Toyota Motor Corporation (7203) Earnings Call Transcript & Summary

Hello, everyone. Welcome to the Q&A session for Toyota's Batteries and Carbon Neutrality. I am [ Shuhe Hori ], moderator of this conference. First of all, please be advised that the conference is live broadcasting. In addition, the archived video and transcript will be posted on our website after the session. I'd like to introduce our speakers. Mr. Masahiko Maeda, Chief Technology Officer; Mr. Masamichi Okada, Chief Production Officer; Mr. Kenta Kon, Chief Financial Officer; and Mr. Keiji Kaita, President of Carbon Neutral Advanced Engineering Development Center. Now I would like to hand over to Mr. Maeda.

Hello, everyone. I'm Masahiko Maeda, Chief Technology Officer of Toyota. First of all, I will turn it over to interpreters to introduce our presentation. [Interpreted] Today, I would like to talk about Toyota's development and supply of batteries toward achieving carbon neutrality. First, using industrial products, as an example, carbon neutrality means reducing CO2 emissions to 0 throughout the entire life cycle of a product from procurement of raw materials, manufacturing and transportation to use recycling and disposal. As you all know, the world's concentration of CO2 has been increasing since the industrial revolution. There is no time to lose when it comes to reducing, in all aspects, the amount of CO2 emitted by human kind. For example, according to our calculations, the CO2 reduction effect of 3 hybrids HEVs is almost equal to that of 1 of BEV best. At the moment, because we can provide hybrids at a comparatively affordable price in places where the use of renewable energy is to become widespread going forward, electrification using hybrids is among the effective ways of reducing CO2 emissions. On the other hand, Toyota believes that the increased use of 0 emission vehicles or ZEVs, such as BEVs and fuel cell electric vehicles, or FCEVs, is important in regions where renewable energy is abundant. Furthermore, in some regions such as South America, bioethanol has been put to practical use as a response to CO2 reduction. As mentioned above, we should focus on how to avoid carbon emissions or on how to reduce them to as close to 0 as possible. Because the options for reducing CO2 emissions depend on the energy situation at hand, Toyota will continue to try various measures to expand the options for achieving carbon neutrality. With this in mind, Toyota is preparing a full lineup of electrified vehicles. We want to provide sustainable and practical products that reduce CO2 emissions while considering the convenience of our customers in each region. First of all, please allow me to look back on Toyota's electrified vehicle achievements to date. Since the introduction of the first-generation Prius in 1997, Toyota has also introduced plug-in hybrids, FCEVs and BEVs while also improving performance. Among such, our accumulative sales of hybrids have now reached as many as 18.1 million units. Earlier, I mentioned that the CO2 emissions reduction effect of 3 hybrids is equivalent to the reduction effect of 1 BEV and the 18.1 million hybrids sold to date are equivalent to the CO2 reduction effect of introducing to the market about 5.5 million BEVs. The volume of batteries for hybrids that we have produced so far is the same as that of the batteries installed on about 260,000 BEVs. In other words, we can say that the batteries needed for 260,000 BEVs have been used to achieve the CO2 emissions reduction effect of 5.5 million BEVs. In the future, in light of changes in the market, we will also accelerate the introduction of BEVs and plug-in hybrids, leveraging the strengths we have gained through our experience so far. And we will strive to reduce CO2 emissions by increasing the selection of electrified vehicles we offer and having customers in each region choose us so that we can accelerate the dissemination of electrified vehicles. The 3 core technologies that support this full lineup of electrified vehicles are electric motors, batteries and power controlled units. Today, in this context, regarding batteries, I would like to share with you Toyota's unique approach and the competitive edge that we have developed via the mass production of electrified vehicles. While promoting a full lineup of electrified vehicles, we have also been developing and manufacturing a full lineup of batteries. For hybrids, our focus is on power output or in other words, instantaneous power. While when it comes to plug-in hybrids and BEVs, our focus is on capacity or what can be called Endurance. As batteries for hybrids, we have been continuously evolving nickel metal hydride batteries and lithium-ion batteries by taking advantage of their respective characteristics. Our bipolar nickel metal hydride battery, which was announced this year and is focused on providing instantaneous power, will be used in an increasing number of vehicles. For lithium-ion batteries for plug-in hybrids and BEVs, we have been striving to improve both cost and endurance, and