Toyota’s new EV strategy? If it can’t beat China, it’s teaming up instead

You know how the old saying goes: “If you can’t beat them, join them.” Well, Toyota’s new strategy is just that — it’s teaming up with China to lower costs for its upcoming EV models.

Toyota’s new EV strategy will use China to cut costs

The world’s largest automaker will tap into China to gain an edge in the global market. Toyota is already sourcing parts from Chinese suppliers to build EVs overseas.

According to Nikkei, Toyota is expanding the use of parts and other EV components from Chinese suppliers for its production base in Thailand.

The facility is Toyota’s largest production hub in Southeast Asia. Japanese brands have historically dominated vehicle sales in the region. However, low-priced EVs from Chinese brands, such as BYD, are quickly winning over buyers with more advanced tech and features.

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In Thailand, Japanese brands have accounted for roughly 90% of new vehicle sales. In the first five months of 2025, Japan’s market share dropped to just 71%. Meanwhile, Chinese brands saw their share rise to 16%.

Several sources note that Toyota has already begun sourcing EV components from China to use at its Thailand facility.

Toyota plans to launch more affordable electric vehicles at the hub as early as 2028. According to the company, it plans to reduce costs by about 30% by sourcing parts from China.

By using local suppliers, Toyota has already sparked hope in China with new EVs, like the bZ3X, seeing strong initial demand. Starting at just 109,800 yuan ($15,000), Toyota’s electric SUV was the best-selling foreign brand EV in China in May, its second month on the market.

A Toyota executive confirmed (via 36kr) that “we also plan to develop electric vehicles with lower costs by making the most of parts from Chinese manufacturers, just like the bZ3X” in Southeast Asia.

The bZ3X is produced by Toyota’s joint venture, GAC-Toyota. It’s about the size of a Tesla Model Y, but half the cost in China.

During its EV Tech Day event in June, the company announced new partnerships with “car industry bigwigs,” like Xiaomi, Momenta, and Huawei.

Toyota also broke ground on a new EV plant in China for its luxury Lexus brand last month. It’s the second wholly owned auto plant in China from a foreign automaker, following Tesla.

Electrek’s Take

Can Toyota compete with China using parts sourced from the country? It will help, as shown with the bZ3X. However, with Chinese brands like BYD producing everything in-house, including the batteries, it will still likely have the advantage.

Toyota is promising to launch a series of lower-cost, more efficient EV batteries, but that could still be a few years out.

With the new US tariffs on imports from Japan, Toyota is doubling down on local production to minimize costs. It also opened its first overseas battery plant in North Carolina earlier this year, which will power Toyota’s EVs, HEVs, and PHEVs in North America.