Toyota Decides to Share Engine technology with Rivals

Toyota has developed several pioneering electric engine technology but had never shared its secrets with competitors. In a surprise move, the company has decided to make its powertrain technology open to all in a bid to boost sales of electric vehicles and expedite the shift to low-emission vehicles among consumers.

The Japanese automotive manufacturer revealed last week that it would be expanding its focus on development of gasoline hybrid technology and would possibly sell complete powertrain modules comprising engines, transmissions and other drive components to rival auto manufacturers.

With cars becoming increasingly dependent on components that are computerized, it will be easier to design similar parts across model ranges if many companies have access to “one-size-fits-all” powertrains. There is already considerable pressure on automotive manufacturers to design and develop more long-range electric vehicles in the wake introduction of tighter norms regarding car emissions.

Many manufacturers are now standardizing mechanical parts while offering more to customers on the style and packaging fronts. Customers end up being spoilt for choice with a wide array of features to choose from ranging from automated parking to cockpit concierges.

This marks a significant style in Toyota’s strategy as the company normally retains its competitive edge by ensuring that its tightly-knit network does not share details of jointly developed technology with rivals companies.

Toshiyuki Mizushima, president of Toyota’s powertrain company, told reporters that Toyota suppliers produce a lot of technology which is only used by Toyota. For example, earlier versions of Toyota’s hybrid system could not be used in the vehicles of other manufacturers and this limited supplier’s ability to sell thesxze to other customers. Now, the company is keen to switch to a system where suppliers are involved in the development of technology at an earlier stage and they can make it available to other companies

Generally, powertrains are made of components that are made separately by different companies, but in the case of Toyota, the powertrains are made by its group suppliers and are developed jointly by engineers at Toyota and its suppliers.

Yoshifumi Kato, executive director of engineering R&D at Denso Corp, Toyota’s biggest supplier said, “Until now, we couldn’t sell the same inverter used in Toyota’s previous hybrid system to other customers because it wouldn’t fit the motor, or the voltage was different. We can avoid this issue if suppliers can sell the entire system.”

As an outcome of Toyota’s new approach, auto parts companies like Denso and Aisin which are group companies can now widen their customer base and improve their competitive edge against companies like Bosch and Continental AG.

This trend by automakers to implement more and more joint agreements with rival companies is becoming more widespread. For example, Nissan Motor Co used engines and parts developed by Mercedes for its Infiniti QX30 luxury compact crossover. Toyota signed a joint agreement with Fuji Heavy Industries to share components of the Subaru BRZ sports car.

BY making its technology more open, Toyota will be able to spread its costs on R&D, which is escalating due to the need to spend more on developing more options when it comes to self-driving cars, connected cars, and hybrid and all-electric cars. Though costs continue to escalate, automakers need to limit price increases and Toyota is hoping to earn back some of its R&D spend by sharing technology with other manufacturers. The company’s rivals who buy the technology will also benefit as they can minimize their costs for development, testing and procurement if they buy the technology from Toyota, thus creating a win-win situation for both parties.