Confirming reports that emeged during the weekend, Toyota Motor and Panasonic concluded today a business-integration contract and a joint-venture contract toward the establishment of a new company related to the automotive prismatic battery business.

The two companies plan to establish a joint venture (pending approval from the competition-law authorities in the countries and regions concerned) by the end of 2020.

The ratio of equity participation in the joint venture will be 51 percent for Toyota and 49 percent for Panasonic.

The joint venture's business operations will cover research, development, production engineering, manufacturing, procurement, order receipt, and management related to automotive prismatic lithium- ion batteries, solid-state batteries, and next-generation batteries.

Toyota will transfer equipment and personnel to the joint venture in the areas of development and production engineering related to battery cells.

Panasonic will transfer equipment, other assets, liabilities, personnel, and other items to the joint venture in the areas of development, production engineering, manufacturing (at plants in Japan and in Dalian, China), procurement, order receipt, and management functions related to the automotive prismatic battery business.

The total number of employees from both companies related to operations subject to transfer to the joint venture is 3,500 (as of the end of December 2018).

Products produced by the joint venture will be sold to various automakers through, in principle, Panasonic.

Toyota and Panasonic announced on Dec. 13, 2017 an agreement to study the feasibility of a joint automotive prismatic battery business. Since then, the two companies have achieved high-capacity and high-output automotive prismatic batteries that lead the industry in terms of both performance and cost.

While Panasonic is one of the world’s biggest EV battery suppliers, it is facing rising competition from South Korean makers Samsung SDI Co and LG Chem, and CATL of China.

Panasonic is currently Tesla Inc’s exclusive battery cell supplier, but the U.S. EV maker has been reportedly in discussions with other companies including China’s Tianjin Lishen to supply batteries for its new Shanghai car factory.

Toyota and Panasonic already operate a joint venture called Prime Earth EV Energy, which manufactures batteries mainly used in gasoline hybrid vehicles.