Big Idea:

Toyota and its affiliated suppliers plan to reduce their shareholdings in electric parts maker Denso Corp., with Toyota intending to lower its stake from 24% to 20%. This move is aimed at generating approximately USD$1.9 billion to fund the companies' shift to electric vehicles. Denso will conduct a share buyback of up to $1.3 billion worth of its own shares.

Why It Matters:

Toyota is freeing up funds to support their transition to electric vehicles, as the company aims to roll out 10 new battery-powered EVs and sell 1.5 million units annually by 2026. This move is part of Toyota's broader strategy to compete in the ever-increasing EV market.

Key Details:

• Introduction of next-generation batteries and sonic technology, aiming for a 1,000 km range, and adopting modular car body structures.
• Collaborations with companies like FAW Group, GAC, and BYD indicate Toyota's global approach to the EV market.

What's Next:

Toyota’s revised strategy and technological advancements makes them a formidable contender against EV competitors like Tesla, Volkswagen, and General Motors. This aligns with their $13.9 billion EV Battery factory investment in North Carolina.

By the Numbers:

• Expected production of 1.7 million EV batteries from Toyota’s BEV Factory by 2030.
• Target of a 37% cost reduction in next-generation hydrogen fuel cell systems.

Zoom Out:

Japanese companies, including Toyota, have been facing pressure to reduce or eliminate cross shareholdings. Toyota previously announced the sale of some of its stake in telecommunications company KDDI Corp. for $2.3 billion.