we will continue to improve them as we move forward. We are developing a further advanced new type of lithium-ion battery for introduction in the second half of the 2020s. From here, I would like to explain something that Toyota values in its development of batteries. What Toyota values the most is to develop batteries that its customers can use with a peace of mind. Especially, we are focusing on safety, long service life and high-level quality to produce good, low-cost and high-performance batteries. For example, longer service life also affects a vehicle's residual value. In terms of cruising range, high energy density and high-level performance are also necessary. We want to make the charging speed faster, but too fast will affect safety. Therefore, we think it is important to strike a balance between each of these factors to ensure safe use. This concept has remained unchanged since batteries were installed in the first-generation Prius, and it is the same for the batteries in all of our electrified vehicles. By applying the technology that we have cultivated through our experience in batteries for hybrids, also to the batteries for future BEVs, we believe that we will be able to deliver batteries that can be used with a peace of mind. Now I would like to introduce 3 examples of the many efforts required to produce batteries that can be used safely using lithium-ion batteries as the focus of my explanation. This is an example of ensuring safety. It is known that each battery cell shows signs of localized abnormal heat generation during spirited driving or other driving that places a large load on the battery. By analyzing the phenomena occurring inside the battery and conducting a vast amount of model experiments, we have been able to clarify the effect of driving style on the battery as well as the mechanism of this effect. Based on the results, we have been able to detect signs of abnormal local heating of cells through multiple monitoring of voltage, current and temperature of individual cells, blocks of cells and the entire battery pack. The battery is then controlled to prevent abnormal heat generation. We will maintain our concept of ensuring safety, security and reliability down to the local areas of each battery even when it comes to BEV systems, and we will continue to refine that concept. The second example I would like to share with you is our commitment to long service life. We have applied the technologies that we have cultivated through the development of batteries for hybrids to plug-in hybrids, and the batteries in the CHR BEV have a greatly higher capacity retention rate after 10 years. Then the batteries, there are 2, used in our plug-in hybrids. Furthermore, for the Toyota bZ4X, which is scheduled to be launched soon, we have set a target of 90% endurance performance; which is 1 of the highest in the world, and we are currently finalizing our development efforts to achieve it. I would like to introduce some examples of the developments that we are working on to achieve long service life. From a detailed analysis of the inside of lithium-ion batteries, we know that degraded materials on the surface of the anode have a significant impact on the life of the battery. To suppress the generation of these degraded materials, we are clarifying the generation mechanism and taking measures in various aspects such as material selection, pack structure and control system. Careful implementation of detailed analysis and an accumulation of countermeasures has led to improved endurance performance. The third example has to do with our efforts for achieving high level quality. If metallic foreign matter enters the battery during the manufacturing process and directly connects the anode and cathode electrically, there is a possibility of failure. We confirm that foreign materials and its effect on Endurance and also its effect on batteries. Based upon this, we are being extremely attentive to the size and shape of foreign matters and are managing processes in order to prevent the generation or entry of these foreign matters. What I explained are only a few of the things that we are doing. But with this kind of study and meticulous analysis and with the experience gained from the feedback of 18.1 million units in the market, we will continue to deliver batteries that can be used with peace of mind. Next, I would like to explain the bipolar nickel metal hydride battery used in the new Aqua announced in July this year. We codeveloped this battery with Toyota Industries Corporation and commercialized it as an onboard battery for driving. Compared to the batteries used in the previous generation of the Aqua, the output density is double, giving the car a powerful acceleration sensation. As for batteries for next-generation BEVs, the BEV technologies that we've gained since our 1996 launch of RAV4 EV and the latest battery and electrified vehicle technologies that we have cultivated through HEPS or hybrids have been reflected into the Toyota bZ4X and will also be introduced in the