Toyota to make batteries in China as country warms to hybrid cars

Japan's Toyota Motor Corp <7203.T> is moving to set up a joint venture in China with a local Chinese company to produce batteries for the country's fledgling electric-gasoline hybrid car market, a Beijing-based company spokesman said on Thursday.

Takanori Yokoi, Toyota spokesman, said the Japanese automaker is in discussions with Hunan Corun New Energy Co in the southern China province of Hunan to jointly produce nickel-metal hydride batteries for hybrid models Toyota plans to start selling in China around 2015.

Toyota previously said it was working to design key hybrid components in China to make those China-only hybrid models more affordable.

The move comes as Toyota - and other automakers in China, both indigenous Chinese and foreign - gear up to try to kick-start sales of conventional hybrid cars in China in anticipation of changes in China's industry policy aimed at nurturing demand for "new energy" cars to include conventional hybrids.

Until now, under the current policy, China provided generous subsidies for private purchases of all-electric battery vehicles and heavily electrified "near all-electric" plug-in hybrids, but only limited support for conventional hybrids. A growing number of industry insiders and experts believe the Chinese government would boost purchase subsidies significantly for conventional hybrids as early as this year.

Toyota's Yokoi said the Japanese automaker, which has bet big on gasoline-electric hybrid technology since the late 1990s when it began selling the Prius hybrid, plans to launch in China two relatively affordable hybrid models around 2015. One model would be for and marketed by Toyota's joint venture with Guangzhou Automobile Group Co, one of China's big state-owned auto enterprises. The other would be for its joint venture with another state-owned auto maker FAW Group.

China is warming to gasoline-electric hybrid cars as it tackles an addiction to fossil fuels, and local indigenous Chinese car makers are heeding the call.

Automakers like state-owned SAIC Motor Corp <600104.SS> and Brilliance Auto <1114.HK> are developing the fuel-saving technology pioneered by Toyota. Executives at BYD Co<002594.SZ>, a Chinese battery and automaker part-owned by a Warren Buffett company, have told Reuters the company plans over the next few years to stop selling gasoline-fueled cars and sell only hybrid and other new-energy cars.

According to a notice Corun New Energy filed with the Shanghai stock exchange, Toyota and the Hunan-based battery producer plan to set up a joint hybrid battery company in the eastern China city of Changshu.

The joint-venture company, which is expected to be called Corun PEVE (China) Automotive Battery Co, would be owned 41 percent by Primearth EV Energy Co, a joint venture between Toyota and Japan's Panasonic Corp<6752.T>, 5 percent by Toyota's China unit called Toyota Motor China Investment Co and 4 percent by Toyota affiliate Toyota Tsusho Co. The joint venture is pending approval by the Chinese government.

The China side investing in the venture includes Hunan Corun New Energy and Changshu Sinogy Venture Capital Co, which would own 40 percent and 10 percent of the venture, respectively.

(Reporting by Norihiko Shirouzu in Beijing, additional reporting by Yoko Kubota in Tokyo; editing by Andrew Hay)