Biz / Auto

Toyota and Mazda agree to collaborate on new US plant and new tech

Toyota to take 5 percent of Mazda Motor Co, set up joint venture to make cars in US and develop tech on electric cars

Toyota Motor Corporation President Akio Toyoda (left) shakes hands with Mazda Motor Corporation President and CEO Masamichi Kogai prior to their joint press conference at a hotel in Tokyo on August 4, 2017. Japanese auto giant Toyota and smaller rival Mazda said on August 4 they agreed a capital tie-up to focus on joint development of electric vehicles, while building a 1.6 billion USD factory in the United States which will create up to 4,000 jobs.

Toyota Motor Co plans to take a 5 percent share of Mazda Motor Co and establish a joint venture to produce vehicles in the United States.

The two companies will invest US$1.6 billion to set up the new plant in the US to make cars to meet the growing demand of the North American market. The agreement, sealed after two years of talks since May 2015, will also envisage the two automakers to jointly develop technologies on electric vehicles and connected cars.

Toyota and Mazda said the plant is expected to produce 300,000 vehicles annually and create up to 4,000 jobs. The new plant is set to be operational in 2021.

"This plant will build a production structure to further grow in North America," a statement from Toyota said.

Toyota intends the new plant to produce the Corolla model for the North American market and Mazda expects to produce cross-over models for the market.

The two companies said they will jointly develop technologies for electric vehicles. Toyota will also cooperate with Mazda in the former's connected vehicles such as vehicle-to-vehicle and vehicle-to-infrastructure technologies.

“Through this alliance, we can help to energize the auto industry by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders, " said Masamichi Kogai, president and chief executive officer of Mazda Motor Co.

"The plan to build a new plant in the US looks rational given that sport-utility vehicle capacity is tight at both companies and protectionism concerns remain. Also, amid signs that overall US auto demand has peaked, building a plant via a joint venture will reduce the risk for both companies," CNBC reported, citing a note from Citi.

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