SHANGHAI -- Renault and Toyota Motor Corp. have each signed a deal with a domestic Chinese electrified vehicle manufacturer to jointly produce EVs.
Among foreign automakers operating in China, the two are not the first to strike similar agreements. And they won’t be the last to do so as Beijing ratchets up pressure to goad global brands to expand EV output.
Foreign automakers began collaborating with local peers on EV production in 2017 after the Chinese government hatched plans to institute a carbon credit program crafted to push manufacturers into hiking output of electrified vehicles, especially EVs.
In June 2017, Volkswagen Group, the largest carmaker in China, signed an agreement with Jianghuai Automobile Co. to form a joint venture to build EVs only.
The next year, Ford Motor Co. and BMW Group forged similar agreements with Zotye Automobile Co. and Great Wall Motor Co., respectively.
The partnerships have taken on various forms.
VW, Ford and BMW have all chosen to incorporate new EV production ventures with local partners, which are subject to lengthy regulatory approval in China.
Renault decided to cut a corner.
The French automaker this month formed a joint venture with Jiangling Motors Group’s EV subsidiary by purchasing a 50 percent stake in the subsidiary for 1 billion yuan ($145 million).
According to the agreements with their local partners, VW, Ford, BMW and Renault all expect the joint ventures to churn out affordable EVs and market them under the ventures’ proprietary brands.
The arrangement allows the four global players to share the large number of carbon credits generated by the EV joint ventures without posing risks to their own brands.
But Toyota wants to take full responsibility for what comes out of its local partnership.
That’s why what it signed last week with BYD Co., China’s largest electrified vehicle maker and second largest EV battery supplier, is essentially an agreement on technical cooperation.
Toyota will collaborate with BYD to develop EV batteries and EVs. But the jointly developed EVs, including sedans and crossovers, are scheduled to hit the Chinese market before 2025 and will be distributed under the Toyota brand, according to a joint Toyota-BYD statement.
Sales of electrified vehicles such as EVs, plug-in hybrids and fuel cell vehicles remain a bright spot in an overall down market, rising 50 percent to approach 617,000 in the first half.
But Beijing plans to raise electrified vehicle production quotas after 2020 over concerns that sales of such vehicles are likely to lose steam after subsidies are phased out at the end of next year.
Under the carbon credit program, passenger vehicle manufacturers must accumulate enough credits by producing enough electrified vehicles to hit a target equal to 10 percent of annual sales in 2019. The threshold is set to rise to 12 percent of annual sales in 2020.
The government this month proposed to hike the level to 14 percent, 16 percent and 18 percent of sales in each of the next three years.
As regulatory pressure intensifies, more global automakers are expected to team up with local carmakers, the chief EV makers in China, in one way or another to accelerate EV output.