Even Toyota Needs Friends Toyota is the largest and most profitable automaker in the world. It is the world's first automaker to pro- duce more than ten million vehicles every year, which it has done since 2012. By revenue, it is also the larg- est company in Japan and is routinely among the top ten largest multinationals in the world on the Fortune Global 500 list. Yet, even the number one automaker cannot do everything alone. While the Toyota way of work- ing together with suppliers as alliance partners in a keiretsu network is world-renowned, Toyota has recently intensified its efforts to create new alliances. Following a strategy of "creating friends" (in the words of chairman and CEO Akio Toyoda), Toyota in 2019 formed three sweeping alliances with new partners. Panasonic: Until 2019, Panasonic had been the sole supplier of batteries to Tesla's electric vehicles (EVs). While Tesla was looking to diversify its sources by also buying batteries from South Korea's LG, Panasonic was interested in securing its batteries in Toyota's EVs. BYD: China's electric car pioneer BYD had deep expertise in developing battery-equipped, plug-in cars but lacked scale. Toyota and BYD would jointly develop and manufacture EVs in China. Contemporary Amperex Technology Limited (CATL): China's CATL is the world's third largest provider of EV batteries behind Panasonic and BYD. In addition, in 2019, Toyota strengthened its existing alliances, by increasing its equity holdings in automakers Mazda, Subaru, and Suzuki; motorcy- cle producer Yamaha; and auto parts supplier Denso (once part of Toyota). While these existing alliances were more traditional, Toyota's new alliances with Panasonic, BYD, and CATL were clearly driven by its strong commitment to EVs, by its lack of cutting-edge EV battery technology, and by its desire to share the tremendous risk and cost of such development with capable partners. This was not Toyota's first time using alliances to develop EVs. Between 2010 and 2016, Toyota and Tesla were partners trying to develop EVs. Toyota as a strategic investor injected $50 million in Tesla, sold Tesla a $1 billion-worth factory in California for only $42 million, and went to codevelop the elec- tric RAV4 SUV with Tesla. Toyota had earlier been a pioneer in hybrid vehicles with its Prius, which was launched in 1997. But as competition focused on pure EVs, it needed to tap into Tesla's expertise. However, conflicts quickly emerged. Engineers from both sides clashed over design, marketers over pricing, and executives over vision. Eventually, Toyota's decision to price the electric RAV4 at $50,000-twice the price of a gasoline version and higher than what Tesla would have liked-made it stand little chance to succeed. After only selling 2,000 electric RAV4 vehicles, Toyota in 2016 pulled the plug. It quietly sold off its stake in Tesla-valued at $538 million at that time. While Toyota made a handsome profit from its $50 million financial investment, its dream of becoming a significant EV player had to wait. Can Toyota's new friends help it revive its EV dream? Sources: (1) Bloomberg Businessweek, 2014, Short-circuit, August 11: 20-22; (2) CNN, 2017, Toyota dumps stake in Tesla as former partners become rivals, June 5: money.cnn.com; (3) Toyota, 2019, BYD, Toyota agree to establish joint company for battery electric vehicle research and development, press release, November 7: global.toyota.com; (4) Wall Street Journal, 2019, Even Toyota needs help sometimes, November 8: B12.