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Toyota is all in on China

Research, autonomous driving, batteries, EVs, and now mobility.

With the announcement on July 25 that it will invest $600 million in DiDi Chuxing, China’s mobility service market leader, and in a joint venture the two companies will form with GAC-Toyota for vehicle-related services for ride-hailing drivers (see Toyota to invest $600 million in Didi Chuxing, form JV with GAC-Toyota), Toyota is all in on China.

The announcement comes less than a week after Toyota and BYD signed an agreement on July 19 to jointly develop Toyota-branded battery electric sedans and low-floor SUVs for launch in the Chinese market in the first half of 2020s, as well as batteries that power these vehicles.

Two days before the Toyota-BYD agreement, the Japanese automaker announced a partnership with Chinese EV battery giant CATL for the supply and development of batteries, development of new battery system technologies and improvements to the quality of current cell technology, as well as reuse and recycling of batteries.

Earlier this month, Toyota joined Baidu’s Apollo self-driving platform as an ecosystem partner and reportedly will use Baidu’s Apollo Minibus robotaxi software stack for Toyota’s e-Palette autonomous shuttle. Interestingly enough, DiDi was one of the first launch partners when Toyota announced the e-Palette alliance at CES in January 2018, and the two have launched vehicle-related services, including a vehicle leasing service and various services for DiDi ride-hailing drivers at a Toyota dealer in May 2018.

On April 21, Toyota and Tsinghua University announced the establishment of Tsinghua – Toyota Joint Research Institute where the two plan to conduct various researches together over the next five years. It will enable two to conduct research not only related to cars for Chinese consumers, but also in research related to active utilization of hydrogen energy.

Within just three months, Toyota has massively expanded its footprint in China as far as “CASE” is concerned, and set up important partnerships with some of the biggest names in the industry: Tsinghua, Baidu, CATL, BYD and DiDi, each at the pinnacle of their respective sectors.

These are all specific moves Toyota is making as it transitions from an automobile company to a mobility company, something that Toyota President Akio Toyoda announced at CES in January 2018 when the e-Palette debuted. And he knows that to do so, Toyota has to work with leading local companies in a country where “CASE” is progressing much faster than anywhere else in the world.

These slew of announcements also come after Toyota announced a wide-ranging plan in June to speed up the introduction of BEVs globally: its previous forecast made at the end of 2017 that it would sell 5.5 million electrified vehicles including 1 million BEVs and FCEVs in 2030 might be reached five years earlier. The first of 10 BEVs available worldwide by 2025 will roll out in China next year, and the tie-up with BYD and CATL is clearly aimed at helping Toyota to achieve its global targets.

Toyota is currently on a high note in China, probably enjoying its best stretch of performance since entering the Chinese market. It sold nearly 770,000 vehicles in the country in the first half of 2019, up 13.2 percent and bucking the trend in a market that is down nearly that much. Even Lexus sold nearly 100,000 vehicles as an import brand. The company plans to sell 1.6 million vehicles in China this year, up from 1.47 million vehicles sold last year, which was its sixth consecutive year of growth in the country.

Everything is looking up for Toyota in China these days. It’s the perfect time to go all in.

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