Toyota Motor and NTT have signed a memorandum of understanding to commercialise their smart city businesses and develop a smart city platform for use worldwide.
 
The two Japanese companies have been collaborating in the connected car field. However, in response to changes in the business environment, they believe it is necessary to strengthen the business foundations they have been cultivating and build more cooperative relations.
 
The automotive industry is undergoing a major transformation due to the complex combination of diversifying market needs, tightening environmental and safety regulations, the sophistication of advanced technologies, entrance by other industries, and the diversification of the mobility business.
 
Meanwhile, in the telecommunications market, the use of various digital services is advancing due to the rapid development of cloud services, IoT, big data and AI. This digital transformation can make better-directed innovation a reality by analysing and using the data accumulated through the use of these services.
 
The two companies have initiated activities to improve the efficiency and sophistication of services in cities and regions through the use of technology and create new value, including comfort and convenience.
 
In January at CES in Las Vegas, Toyota announced the outline of a project to build a prototype city connecting all kinds of goods and services that support people’s lives. The project will use the soon-to-be former site of the Higashi Fuji Plant of Toyota Motor in Susono City, which is scheduled to close at the end of 2020. Toyota named this city Woven City and is promoting efforts to make smart cities a reality.
 
Meanwhile, telecoms company NTT is collaborating with Fukuoka, Sapporo, Yokohama, Chiba and other local governments as well as companies to solve various city and community problems. Under the smart city initiative in Las Vegas, announced in December 2018, various collected data becomes the property of Las Vegas city, and by using AI, IoT and ICT resource management technologies, the city can quickly detect, analyse and predict incidents and accidents, and manage ICT resources.
 
NTT is promoting initiatives for deployment of such practices in other cities. In addition, in July 2019, NTT established NTT Urban, which promotes smart urban development by using ICT technologies in NTT-owned real estate. Furthermore, in June 2019, NTT established NTT Anode Energy, which promotes business in the smart energy field, an important component of smart cities. Through these projects, the NTT Group is promoting initiatives to realise smart cities.
 
Toyota and NTT decided it was necessary not only for each company to engage in its own projects but also for both to work closely in building and operating a smart city platform as a core foundation for realising smart cities and introducing it in various cities in Japan and worldwide.
 
The two companies will jointly build the smart city platform that will offer value to all domains, from people, cars and houses, to everyday life, business, infrastructure and public services related to residents, businesses, local governments and so on.
 
As a model, it will first be implemented in Woven City and in the Shinagawa area in Minato-ku, Tokyo, a part of the NTT block in front of Shinagawa Station, and will then be introduced to other cities.
 
In the future, Toyota and NTT aim for further growth through the enhancement of the competitiveness of smart cities and the development of a sustainable society.
 
The smart city platform will consist of smart-city data management and information distribution, a digital twin based on such data, and peripheral functions.
 
Toyota and NTT will acquire each other’s shares in accordance with the MoU to establish a long-term and continuous cooperative relationship that enables the commercialisation of smart city businesses, and to raise funds to research and develop, plan, design, construct and implement the smart city platform, and jointly promote the operation of smart cities.
 
Toyota will hold 80,775,400 shares of NTT’s common stock with the percentage to the total number of issued shares being roughly 2.07% and the total amount of shares acquired being valued at roughly ¥200bn by way of the disposition of NTT treasury stock through the third party allotment of shares conducted by NTT.
 
Likewise, NTT will hold 29,730,900 shares of Toyota’s common stock with the percentage to the total number of issued shares being roughly 0.9% and the total amount of shares acquired also being valued at roughly ¥200bn. Toyota and NTT understand that the alliance will not have a material impact on the consolidated accounts of both companies for the foreseeable future.