Toyota plans to enter the extended-range electric vehicle (EREV) market by producing its first model in this category in China during spring 2027, in a move that reflects a shift in the Japanese company’s strategy to address competition in the world’s largest electric vehicle market.
According to information reported by Nikkei, Toyota is targeting production of approximately 200,000 EREVs in China during 2027, with production expected to rise to nearly 400,000 units in 2028. The source material did not mention details about the model, its price, or its driving range.
What distinguishes EREVs?
Extended-range electric vehicles use an internal combustion engine to charge the battery when its level falls, while electricity usually powers the wheels. These vehicles have a smaller battery than fully electric cars and a smaller engine than those used in plug-in hybrid vehicles.
This design provides a driving experience closer to that of electric vehicles while reducing range anxiety, but it is not without trade-offs. The presence of a gasoline engine means greater maintenance requirements and complexity compared with fully electric vehicles, while efficiency is lower than that of vehicles relying solely on a battery.
A bet on the Chinese market
The move comes at a time when low-cost Chinese brands, such as BYD, dominate the local market, while intensifying competition in battery-electric vehicles has triggered a price war that is pressuring companies’ margins.
Toyota believes that EREVs may allow it to offer products priced higher than basic electric vehicles and thus partially move away from direct price competition. A company executive said that the Chinese market had become highly competitive and that its focus on battery-electric vehicles was leading to price wars, prompting Toyota to look for a different path.
Why does this news matter?
EREVs are the fifth category in Toyota’s range of electrified vehicles, alongside battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), conventional hybrids (HEVs), and fuel-cell electric vehicles (FCEVs). The move is particularly significant because Toyota has built a large part of its presence in the electrified vehicle market on hybrid cars, while hybrids are not counted among China’s new-energy vehicle incentives.
The decision also reveals increasing reliance on China’s supply chain. Toyota’s bZ3X electric vehicle, whose price in China starts at 94,800 yuan, is produced by GAC Toyota, the joint venture between Toyota and GAC Group. Estimates mentioned in the source indicate that approximately 90% of its components come from China, including BYD batteries and autonomous-driving software from Momenta.
These facts indicate that Toyota’s entry into the EREV race is not only about the type of powertrain, but also about benefiting from Chinese batteries, software, platforms, and manufacturing practices. However, the source does not clarify whether the new model will be exported outside China, how it will be priced, or how capable it will be of competing with local electric vehicles in terms of efficiency and cost.