TOKYO -- Japanese automakers are aiming to boost electric and other green vehicle production in China as deregulation opens up avenues for fresh partnerships with local carmakers.
The Chinese government on Monday lifted a restriction on joint ventures between domestic and foreign automakers. Previously, a foreign automaker could establish joint operations with a maximum of two Chinese peers. Now a third partnership is allowed when it involves green vehicles.
China has become the world's biggest electric-vehicle market. Yet Japanese automakers have lagged behind Western counterparts in that arena. Nissan Motor is the only Japanese automaker offering electric vehicles, selling the improved versions of the Leaf electric cars available in Japan. Nissan's Chinese joint ventures have been so far limited to one with Dongfeng Motor.
The know-how required to build and sell electric vehicles differs from that for gasoline vehicles. So working with a Chinese company well informed about the local market should be an effective way to catch the wave of market growth. With low-price products popular in China, strengthening such offerings will be a key challenge.
Starting from 2018, the Chinese government will require that electric and plug-in-hybrid vehicles account for a set proportion of vehicles sold by automakers.
How Japanese carmakers will respond will be critical, and they will have to speed up advances in green vehicle operations.
Many Japanese automakers have production and sales joint ventures with two local partners already -- like Toyota's alliances with FAW Group and Guangzhou Automobile Group. More Chinese partnerships may mean risks of dispersing finite resources available for development, a consultant at Arthur D. Little Japan points out. The strategy of Japanese carmakers will be put to the test.