market. From now, I would like to explain about the batteries of the future. To popularize BEVs, we would like to reduce costs so to provide BEVs at a reasonable price. To start with, we aim to reduce the cost of batteries stem cells by 30% or more by developing materials and structures. Then for the vehicle, we aim to improve power consumption, which is an indicator of the amount of electricity used per kilometer by 30%, starting with the Toyota bZ4X. Improved power efficiency leads to less battery capacity, which will result in a cost reduction of 30%. Through this integrated development of vehicle and batteries, we aim to reduce the battery cost per vehicle by 50% compared to the Toyota bZ4X in the second half of the 2020s. Please allow me to explain the coming next-generation batteries. For liquid batteries, we will take on the challenge of material evolution and structural innovation. We'll also aim to commercialize all solid-state batteries. As you can see, we'll develop 3 types of batteries. And by the second half of the 2020s, we hope to improve the characteristics of each type so that we can provide batteries that can be used with peace of mind. Next, I would like to explain our initiatives related to all solid-state batteries. We are developing all solid-state batteries to see if we can realize high output, loan cruising range and shorter charging times. In June last year, we built a vehicle equipped with all solid-state batteries, and we conducted test runs on a test course and obtained driving data. Based upon this data, we continue to make improvements. And in August last year, we obtained license plate registration for vehicles equipped with all solid-state batteries and conducted test drives. There are some things that we have learned during the development process. All solid-state batteries are expected to have higher output because of the fast movement of ions within them. Therefore, we want to take advantage of the favorable properties of all solid-state batteries by also using them in hybrids. On the other hand, we found that short service life was an issue. To solve these issues, we need to do further development of solid electrolyte materials We feel that having identified an issue has brought us to 1 step closer to commercialization. The establishment of battery supply system is also important for the dissemination of BEVs. With the rapid expansion of electrified vehicles, we are working to build a flexible system that can stably supply the required value batteries at a required timing. While meeting the needs of various customers in each region around the world in pursuit of a battery development concept of achieving batteries that can be used with peace of mind, we'll establish the needed technologies through a certain amount of in-house production and will cooperate with partners who understand and will practice our concept. We'll also proceed with discussions with new partners in some regions. We are building a system with our partners that will allow us to incorporate into discussed plans the valuable batteries that we'll need in about 3 years. Within the Toyota Group, we are also working to shorten the lead time for the start-up of production and to establish a system that is adaptable to changes. This summarizes our development and supply of batteries by 2030. In development, we will aim to achieve a per vehicle cost of 50% or less compared to now through the integrated development of vehicles and batteries. In terms of supply, we'll respond flexibly to the changing needs of our customers. For example, we assume that we would exceed 180 gigawatts hour worth of batteries that we are currently considering and we'll be ready with 200 gigawatt hour worth of batteries or more if the dissemination of BEVs is faster than expected. The amount of investment in the development of battery supply system and R&D is expected to be about JPY 1.5 trillion by 2030. By establishing a system for both development and supply, we will promote the dissemination of electrified vehicles, including BEVs. On the way to our goal of achieving carbon neutrality in 2050, the energy situation infrastructure of each region as well as the sensibilities and convenience requirements of customers will continue to change. When it comes to electrified vehicles, cars and batteries cannot be separated. Toyota, which has been committed to producing batteries within the Toyota group since 1997 and whose market introduced hybrid alone, number 18.1 million unit is an automaker that has been working on battery development as a corporate group. And into the uncertain future of electrified vehicles as well, it intends to move forward in sure footsteps. Thank you. To adapt to the future sustainably and practically, Toyota would like to contribute to the achievement of carbon neutrality by improving its adaptability to change and its competitiveness as well as by aiming for the fundamental widespread acceptance of ever beta electrified vehicles. That's our presentation. We are now ready for the Q&A session.

