Toyota to source Chinese-made parts for electric vehicles to be produced in Thailand from 2028

Toyota will be sourcing Chinese-made parts for its manufacturing base in Thailand, according to 36Kr. This will see the use of Chinese parts in the manufacturer’s electric vehicles which are set to be produced in the region from 2028, the report wrote.

The Japanese manufacturer has officially started sourcing parts from Chinese enterprises in Thailand, 36Kr cited “multiple sources” as saying.

Chinese manufacturer of interior materials, Wuhu Yuefei New Sound-Absorbing Materials has entered into a joint venture with Summit Group in January this year, and this is to set up a factory in Thailand for future supply of parts for Toyota. In doing so, this marks the first time a major Japanese automaker has driven the entry of a Chinese component-producing enterprise into the Thai market, 36Kr wrote.

Toyota is also calling on Japanese parts manufacturers to use products from Chinese firms, such as moulds produced by Zhejiang Kaihua Mould, and resin materials produced by Kingfa Science & Technology, according to the report. Toyota’s aim is to use Chinese-made parts which are more competitively priced, and also to encourage Japanese firms to reduce costs.

“In Southeast Asia, we also plan to develop electric vehicles with lower costs by making the most of parts from Chinese manufacturers, like the bZ3X,” an executive of a large parts enterprise under Toyota was quoted as saying.

“Compared with Japanese-funded enterprises, the costs of Chinese parts manufacturers are 20%-30% lower,” a head of a local parts manufacturer in Thailand told 36Kr, noting that some Japanese firms may be faced with the decision to downsize, or exit the business.

Citing data from research firm MarkLines, the report states that there are approximately 2,770 Japanese parts manufacturers in Thailand as of August 1, with Thailand accounting for 50% of the total. For comparison, a total of 2,090 Japanese parts manufacturers have entered the Chinese market, while 1,630 Japanese-funded parts manufacturers entered the North American market.

While Japanese vehicles have historically accounted for a majority market share in countries such as Indonesia and Thailand, the entry of Chinese carmakers into the Southeast Asian market has also seen the flow of low-tariff automotive parts into the region through the ASEAN-China free trade agreement as Chinese OEMs have begun production in Thailand, 36Kr wrote.