Toyota plans to build the vital components of its third Prius hybrid car model from China, a move to boost sales. Toyota will have a joint venture with China FAW Group Corp, a leading Chinese carmaker and plans to begin the production early next year. The joint venture will manufacture electric motors and batteries at its Chinese facility and also cater to the growing demand from the mainland.
The second model of the Prius was also manufactured in China, with the key components manufactured in Japanese factories and then sent over to the assembly lines in China. This made the product expensive and eventually led the company to suspend its operation in 2009.
The company expects hybrid to be the preferred choice of next generation, given the fact that hybrid cars produce minimum pollution. “Everybody recognises that China is going to be a very important market for all car manufacturers,” said Paul Nolsco, a spokesperson for Toyota. He added, ?Given the scale that we hope to achieve in China, it makes sense to manufacture components here.”
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China possesses uniquely useful chemical properties for applications in batteries and wind turbines. The country accounts for 95% of global supply, however, they have reduced the exports by 35%. According to Vivek Vaidya of Frost & Sullivan, Toyota’s move to start producing components in China may help the company counter any restrictions on the components as it will be buying the elements to use within China.
Toyota’s operations were affected badly by the earthquake and tsunami that hit Japan earlier this year. By moving part of manufacturing to China, the company oversees an uninterrupted supply chain to the factories.
Toyota’s decision to shift the manufacturing of these parts to China would result in cheaper parts and boost sales.
Sources: BBC, smh.com.au, raremetalblog