Toyota is planning to set up a hybrid battery plant in Thailand, in a bid to start operations in early 2020, according to the Kyodo news agency quoting sources close to the matter.

Toyota, which plans to sell 4.5 millions units of hybrids and plug-in hybrids (PHEVs) in 2030, has decided to manufacture hybrid batteries in Thailand as the number of electrified cars is expected to grow there due to preferential tax treatment for green cars, the report’s sources say.

Key battery components will be imported, with the final product assembled in Thailand. The facility will be located in Chachoengsao, east of Bangkok, where Toyota already has a car manufacturing presence.

This development follows a similar move by Mercedes-Benz. Last month, the premium carmaker announced that together with local partner Thonburi Automotive Assembly Plant, it will invest over 100 million euros (RM483 million) in production operations in Thailand until 2020. The investment will go into the extension of an existing car plant in Samut Prakan and a new hybrid battery assembly plant in the area. Local production of the lithium-ion batteries will start by 2019, serving locally assembled PHEVs.

Fellow German premium brand BMW, which also assembles and sells PHEVs in Thailand, has similar plans to localise hybrid battery production. BMW’s battery plant is also scheduled to come online next year.

Thailand has of late put in efforts to attract carmakers to build green cars such as hybrids, PHEVs and EVs in the country. Last year, the government approved promotional privileges for carmakers. Toyota was the first to apply for and receive the privileges under the hybrid category with the Toyota C-HR Hybrid.