Toyota Motors and Mazda Motor have come together to build a $1.6 billion assembly plant in the United States. The two Japanese auto manufacturers announced their intentions on Friday as part of a partnership which will see the two companies join together to develop electric vehicle technologies. The two companies will take small stakes in each other's company as part of the agreement. Toyota, the world's second largest automaker in the world by volume last year, will take a five per cent share of Mazda, while the smaller partner and rival will take a quarter of a per cent share of its much larger counter part. The new plant will employ roughly 4000 people and have the capabilities of producing 300,000 vehicles annually. The production will be divided between the two auto manufacturers. The plant is expected to begin operations in 2021. The electric vehicle development cooperation agreement is not a big surprise for industry experts. As countries begin tightening their emission regulations, it has prompted many auto manufacturers to look towards battery powered cars. Battery powered technology requires a major investment and it already has intense competition.
The Toyota and Mazda agreement will also see collaboration in developing in-car information technology and automated driving functions. Toyota, Japan's largest auto company is no stranger to forming partnerships, alliances and agreements with smaller domestic rivals. Through their strategy, the company has a loose consolidation of the Japanese auto sector. The company already owns a 16.5 per cent stake in Subara, Japan's sixth ranked auto manufacturer, which they also have a development partnership with. The Japanese automaker is also in the process of courting Suzuki Motors to cooperate on R&D and parts supply. Experts feel the five per cent stake Toyota acquired in Mazda is a major gain for the company as the acquisition will no longer side line the technology heavy company and they will also be incapable of being used by a rival against them in the future. Mazda's budget of roughly $140 billion yen for R&D is roughly a fraction of Toyota's $1 trillion yen budget. Mazda has said that they lack the funds to develop electric cars on its own, a view shared by Subaru and Suzuki.