Toyota said ready to share hybrid-car secrets with China

Toyota has engaged in advanced talks to license its hybrid system to Geely

by BLOOMBERG

TOKYO • Toyota Motor Corp is preparing to divulge details of the hybrid-car engine technology it pioneered with the Prius to China in an attempt to catch up with rivals in the world’s biggest auto market.

Chinese officials asked Toyota to share its petrol-electric technology to help local firms meet stricter emissions targets, people familiar with the matter said, asking not to be named because the talks are private. Seeing this as a chance to make inroads in China, Toyota has engaged in advanced talks to license its hybrid system to Chinese carmaker Geely Automobile Holdings Ltd, two of the people said.

Government backing for hybrid vehicles would be a boon for Toyota’s ambitions to boost sales in China. Hybrids have been a success for Toyota in Europe and Japan for years, but China has so far placed more focus on so-called pure electric vehicles (EVs), promoting them through subsidies and tax breaks.

Gradually, though, China is starting to see hybrids as a means of reducing emissions on the way toward a pure-electric future, part of a plan to reach ambitious environmental goals and reduce the country’s reliance on imported oil. Trade tensions emanating from America are giving added impetus for Toyota and China to work together.

Geely’s shares jumped 8.4% yesterday in Hong Kong, their biggest gain in 11 months. Toyota rose 1.8% in Tokyo, the most in two weeks.

An increase in hybrids’ popularity could help Toyota catch up with sales leaders Volkswagen AG and General Motors Co, which each sold more than four million vehicles in China last year. Of the 1.3 million vehicles Toyota sold, about 10% were hybrids. The company wants to raise that proportion to more than 30% by as early as 2020.

Chinese carmakers that don’t have hybrid technology are asking Toyota to work with them, and the company is considering several of them, said a Toyota executive, speaking on condition of anonymity. Toyota should be able to announce its stance officially within this year, the executive said.

As part of the discussions, Toyota is in talks to share its hybrid knowhow and licence the technology as a complete package via battery supplier Hunan Corun New Energy Co to Geely and potentially other Chinese carmakers, the people familiar said. Corun works closely with Geely, which shot to the No 3 spot in Chinese sales this year, topping all Japanese rivals for the first time. Corun shares rose 2.2% in Shanghai, the most in a month.

Toyota has an open policy toward working with partners, which also applies to the area of electrification technologies, a Toyota spokeswoman said. Talks with Geely about cooperating on hybrid technology is based on that policy, though nothing has been decided for now, she said. A Geely representative declined to comment.

Expecting rising demand, Toyota is ramping up hybrid battery production with Corun in China through their joint venture, Corun PEVE Automotive Battery Co. The venture will double production to about 210,000 battery packs annually in 2020. The companies are also in discussions to more than double that again to about 480,000 packs per year after that, according to one of the people. — Bloomberg