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Toyota Motors (TM) to Sell Locally Designed EVs in China

Zacks Equity Research

Per a Reuters report, Toyota Motor Corporation TM has announced that it will sell locally developed electric vehicles (EVs) in China. This is in sync with the company’s strategy to boost its EV line up and act in accordance with the Chinese EV production and sales regulations.

Notably, China has imposed stringent rules for electric and plug-in hybrid vehicles that are set to be available in the market from 2019. Moreover, per the new regulations, foreign auto manufacturers, which intend to operate in China, have to tie up with local partners. On the other hand, foreign auto companies are coming up with a bevy of EV deals and new models in order to grab a greater share of the world’s largest auto market. For this, Toyota has entered into a partnership with China FAW Group Corp and Guangzhou Automobile Group.

Besides the development of all-electric vehicles in collaboration with local companies, the Japanese auto giant also has plans of introducing an EV model in China in 2010, which would be designed in Japan.

In fact, global vehicle makers are coming up with new strategies for the Chinese market. Germany’s Volkswagen has announced plans of investing more than $12 billion with its partners to make and develop a range of new energy vehicles in China. Ford Motor Company F also made announced that it will invest $754 million with its partner in China.

In the last three months, Toyota’s shares have underperformed the industry it belongs to. During this time period, shares of the company have gained 11.3%, whereas the industry grew 13.4%.

Currently, Toyota has a Zacks Rank #2 (Buy), while Ford carries a Zacks Rank #3 (Hold).

Other stocks worth considering in the auto space are PACCAR Inc. PCAR and AB Volvo VLVLY, each sporting a Zacks Rank# 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PACCAR has an expected long-term growth rate of 10%. Its shares have increased 10.6% in the last three months.

Volvo has an expected long-term growth rate of 15%. Its shares have gained 14.8% in the last three months.

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