Toyota rumored in talks on selling Prius III hybrid technology to China’s FAW

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A source close to Toyota Motors reveals that Toyota has sold the technology of the third-generation Prius to China’s auto giant FAW Group, but the two companies would not expose the deal to the public now and say they are in talks about local production.

It could be a new explanation to the delayed local production of the third-generation Prius. The car was scheduled to reach the market in the first half of last year, and then postponed to the second half, and then was said to suspend local production plan at the end of last year as it was not covered by China’s incentive program for new energy vehicle products.

According to industry analysts, the deal, if it does happen, is not a matter of money, but each party gets what it needs.

Although the hybrid technology of the third-generation Prius is not encouraged by Chinese government, it’s still advanced for FAW. The Chinese automaker has long been blamed for lack of independent innovation. It wants to change the situation by making progress in the new energy vehicle sector, which is also valued by the government.

Toyota sees China as a key market in its recently-released Global Vision. It may seek support from its local partner, FAW, to achieve its expansion plan in China. Besides, the first two generations of Prius saw sluggish sales in China, and the third generation was not covered by China’s incentive policy. Therefore, the price of a Prius 1.5L is almost the same as that of a high-end B-segment car, and it won’t sell.

Meanwhile, Nissan plans to launch its first all-electric Leaf in China this year. Shanghai GM also plans to launch its self-developed New Sail BEV in China at the end of this year. Notably, the all-electric vehicles and plug-in hybrids are covered by China’s incentive program. The moves of rivals may force Toyota to change its strategy for new energy vehicles. According to the source close to Toyota, the Japanese automaker may sell its hybrid technology to FAW Group, and then develop a plug-in hybrid vehicle. The source’s words have some grounds. Toyota and China Automotive Technology and Research Center inked a partnership deal last December on a one-year road test of a Prius plug-in hybrid.