Toyota is considering setting up hybrid vehicle (HV) battery production in the ASEAN region to lower the cost of producing its hybrids, a recent Thai report said.

Currently, the automaker produces HV batteries only in Japan through its joint venture Primearth EV Energy (PEVE), the Bangkok-based paper The Nation noted.

It has set up a plant in China through Corun PEVE Automotive Battery to produce lithium-ion batteries for hybrid vehicles; that plant will begin operating this year, according to Usui Tomohiro, of PEVE's general affairs division.

The production utilisation rate of nickel-metal hydride (Ni-MH) batteries at PEVE in Japan is almost 100%, while the utilisation rate of lithium-ion batteries is 70%, the report said.

Hiroyuki Fukui, president of Toyota Motor Asia Pacific Marketing and Sales, told the paper the carmaker also planned to have battery-manufacturing plants in ASEAN to capture the strong demand for hybrids in that region.

Toyota is seriously focusing on advanced safety and environment, so it is promoting hybrids in the Asia-Pacific region including Thailand where sales of this type of vehicle are highest in ASEAN. Malaysia and Singapore are second and third.

However, Toyota acknowledges that even though there is high demand for HVs in Thailand, its Prius is expensive because of the high excise tax, as it is judged as an imported car.

Toyota decided to pull the Prius from the Thai market in 2014 and leave only the Camry hybrid, because Toyota Motor Thailand has a Camry assembly line here.

Toyota's Asian hybrid assembly lines outside Japan are in China, Thailand, Malaysia, India, and Taiwan; China is the manufacturing base for the Prius, the paper said.

Fukui said the excise tax in Japan was the same for hybrid and regular cars, so hybrids are widely accepted there.

Toyota executives in Thailand have made an effort to talk about excise tax with Thai government agencies, he said. However, TMC considers that to build strong demand for hybrids in the Asia-Pacific region it has to lower the cost of batteries.

If it can accomplish this, it might review selling the Prius in Thailand again.

Toyota started exporting hybrids in 2000 and selling them in southeast Asia in 2006.

However, Toyota is facing a new challenge because Thai government wants to push electric vehicles (EVs) rather than hybrids by offering attractive incentives to auto producers in that segment. The government plans to ask automakers interested in producing EVs to propose investment packages.

Fukui told The Nation Toyota was ready to support the government policy but a barrier to making EVs in Thailand was the need for charging stations.

Toyota considers EVs suitable only for short-distance use, while hybrids and plug-in hybrids are for general-purpose use and fuel-cell vehicles (FCVs) for medium-to-long-distance use.

"In my personal view, we have to consider the preparation of infrastructure and the policy of energy in Thailand, [both of which] are key for Toyota's consideration," he said.

He sees hybrid technology as a core technology, as it is found in plug-in hybrid vehicles, EVs and FCVs, so Toyota will push hybrid as the mainstream for developing eco-friendly vehicles.

Hisashi Nakai, head of public affairs at TMC, said during a media briefing on the overview of Toyota's environmental activities in Japan that the company believed HVs and FCVs would appeal to buyers rather than EVs because drivers of FCVs spend only three minutes refuelling their vehicles with hydrogen while EV drivers have to spend much more time recharging them.