[Operator Instructions] Our first question from Domini, Ms. Sekiguchi.

And my name is Shoko Sekiguchi with Domini Impact Investment, a New York-based asset manager. And I have 2 questions. One is I appreciate the presentation about long service life of lithium battery. But my question is that do you have any sort of program to recycle the battery because regulation is -- cannot be avoided for a while. I understand Nissan, for instance, joined -- launched joint venture called 4R Energy that focus on recycling LEAF battery. And I was wondering if you have the kind of program in the future? And the second one is any -- do you have any charging station initiatives? That would be another very important strategy. So I'm just wondering about 2 questions.

[Foreign Language]

[Interpreted] Thank you. For your first question, myself, Maeda, would like to respond. First of all, Toyota has more than 20 years of history in selling hybrid electrified vehicles. When Toyota thinks about the recycling, reuse or rebuilding of batteries, we need to think on how to collect, recollect those batteries. And so, as I said, Toyota has more than 20 years of history selling hybrids. However, currently, Toyota has not been able to collect so much of the -- collect so much of the batteries that have been sold. When we talk about extending, having a longer service life of batteries, this will also mean that the life of the vehicles will become longer as well. Therefore, when we think about in longing the life of the battery, at the same time, we'll have to think of how to establish a system to collect those batteries. Currently, we do not have a detailed plan in order to do this. However, for example, we can think about a lease program where the electrified vehicles can be more proactively used for leasings and then consider the batteries or the vehicles that is leased to be returned and collected in Toyota. Also in Japan, there is a recycling law for house appliances -- home appliances. And therefore, this kind of an approach of having an enforced law regarding -- for now, it's about the electrical appliances, but creating such a similar system for the batteries may be one option to consider. In addition to considering about how to create a system to collect and recover the batteries that we have sold. At the same time, I think it is important to consider a design approach as well about designing the vehicle structure so that the recycling or collection of the batteries will become more easier in the future. So that will be the response to the first question. So I'll go on to respond to your second question as well. So the second question was about the charging station strategy. Currently, in Toyota, we do not have our own unique plan to create a large-scale charging station ourselves. And on the other hand, for Toyota, we do have many dealers that work with us and cooperate with us trying to contribute in achieving carbon neutrality targets. So working together with dealers, at least in Japan, we have started initiatives to work on establishing the charging station infrastructure in Japan. Therefore, in the future, when we see that the electrified vehicles are much more popularized in society, I think the next key point for us is to work with dealers and think about how we can expand this network of charging stations. And I think that there is another important point when we think about the charging stations. Probably when you think about your own experience, if you visited the gasoline station, you probably never have experienced of not being able to fill up your car with gas. And that similar experience needs to be replicated with the charging stations as well. In other words, we should avoid a situation where our customers visit a charging station but are not able to charge their vehicles. So how to set up an environment that will allow the users to always be able to charge the cars, charge the vehicles will be a challenge or an important thing that we must think about. To give you an example, there has been cases in Japan, where at the charging station, the customer was not able to use their card -- credit cards for the payment. Since it didn't match this payment system, they were not able to charge their vehicle. And there has been actual experiences with the customer where the charging and the vehicles function -- charging function did not match well and therefore, the customers was not able to have their car charged. So when we work with dealers about setting up the charging stations, we will need to take care of these issues and be able to provide the services that will be not having these kinds of issues. That will be my response to your questions. Thank you.

So next question comes from the chat. I'd like to introduce that from the Fidelity [ Lucille Lu ]. I have 2 questions. Question one, you mentioned a decrease battery cost by 50% by 2025. Can you please give some color of when -- where you see your current battery cost. Question two, out of the JPY 1.5 trillion, you plan to spend on batteries by 2030, how much will be allocated to solid-state batteries? Many thanks.

