SHANGHAI – Toyota Motor Corp. and Hyundai Motor Group, while lagging far behind domestic automakers in capturing a share of China’s booming electric-vehicle sales, are on track to penetrate the local market for fuel cell vehicles.
Toyota and Hyundai are recognized global leaders in FCV development. But what has enabled them to get a leg up on rivals on the new front in China is a pragmatic approach to exploring the market.
Starting in 2018, the Chinese government allowed foreign automakers to establish wholly owned local subsidiaries to produce electrified vehicles, including FCVs.
Rather than going solo, Toyota and Hyundai both opted to team up with local companies to jointly commercialize the FCV market.
Toyota in 2020 formed an R&D partnership for fuel cell system development with Beijing-based fuel cell developer SinoHytec Co. and four major state-owned Chinese automakers – China FAW Group, Dongfeng Motor Group, GAC Motor Group and BAIC Group.
The deal has essentially made the four state-owned companies potential customers for Toyota’s fuel cell systems.
Last year, the Japanese auto giant also incorporated an 8 billion Japanese yen ($549 million) joint venture with SinoHytec to produce and market fuel cell systems for commercial vehicles.
The joint venture, in a key milestone, broke ground this week on a plant in Beijing.
The factory will produce the first two fuel cell systems Toyota, along with local partners, has developed for China: one is based on the fuel cell system used on the second-generation Toyota Mirai sedan; the other enhances the system’s power output for applications in light commercial vehicles.
Unlike Toyota, Hyundai has chosen to build fuel cell systems in China on its own.
It signed an agreement in January 2021 with the local government to build fuel cell systems in the south China city of Guangzhou. The next month, the Korean automaker started constructing a plant, that can initially build 6,500 fuel cell systems per year.
But it has remained on the lookout for local partners.
This week, Hyundai inked a tentative deal to create a joint venture with two local government-affiliated companies – energy supplier Guangzhou Hengyun Enterprises Group Co. and public transport operator Guangzhou Development District Transport Investment Group Co.
The partnership will conduct sales and provide after-sale service for commercial vehicles fitted with Hyundai’s fuel cell systems developed for the Chinese market.
The initial goal is to put more than 4,500 such FCVs on Guangzhou roads, Hyundai said.
FCV sales in China remain tiny despite government subsidies of up to 200,000 yuan ($27,600) and 500,000 yuan for domestically produced fuel cell cars and fuel cell commercial vehicles.
In the first three quarters, roughly 2,100 FCVs were sold in China. By contrast, EV shipments industrywide approached 3.6 million during the period, according to data from the China Association of Automobile Manufacturers.
Yet backed by advance technology and local partners, Toyota and Hyundai are well positioned to become key leading suppliers as the Chinese FCV market gains scale and acceptance.
