The move is aimed at making full hybrid cars affordable to a wider section of Indian consumers and bolstering the government’s efforts to curb air pollution in the country, which has nine of the world’s top 10 most polluted cities.
The first hybrid car from the partnership with Suzuki might go on sale in India in about three years, said Shekar Viswanathan, vice chairman and whole-time director at Toyota Kirloskar Motor Pvt. Ltd.
“Both Suzuki and Toyota are working towards reduction in the cost structure and that will be the hallmark of this collaboration," he said. “One of the reasons for this collaboration is that no company in this world wants to invest in research and development alone, because they are not sure of the outcome. It is always better to buy technology at one stage because the cost of developing a technology would become prohibitive."
With Toyota deciding to share its hybrid vehicle technology with Suzuki, considered a pioneer in low-cost car manufacturing, the development cost per vehicle would reduce substantially, said Viswanathan. Hence, it would benefit both the companies and result in affordable hybrid vehicles for consumers, he added.
The collaboration between Toyota and Suzuki will let the two carmakers meet the government’s stringent fuel efficiency norms. India has adopted corporate average fuel efficiency norms, which require cars to be 10% or more fuel-efficient from 2021 and 30% or more by 2022. The government had initially also pushed companies to produce largely electric vehicles, but issues such as battery charging points have slowed those plans for now.
To be sure, full hybrid vehicles such as Toyota’s Prius sedan cost much more than those that run on conventional petrol or diesel as the former use lithium-ion batteries, prices of which are currently prohibitive. Such vehicles are, however, considered an intermediate step in the adoption of costlier electric vehicles, as the ecosystem required is almost the same and carbon emissions of hybrid cars are significantly lower than those of vehicles that run on fossil fuels.
Mint reported on 20 December that Suzuki had started working on its first full hybrid vehicle for India and has also started the process of developing the ecosystem needed to make such vehicles.
That includes forming a three-way joint venture with Toshiba Corp. and Toyota’s unit, Denso Corp., to invest in setting up a lithium-ion battery manufacturing plant in Gujarat for hybrid and electric vehicles.
“If you get the battery cost down, that’s a first step to success and because of our battery plant, we are ahead," said Viswanathan.
As part of the collaboration, the two companies will sell each other’s vehicles—Vitara Brezza (a compact sports utility vehicle) and Baleno (a premium hatchback) of Suzuki and Corolla, a sedan of Toyota—in India through their respective sales outlets.
Both are also in the process of studying the prospects of Suzuki manufacturing its cars at Toyota’s second factory in Bengaluru, where the latter produces the Etios range of hatchback and sedan.
“We are pushing for localization of components like lithium-ion batteries and others. We are already in the process of implementing the battery plant and are planning for a strong hybrid vehicle as well," Kenichi Ayukawa, managing director and chief executive of Maruti Suzuki India Ltd, said on 19 December.
In 2018, Suzuki decided to invest $1.5 billion—the highest ever earmarked by the company—for research and development of hybrid and electric vehicles with Toyota and upgrade its entire product portfolio to the Bharat Stage VI emission norms in India.
As certain ministries of the Union government agreed to offer incentives on hybrid vehicles in the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles scheme and recommended reduction in goods and services tax (GST) on hybrid vehicles, Toyota’s local unit brought back the hybrid variant of its premium sedan, Camry, on 18 January. The company had stopped selling the vehicle in India due to a sharp decline in sales following an increase in its tax rates after implementation of GST in July 2017.