[Foreign Language]

[Interpreted] Okay. This is Kenta. Thank you very much for your question. For the first question for you, I'll answer that maybe we have the electrical vehicle launched the year before last. That is maybe -- from that cost, maybe next year, we will launch the so-called electrical vehicle in China of the world. And maybe the battery costs will be reduced up to 40%. And then from that electrical vehicle, maybe in the latter part of 2020, we will reduce the battery cost to, at most, 50%. And maybe the 50% is accomplished. Maybe both of the improvement of reducing the drag or maybe rolling falls of the vehicle but also the battery cost itself. And mainly, the battery cost is coming from the like material improvement and maybe a structural improvement, including the battery cell and battery pack. And the second question.

[Interpreted] I will take the second question. Well, I think your question was about how much of this total investment will be allocated to all solid-state battery. And my answer is that we have not decided a clear level or clear number for such allocation at the moment. Out of JPY 1.5 trillion, JPY 500 billion is an investment for development. But this is not only for all solid-state battery, but it also includes the investments or the development for the next-generation liquid type lithium-ion batteries, too. When we go through the development, of course, for some material development, there are separate development uniquely for all solid-state batteries or lithium-ion batteries and also liquid batteries, respectively. However, there are some common development elements, too. This year, in July, in Japan, we launched a model change version of Aqua, which is a hybrid car. This car carries a new type of bipolar battery. And this was developed jointly together with Toyota Industry Corporation. So please understand this JPY 500 billion would include some of such joint development with companies within the group companies -- sorry, within the Toyota Group. There will be some joint development within the group or there will be some unique development by each company. And through such ways, we would like to go pursue efficient development process. Thank you.

We'll go to next questions, [ NWQ, Mr. Peter Bodeman ].

I have 2 questions. First of all, could you give us -- of the JPY 1.5 trillion investment in batteries, could you give us a breakdown by region? Given United States, NAFTA and local content rules, what is your outlook for U.S. investment. I think most of your batteries are made with -- like in China with CATL and also Pan Pacific with Panasonic in Japan, but are there plans to build batteries in the United States? And then also in China, what is your expectations for battery production? And the second question is regarding chip shortages. Today, it seems as though I know Toyota has been talking about recovering in production with the chip shortages. But is this -- is your EV strategy being delayed at all because of lack of -- inability to source materials such as wire harnesses and semiconductors.

[Foreign Language]

[Interpreted] Thank you for your question, myself, Okada, would like to explain. Starting with your first question. So Toyota's plan is to make a JPY 1.5 trillion investment until up to 2030 globally for the production lines. And for the production lines dedicated for BEVs, we are thinking of adding 70, 7-0, lines. And to elaborate -- to talk about the production plans for each region. First of all, Toyota will have our in-house group companies that we work with to create plans for the production. And as it was included in the presentation of Maeda-san, we have also many partner companies that we will be working with to create a plan -- a supply plan in each region. So these plans are being discussed among with these companies. And basically, our policy is to do local production and local consumption. So following this policy, regardless of the region, whether it is U.S., China or Europe, we will take the same approach of local -- way of -- same way of thinking, local production, local consumption. In any case, towards 2030, Toyota will be proactively developing our supply of electrified vehicles. And for the batteries that will be supplied for these vehicles, we will be working with this approach or concept that I have said, local production, local consumption. And this will cover the material procurement and also the setting of additional production lines, too. So we will be proactively engaged in these development activities with our partners. Now going on to your second questions about the chips, the semiconductors. Here, we have been able to build a trust-based relationship throughout long years with our suppliers. Therefore, we are -- even though we are under a very tough situation, we have been able to keep the impact of the chip shortage issues as small up to this day. However, saying that, of course, there are limits in the supply capacity as well. So there will be some impact to Toyota as well. However, also for this issue, we are working closely with our suppliers. So in order to stabilize the supply situation as quickly as possible. So that will be the basic direction that we are working on. However, in addition to the chip shortage that has happened originally, in addition to that, we are now seeing the impact coming from the spread of COVID-19 in the Asian regions. So this is an impact that is caused to the total auto industry. And therefore, we still need to work with -- we still -- we will continue to work with our partners for these issues as well in order to recover the situation. That will be my response. Thank you.

So we will move on to the next questions. So Matthews, Mr. Donghoon Han.

