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Automobile

Toyota looks to sell electric cars developed by Chinese partners

In India, automaker will turn to Suzuki; all efforts to keep up with environmental rules

Automakers must have "new-energy" vehicles contribute a specified portion of sales in China starting in 2019.

GUANGZHOU/BEIJING -- Toyota Motor is considering producing and selling electric vehicles in China developed by local partners while planning to procure electric models from Suzuki Motor in India, part of a strategy to cope with tougher environmental regulations.

The electric vehicles are being developed by joint venture partners China FAW Group and Guangzhou Automobile Group, with their releases planned for as early as 2019. Hiroji Onishi, head of the Japanese automaker's Chinese operations, discussed the possibility Friday at the Guangzhou International Automobile Exhibition.

Toyota plans to roll out an electric vehicle model of its own in China for 2020. By having Chinese partners work on development at the same time, the automaker will try to adapt to tough new quotas taking effect in 2019.

China will require so-called new-energy vehicles, mainly electric cars and plug-in hybrids, to account for a certain percentage of an automaker's annual production and sales in the country based on a complex points system that assigns different values to autos based on performance. The quota starts at 10% in 2019 and rises to 12% in 2020. Automakers that cannot meet the target -- such as by failing to develop qualifying models in time -- will need to buy credits from companies that exceed the quota.

The new regulations are likely to obligate automakers to use Chinese-made batteries. Doing so while also teaming with local automakers on vehicle design probably would help get new models on the market faster. Toyota likely considered all these factors in deciding on this unusual arrangement.

Riding Suzuki's coattails

In India, meanwhile, Toyota said Friday it will procure electric vehicles from market leader Suzuki, which begins production around 2020. The specific models and volumes have yet to be determined.

Prime Minister Narendra Modi's government plans to limit auto sales to electric models only by 2030, seeking to combat the nation's worsening air pollution. The Goods and Services Tax introduced in July levies a 28% rate on compact hybrid cars but only 12% on electric vehicles. New Delhi likely hopes to use the electrification push to bolster the country's auto industry as well.

Toyota and Suzuki announced a partnership in February that spans environmental, safety and information technology as well as supplying products and parts to each other. Though Toyota does make some vehicles in India, such as the Etios aimed at emerging markets, the automaker's sales volume in the country slumped 5% to 132,000 last year, putting its market share at just 3.5%.

Suzuki subsidiary Maruti Suzuki India leads the market with a share in the 40% range, focusing on small, cheap models such as the Alto and Swift. The company also is working with Toshiba and autoparts producer Denso to build a 20 billion yen ($177 million) automotive lithium-ion battery factory in India, expected to go online in 2020.

Toyota will provide technical support to Suzuki in exchange for the opportunity to tap its much more developed customer base. The pair also will study setting up charging stations, training service personnel at dealerships and establishing disposal systems for used batteries.

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