Japan’s Subaru unveils first all-electric car, developed with Toyota By Reuters

TOKYO (Reuters) – Japan’s Subaru (OTC:) Corp on Thursday unveiled it first all-electric vehicle (EV), the Solterra, the result of a two-year joint development project with its biggest shareholder Toyota Motor (NYSE:) Corp.

The sports utility vehicle (SUV) launch comes amid accelerating demand for EVs as nations around the world tighten environmental regulation to cut carbon emissions. Toyota last month announced its version of a battery electric vehicle (BEV), the bZ4X.

The technological shift away from internal combustion engines poses a challenge for smaller carmakers, such as Subaru, that are less able to fund expensive development of EVs. At the same time, its an opportunity for top-tier automakers, such as Toyota, to draw smaller rivals closer.

Toyota, a pioneer of hybrid electric cars but a late comer to the full EV market, plans to have a line up of 15 BEV models by 2025. It is also spending $13.5 billion over the next decade to expand auto battery production capacity.

Subaru’s vehicle sales are less than a tenth of those at Toyota, the world’s biggest automaker by production volume.

The front-wheel drive Solterra has a cruising range of 530 km (329 miles), while the all-wheel drive version can drive 460 km on a single charge, Subaru said in a press release.

Toyota owns a fifth of Subaru, and has a 5% stake in Mazda Motor (OTC:) Corp, which plans to launch 13 electrified vehicles by 2025, including hybrids and BEVs that will incorporate Toyota technology.