Toyota faces a lawsuit from a key member of the vehicle maker’s supply chain.
In a newly filed lawsuit, the Japanese Nippon Steel Corp. claims Toyota used stolen technology on steel material in its electric motors. The patent infringement case was filed in Tokyo District Court earlier this month and also names Boashan as a defendant, as Toyota alleged Toyota continued to buy from Baoshan even after it became known that the Chinese company had committed patient violations.
The lawsuit comes after a longstanding business partnership between Toyota and Nippon and at a time when suppliers are feeling rising material costs, which affect the entire supply chain. Nippon Steel could also have problems with Toyota entering into a new agreement with a competing steel supplier.
Nippon Steel’s lawsuit alleges that the Boashan infringed a patent on a material used in the steel sheets that make up the core of some electric car engines, and that Toyota makes them despite the stolen technology in its vehicles. According to court documents, the Japanese steelmaker has applied for an injunction to “prevent the manufacture and sale of Toyota vehicles with engines” and “approximately $ 176 million in damage” with its steel. It seeks the same of Baoshan.
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Toyota responded, indicating that it made inquiries with Baoshan regarding Nippon’s allegations and received assurances from the company that it did not do what Nippon alleged. The auto company believes it should be removed from the legal process entirely and that the other two companies should work out a deal between the two. “We heard of this lawsuit with great regret,” said Toyota, saying it values the partnership with Nippon.
In general, such cases are very rare between vehicle manufacturers and members of their supply chains. Depending on the outcome of the case, the relationship may not be reestablished, which could mean Toyota may need to sign a new supplier.
Japan’s Prime Minister Fumio Kishida has called on companies to stop what he calls “supplier bullying”, saying, “Profits are not properly distributed in the supply chain”.
Tanh Ha Pham, a Tokyo-based steel analyst for Jefferies, added, “Previously, Nippon Steel was a very Japanese company that respected those relationships with its customers, and Toyota was the emperor. But Nippon Steel has a new sheriff in town, President Hashimoto. He’s struggling with Toyota. ”Since taking office in 2019, Hashimoto has shut down factories and legacy production lines in Japan to increase profits.
In 2020, Nippon announced it would spend about $ 1 billion and increase sheet steel production by about 40%, with Toyota being its main customer. The tables have now turned massively within a very short time. The company hoped to continue selling its steel to Toyota despite the lawsuit. One of our key customers will not change. “
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