Toyota Motor Corporation and NTT Corporation have entered into a memorandum of understanding concerning a business and capital alliance at meetings of their respective Board of Directors today.

The purpose of the memorandum of understanding is to build a long-term and continuous cooperative relationship that enables the commercialization of smart city businesses.

In the automotive market, the automotive industry itself 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, etc.

Meanwhile, in the telecommunications market, the use of various digital services is advancing due to the rapid development of cloud services, IoT, big data, AI, etc. Digital transformation, which can make better-directed innovation a reality by analyzing and utilizing the data accumulated through the use of these services, is advancing worldwide.

The two companies have been collaborating in the connected car field. However, in response to these changes in the business environment, the two companies believe that it is necessary not only to seek to further strengthen the business foundations that they have been cultivating to date, but also, by further building the cooperative relations between them, to engage in the creation of new value that enables sustainable growth.

The companies have initiated activities related to smart cities, which can solve various issues by improving the efficiency and sophistication of functions and services in cities and regions through the utilization of advanced technologies and create new value, including comfort and convenience, and which they view as being an important area of focus in the future.

On January 7, 2020, Toyota announced the outline of a project to build a prototype city connecting all kinds of goods and services that support people's lives, at CES 2020 held in Las Vegas, Nevada, U.S.A. The project will use the soon-to-be former site of the Higashi Fuji Plant of Toyota Motor East Japan, Inc. (in Susono City, Shizuoka Prefecture), which is scheduled to close at the end of 2020, to move verification initiatives forward in coordination with various partner companies and researchers toward the creation of a new city. Toyota named this city "Woven City" and is promoting efforts to make smart cities a reality.

Meanwhile, the NTT Group is collaborating with Fukuoka, Sapporo, Yokohama, Chiba and other local governments as well as companies to solve various city and community issues. Under the smart city initiative in Las Vegas, announced in December 2018, various collected data becomes the property of Las Vegas City, and by utilizing AI, IoT, and ICT resource management technologies, the city is able to quickly detect, analyze, and predict incidents and accidents, and to optimally manage ICT resources, and the NTT Group is promoting initiatives for deployment of such practices in other cities.

In addition, in July 2019, the NTT Group established NTT Urban Solutions, Inc., which promotes smart urban development by utilizing ICT technologies in the utilization of NTT-owned real estate. Furthermore, in June 2019, the NTT Group established NTT Anode Energy Corporation, which promotes business in the smart energy field, which is an important component of smart cities. Through these projects, the NTT Group is promoting initiatives to realize smart cities by making the most of the assets of the NTT Group.

Toyota and NTT came to the conclusion that it is necessary not only for each company to engage in its own projects but also for both companies to work closely in jointly building and operating the "Smart City Platform" as a core foundation for realizing smart cities and introducing it in various cities in Japan and worldwide.

The two companies will jointly build for smart cities 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, etc. As a precedent model, it will first be implemented in the Higashi-Fuji area of Susono City, Shizuoka Prefecture (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 succession.

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 two hundred billion yen) by way of the disposition of NTT treasury stock through the third party allotment of shares conducted by NTT.

Furthermore, NTT shall hold 29,730,900 shares of Toyota's common stock (with the percentage to the total number of issued shares being roughly 0.90% and the total amount of shares acquired being valued at roughly two hundred billion yen) by way of the disposition of Toyota treasury stock through the third party allotment of shares conducted by Toyota.

Smart City Platform Overview

The Smart City Platform will consist of smart-city data management and information distribution, a digital twin based on such data (urban development simulation) , and peripheral functions. It also consists of a "platform of platforms" as a platform for individual smart cities and as a platform for linking with other smart city platforms.

A growing number of global tech giants including China’s Tencent Holdings, Alphabet, Samsung Electronics, and Panasonic, are looking at developing hi-tech, connected cities, although many remain in the early planning stages.