SMM News: Toyota plans to produce up to 400000 new energy vehicles a year in China by spending $1.64 billion to expand a joint venture plant with its local partner Guangzhou Automobile Group, according to the Japan Keizai Shimbun.
GAC and Toyota will each invest $274 million in the new plant, with the rest being borne by the joint venture GAC Toyota.
Toyota produced a total of 1.16 million vehicles in China in 2018, including a joint venture with China's first Motor Group, but that figure included only a small number of electric vehicles or plug-in hybrid vehicles. The expansion of GAC's Toyota plant will increase production capacity by more than 30 per cent to 1.56 million vehicles.
The Japanese carmaker is also considering expanding its plant with FAW. Toyota's new car sales in China rose 14 per cent to 1.47 million in 2018. Although China's new car market has shrunk as a whole, Toyota's sales have maintained year-on-year growth for six years in a row and hit an all-time high. Toyota aims to sell 1.6 million vehicles in China in 2019, up 8 per cent from last year.
China is already the world's largest market for new energy vehicles, selling 1.25 million new energy vehicles in 2018. In March, the new energy vehicle market continued to grow strongly, with sales of 126000 vehicles. This represents a sharp increase of 85.4% over the same period last year. Sales of new energy vehicles doubled from January to March to 299000 vehicles from a year earlier. The CAA expects China's new energy vehicles to sell 1.6 million vehicles in 2019, up 333 per cent from a year earlier. The government hopes to raise that number to 7 million by 2025.
Starting this year, carmakers must produce a certain proportion of new energy vehicles in China to meet the "double-point policy". According to the regulations, if the annual production or import of traditional energy passenger vehicles reaches more than 30,000, the requirement for the integral proportion of new energy vehicles will be set from 2019. In 2019 and 2020, the proportion of points for new energy vehicles is 10% and 12%, respectively.
As a result, Toyota is adjusting its product planning strategy. GAC Toyota has been selling plug-in hybrid vehicles since February and plans to launch pure electric vehicles this year. The joint venture will also launch its own electric car next year.
By comparison, Volkswagen and its local partner SAIC will invest 17 billion yuan ($2.5 billion) to build a plant in Shanghai that will produce 300000 electric vehicles a year, with the goal of starting production of electric vehicles by 2020. BYD, China's largest electric car maker, plans to invest 10 billion yuan to build a factory in Changzhou, Jiangsu province.
In addition, Toyota and GAC are seeing room for growth in traditional cars and are investing $600m to increase the annual production capacity of an engine plant to 430000 vehicles.