I have 2 quick questions. The first question is, so you guys are expecting 200 gigawatt this time. But previously, this used to be 180. So -- but your BEV target assumption has actually not changed. So in terms of raising that battery capacity target, can you just elaborate what kind of assumptions has changed, whether that's a regional mix or just general underlying assumption. That's the first question for me. The second question is just CapEx intensity seems fairly low. JPY 1.5 trillion divided by 200 gigawatt is only JPY 7.5 billion per gigawatt, and that's fairly low compared to what peers have announced. And also when we think only JPY 1 trillion of that is from production capacity. So it seems very efficient. Does it mean that you guys are pushing a lot more JV format going forward? Can you just elaborate on that high efficiency and whether that is sustainable.

[Foreign Language]

[Interpreted] Okay. I will respond to the first question. So the first question was about -- we announced 180 gigawatts hour in -- at the time of May. And after that, we made a more detailed discussion. And based upon the situational changes in many regions, including the United States. And in order to supply 2 million units of BEVs and FCEVs and also 8 million units of electrified vehicles in total, if we want to be sure to deliver these units, we thought that we need -- we would need a larger volume of batteries. And based upon these numbers, we thought that 200 gigawatts will be necessary. And we do expect that these kind of changes will occur also in the future. There will be some changes in the regulation and the legal status of the electrified vehicles in each region and also customer needs and infrastructure status would change as well in the future. We did say that our baseline would be 2 million of BEVs and FCCs and also 8 million of electrical vehicles in total. But these are also likely to -- they are -- they could change. And also the allocation to each region would also might change. And we would need to flexibly cater to those changes in order to speedily deliver those units to customers. Now with regards to the second question about the capital expenditure. We pursue what's called small base units. Base unit means the production volume for each line or investment amounts per each line or the staffs involved working in each line as well as the lead time to create each production line. we call those things base units, and we try as much as possible to minimize these base units. Toyota has been making cars based upon this concept, and this concept will also be applied -- has also been applied to the production lines of hybrid -- the battery lines of hybrid, which we've been producing in the past 20 years. So I think this will be connected and relevant also in the electrification, which will be bigger in the future. So this initiative will be applied to the in-house line of Toyota and Toyota Group but also we'll be working with the partner companies who are the experts of battery making, and they have their original strengths. And by collaborating with these partner companies and also by exhibiting each other's strength, we would like to improve each other's capability so that we can come up with more competitive batteries and more competitive cars. That is all.

So we'd like to move on to the next question. So from Church of England, Ms. Clare Richards.

Yes. So that's Church of England Pensions Board. There are 2 aspects from the presentation I just wanted to touch on. So 1 was where you said that the energy situation and infrastructure of each region will continue to change. And the second one, soon after that, Toyota is aiming for the fundamental widespread acceptance of ever-better electrified vehicles. And my question is what role Toyota sees for itself in terms of responsible advocacy and lobbying in order to make those conditions a reality.

[Foreign Language]

[Interpreted] Thank you for your question. So I am Kon. I would Like to respond to your question. So probably after my response, the engineering group members will provide an additional comment, but I'll start anyway. So for Toyota, we have explained that we are going to proactively work to be able to supply them further in the future. And especially in Japan, we are a leading company in the automobile industry. Therefore, because of this position, we think that we have a big responsible -- responsibility in working to promote BEVs. And in addition to that, we conduct business in all parts of the region globally. Therefore, in each region, according to the situation that each region has, we think that we need to take the appropriate measures for each region toward carbon neutrality and also to reduce carbon CO2 in that region. That will be also a necessary initiative for us to take. At the end, for carbon neutrality targets, 1 maker like us will not be able to achieve those targets alone. So we think it's important that we play our own role and then there are things that the national government needs to do. And also, there will be some of the contributions from the consumer side. So everyone in each of their positions will take their actions. And I think at the end, it will all combine together. So in that sense, we will have responsibility to play our role. And finally, you did mention about the lobbying activities for Toyota. In spring, we have made a commitment that we will disclose our lobbying activities plans or report for this fiscal year. And therefore, we are now preparing that disclosure or that report. So that would be all for my response.

