Toyota to team up with Mazda to build EVs

Toyota and Mazda have agreed to jointly invest USD 1.6 billion in a US assembly plant. The two Japanese auto manufacturers will also collaborate on development of electric vehicle technologies.

As part of the collaboration, the two auto major will take minor shares in each other’s companies with Toyota taking a 5 percent share of Mazda, and Mazda taking a 0.25 percent stake in Toyota.

The factory in the United States, which will have about 4,000 employees is slated to have the capacity to make 300,000 vehicles on an annual basis. It will produce both Toyota and Mazda models including the Toyota Corolla and a new Mazda SUV crossover and is expected to become operational in 2021.

With pollution and the issue of toxic emissions taking centerstage, many leading automakers are focusing more of electric vehicles and the collaboration with Mazda will help Toyota to cope with high research costs and the challenge from tech majors like Tesla in this segment. Other areas on which the two companies will cooperate include in-car information technologies and automated driving functions.

Toyota has been forged several collaborations with other Japanese auto companies in recent years and has already acquired a 16.5 per cent stake in Subaru, with which Toyota also has a development partnership. With Suzuki emerging as a leader in emerging Asian markets, Toyota has approached the smaller company regarding collaboration on R&D and parts supply as Toyota seeks to tap its smaller rival’s expertise in emerging Asian markets.

Through the collaboration with Toyota, Mazda will gain production access to its biggest market, the United States. Currently, Mazda models sold in the United States are shipped from Mazda’s factories in Mexico and Japan.It will also benefit from the collaboration on electric vehicles as it had earlier decided that its R&D budget of around 140 billion yen (USD1.27 billion) for 2017 was too small to cover research into electric cars.

Mazda is known for its stylish and sporty sedans and SUVs, and has been focusing on developing more fuel-efficient gasoline engines.

Toyota has declared that it plans for all of its vehicles to be zero emission by 2050 and in 2016 had set up a division to develop full-sized EVs.