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Toyota and Mazda Team for $1.6 Billion Electric Vehicle Plant

06 August 2017, 01:38 | Hattie Nash

Two large rival car giants are reportedly joining forces for a new venture

Toyota and Mazda To Build US Plant -- WSJ

The alliance is also an attempt to catch up with rivals in the race for electric auto technology, as tighter global emissions rules loom, along with the entry of new players into the market. The companies gave no further details on the proposal.

The next question is how Toyota and Mazda will leverage this alliance for sports auto production.

Mazda president and CEO Masamichi Kogai said: "Nothing would please me more than if, through this alliance, we can help to energize the auto industry and create more vehicle fans by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders".

USA auto sales have weakened so far this year, and already two US factories operated by General Motors Co have indefinitely laid off work shifts, while others have scaled back production. Automakers can't create that future on their own and it's becoming increasingly important for carmakers to seek partners without viewing it from a confrontational perspective, he said. "We will study the possibility of expanding the capital alliance, but the basic premise is that autonomy is assured", said Mazda Executive Vice President Akira Marumoto. "There are no nautical charts for us to follow".

President Donald Trump threatened to tax auto imports early in his presidency and specifically attacked Toyota's plan to open a Corolla plant in Mexico. He called it "a great investment in American manufacturing" in a Friday morning tweet.

Toyota initially had been planning to produce Corollas at its new $1 billion plant being built in Mexico, prompting Trump to threaten punitive tariffs.

Sales of small cars have slumped in the US amid steadily low gas prices.

Mazda, whose annual global vehicle sales are one-eighth that of Toyota, caters to a specific audience largely in North America with its design-conscious sedans and SUVs, and has been focusing on developing more fuel-efficient gasoline engines.

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"We have a lot of confidence in the USA economy", Lentz said.

"We're in the process of preparing for our current volumes to be projected, and at this moment, we don't see any big change for us".

Purchasing stakes in other companies is not an every day phenomenon at Toyota, which in recent years acquired a minority equity stake in Isuzu Motors Ltd.

The Toyota-Mazda capital tie-up is expected to push forward further the consolidation of automakers into four major groups: Toyota, Germany's Volkswagen, General Motors Co. of the United States, and the alliance of France's Renault SA and Nissan Motor Co.

Toyota plans to acquire 31,928,500 shares of common stock newly issued by Mazda through a third-party allotment, which will amount to a 5.05 percent stake in Mazda, valued at 50 billion yen ($455 million). And they will build a $1.6 billion plant that will employ 4,000 people to produce 300,000 vehicles a year.

Also Friday, Toyota reported its April-June profit was 613.0 billion yen ($5.6 billion), up 11 percent from 552.4 billion yen a year earlier.

The sheer cost of the plant also makes a partnership logical, as it boosts cost-efficiency and economies of scale. It will start operating in 2021.The electric vehicles cooperation, meanwhile, comes as the tightening of global emissions regulations prompts more automakers to develop battery powered cars, as the industry struggles with hefty research costs and intense competition from technology companies over technology like self-driving cars.



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