[Interpreted] Now myself, Maeda would like to make some additional comments from the technical side. So we did talk about different regions having different energy situations. To give you one example, for Brazil in Latin America, the bioethanol carbon-neutral fuel is already commercialized and used. For these kinds of regions, for us OEMs, it will be important to prepare and develop the technology so that we will be able to adapt to the bioethanol fuels and also to further to commercialize that. And Toyota has already been taking initiatives in this direction. On the other hand, for these type of carbon-neutral biofuels, I also understand that in Europe, there is the biodiesel that maybe not has penetrated too much yet. But I've heard I understand that the biodiesel has started to be introduced to the market. And in China, there is also an active movement of utilizing hydrogen for the fuel cell commercial vehicles. There is a movement to introduce these types of hydrogen fuels to commercial vehicles already. And even in the world of races -- sport car races, there are movements to introduce the e-fuels to racing cars as well. And for Toyota, we have started to use the hydrogen engine in Japan for these racing cars. And therefore, I believe that while we place BEVs at the core of what we promote, in addition to that, we'll need to carefully watch the energy situation and the infrastructure situation of each country and be able to prepare and provide products, specific products, to meet the individual needs. So that will be important for us to do. Toyota will be developing -- working on development projects to be able to do that and also to deal with these different situations. That will be all. Thank you.

Okay. Thank you, Clare. So we'd like to move on to next question. Next question comes from the chat, Ben Moyer, 2 questions. Number one, can you quantify the degree of performance improvement of the bipolar nickel hydride battery used in Aqua versus the previous edition nickel hydride battery. When will this new battery used in other HEVs as Prius, RAV4, et cetera? That is number one. And number two is when the first hybrid using the solid-state lithium-ion battery appear? I understand the solid-state battery could appear in hybrid before a BEV.

[Foreign Language]

Thank you for your question. My name is Kaita. And for the first question, I'll answer that. Maybe nickel bipolar, compared with the existing current nickel metal hydride for the year we are using, maybe almost [indiscernible] is increased up to twice. So -- and maybe the next question is when the next HEV, which equipped -- is equipping this new battery is launched. And maybe it is very hard to say, a delicate question, but probably very soon, but maybe next year or the year after next. And for your question number two, the question is maybe all solid-state battery will be used in the year for the HGV, and these activities, in order to accelerate the development of all solid-state battery. And maybe as we promised several year ago, this battery will be equipped on the vehicle maybe in the first half part of the 2020. And then maybe as we explained, maybe the performance of the all solid-state if found that maybe this is very good performance, it has maybe for the very fast charging and discharging. So it is also a very good future for the HEV battery. So maybe you understand it correct. Probably you will use the all solid-state battery earlier for HEV than BEV. Thank you.

Thank you very much. So we are afraid our time is almost up. So we'd like to conclude this conference with next question. So from Mr. Andrew Chang of T. Rowe Price. So provide a moment while we switch your lines.

I have 2 questions. First is with the JPY 1.5 trillion investment on the battery plants with your partners, roughly what percent of battery cell economics will Toyota have on the 200 gigawatt hour by 2030? And the second question is who ends up owning the patent on these battery investments because many of your partners also have partnerships with other auto producers. And they also have similar target of 50% cost reduction on battery cells. So I just wonder is it the battery company that owns the patent and they just share it with everybody in the industry? Or does Toyota have the patent? And is there any way we can gain some technological edge with this investment?

[Foreign Language]

[Interpreted] So I myself, Okada, would like to respond to your first question. So regarding your first question about the effect of this JPY 1.5 trillion investment. So this will include the development investment, also investment for the production facilities and equipment, also the dedicated investment needed for hybrids, plug-ins and BEVs. So this will all be included. Therefore, it's quite difficult to respond to your question about per gigawatt hour. So if I can explain a little about our approach this investment, for Toyota, our plan is to secure 200 gigawatt hour of battery capacity by 2030. And in doing so, we would like to make this investment as compact as possible to make it competitive as possible and also work in parallel, the 50% reduction for the battery cost as well. So taking on approaching this investment from these various factors, we would like to make the per gigawatt hour investment small as possible. So this will be the...

