Shanghai (ZXZC)- GAC Toyota, one of Toyota’s major joint ventures in China, is ready to plow RMB 11.329 billion (around $1.644 billion) into a program for new energy vehicle (NEV) capacity expansion, according to an announcement released on May 6 by GAC Group.

The Group said the board of directors has agreed the program in which GAC Toyota will increase a total of NEV capacity by 400,000 units per year. The program is scheduled to be completed in 2022. Shareholders will inject $547.99 million into the program, among which $273.995 million should be offered by GAC Group based on its 50% equity in the joint venture.

(Photo source: official website of GAC Toyota)

Overall vehicle capacity of GAC Toyota will be enlarged by virtue of the fresh program. In the meantime, the automaker is to introduce more new models on the basis of its medium- to long-term development planning to meet market demands and the requirement of China’s Dual Credit Policy for NEVs.  

GAC Toyota achieved a significant year-on-year growth in Q1 sales with 161,824 new cars sold in total. Of that, the sales of the eighth-generation Camry, the Levin family and the Highlander represented double-digit growth of 21%, 50% and 13% respectively.

The fast-climbing sales volume made the capacity increase urgently necessary. According to local media outlets, GAC Toyota currently has three assembly lines with a total capacity of 480,000 vehicles on an annual basis—two lines built earlier possess a capacity of 380,000 units/per, while the third one only has 100,000-unit yearly capacity due to a relatively late starting time despite its compatibility for TNGA-based models. 

Obviously, the current capacity still lags behind the 550,000-unit sales target the joint venture set for 2019. 

Both two parent companies are reinforcing their onslaught in China’s NEV industry. GAC Group aims to raise its NEV sales percentage to 10% by 2020. Toyota also plans to roll out at least 10 BEV models before 2025 with the first model targeting China’s market to be launched in 2020, much earlier than other countries.