of electric batteries.

As the demand for electrified vehicles continues to grow in China, the largest automotive market in the world, Toyota entered into partnerships in June with Chinese supplier CATL, the world's largest battery manufacturer, and its counterpart BYD.

China has this year imposed production quotas for new energy vehicles, a category that includes plug-in hybrid vehicles and electric vehicles. Deliveries of electrified vehicles from Chinese factories jumped 64 percent in 2018 to reach about 1.43 million vehicles, according to the China Automobile Manufacturers Association.

The battery supply has not increased at the same rate. Global shipments of automotive lithium-ion batteries grew only 26 percent to 98 gigawatts per hour last year, according to data from Tokyo-based Techno Systems Research.

"A limited number of manufacturers in China are capable of producing high quality automotive batteries, so the supply / demand ratio is well balanced," said Tang Jin of Mizuho Bank.