I think the interpretation was wrong. What I meant was what percent ownership will Toyota have on the battery cell. Because you have 50% JV with Panasonic, so I understand Toyota will have 51% economics of battery sales. With future partnerships you're going to have on the 200 gigawatt hour, how much ownership will Toyota have? That was my first question.

[Foreign Language]

[Interpreted] So I will respond first, and my colleagues may further add some explanation. First of all, for the group of Toyota. We do have a joint venture with Panasonic, and we are working also with our partner group companies to invest -- to setup these production lines for the batteries. And when we talk about the capital expenditures, the investments to set up these lines for the battery production, basically, the -- basically, the carmakers, we will be bearing the investment that is necessary to set up these lines. Therefore, for the lines that we have invested in to construct and set up, at the end, it will be owned by Toyota. So that will be my response.

For the -- your question on #2. This is Kaita and I will explain -- I will answer you. Could you please look at Slide 24. We will show that. This is the -- some of the metrics. We are doing the tests for the lithium-ion battery. At first, in order to run the lithium-ion battery, there are various kind of association for the battery because maybe for sensing the association with the battery, we only can know the temperature, what voltage and electrical current. That is maybe very similar to that we are judging the health condition of the people by the temperature and blood pressure and heartbeat. So it's very important to make the model for the -- each part of the large section, close section, of the battery electrodes. And we have more than 10,000 channels to test the battery. And this kind of -- maybe in addition to this kind of experiment, please look at Slide 23. This is a kind of the analysis or the development means that we are taking. Maybe from the 7-nanometer like maybe the utmost scale analysis to the very large scale analysis we are doing for the -- in order to visualize that. And this kind of experiment is, I think, taken by most of the major battery suppliers. But exclusively, we are measuring -- developing the major method by ourselves. And then please look at Slide 25. And this is a very typical -- maybe the circulate of the experiment or development, maybe we are taking the method of AI or material informatics. Also maybe we are doing some kind of an obvious test. There are many kind of obvious to ensure the safety of the battery. And please look at 26. And also maybe we have also the -- here maybe a hard look in the group system of the -- between the vehicle and the battery development. Actually, we have some very unique usage of the vehicle. And from the vehicle, we are taking the data. And precisely, that data is introduced into the battery pack chamber. And maybe repeatedly, the completed the same condition is realized for this. And then maybe also maybe our feature is maybe we are developing this kind of test instrument by ourselves. And then please look at Slide 27. This is the number of their applicant -- application of the patent maybe each year. Maybe Toyota and the Toyota Group is holding the -- more than the battery patent than the top patent holder of the battery manufacturer. I don't think this showed the height of the technology. But maybe this is the kind of the symbol that our engineers are maybe steadily making a greater effort for finding the -- even a small improvement, we will steadily improve the battery. And then maybe for your questions, maybe when we develop our battery, the patent is owned by ourselves. And when we order some battery to our battery partner or maybe battery suppliers. At first, we will show them the specification, which has to maybe satisfy our safety or quality standard. And then some of the parameter, if they cannot meet, then we will propose them the method to meet that. And then if they themselves can improve their features, then maybe the patent or such, maybe, to say, their patent is held by them. But even they I think that even our method we offer is acceptable for them and then they use this, then the patent is held by ourselves. And we have a very good relationship with respect to each other between we and our battery partner companies. So maybe such may be very fair. The patent right is understood by themselves. Do you understand?

Yes. That makes a lot of sense. Thank you for clarification.

Thank you.

Thank you, Andrew. So that concludes today's Q&A session. If you require further information, please contact our IR representatives. Thank you very much for joining us today. Goodbye. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]