Hybrid vehicles

Some Japanese carmakers expect to make a breakthrough by localizing the production of gasoline-electric hybrid vehicles and key parts.

Toyota is currently producing the Prius and a hybrid version of the Camry in China but the core parts are imported.

It started an R&D center in Changshu, Jiangsu province in 2013 to prepare for local production of hybrid powertrains next year that will lower the price.

Though it currently only sells imported hybrid models in China, Honda also plans to begin domestic production of shybrid Accord, Vezel and Fit models at its local plants in two years.

Unlike the European carmakers that focus on plugin hybrids and pure electric cars, Japanese carmakers are making a big bet on gasoline hybrid vehicles.

Those are still fueled by gasoline with electric motors as auxiliary power, while plug-in hybrids use a combustion engine only to recharge batteries.

The current industrial policies in China offer no essential support for the development of hybrid vehicles in which Japanese carmakers have an edge. Instead, plug-in hybrid and pure electric cars are eligible for many incentives and subsidies.

The latest example is a sales tax exemption for all electric cars, plug-in hybrids and fuel-cell vehicles from Sept 1 this year to the end of 2017, according to a recent announcement by State Council.

Gasoline hybrid vehicles are not included.

Zhu with the LMC Automotive forecast that in the next two to three years, plug-in hybrids will have faster sales growth than traditionally powered hybrid vehicles.

He said his view is that market demand for gasoline hybrids will not be as high as expected by Japanese carmakers.

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