An EV joint Venture Worth 1.6 billion USD Planned By Toyota and Mazda
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Toyota and Mazda have entered a business and capital alliance with the aim strengthening their lasting partnership. The plan is to spend $1.6 billion to jointly to build an auto manufacturing plant in the U.S. This move will presumably create up to 4,000 jobs.
The annual production capacity of the plant is presumed to be about 300,000 vehicles. The plans are to produce Toyota Corollas in the new plant along with a new Mazda crossover vehicle for the North American market.
Toyota hasn’t yet declared where the plant is going to be built. The probability is that the new plant will be built near Toyota’s current Corolla plant because the new plant will build the Corolla, chances are it will be located near Toyota’s current Corolla plant in Mississippi to be close to parts supply companies. The operations are expected to begin by 2021.
Toyota stated that it planned to produce Corollas at a plant in Guanajuato, Mexico, now under construction, after reassessing the market they changed the decision. Instead, it will produce Tacoma pickups there, Toyota President Akio Toyoda said.
President Donald Trump has previously denounced Toyota and other automakers for taking auto production and jobs to Mexico, saying - vehicles for the U.S. market should be built by U.S. workers. However, Toyoda denied that Trump’s views influenced his decision.
Trump welcomed the announcement in a tweet: “Toyota & Mazda to build a new $1.6B plant here in the U.S.A. and create 4K new American jobs. A great investment in American manufacturing!”
The US has seen a fall in the sales steadily low gas prices. Corolla sales fell 10 percent through July. Toyota hopes the market will have by 2021. If not, the plant will have the flexibility to shift to another model, according to spokesman Scott Vazin.
Toyota has a plan to attain 5.05 percent stake in Mazda, valued at $455 million. Also, Mazda will gain $451.7 million worth of Toyota shares, the equivalent of a 0.25 percent stake.
The companies also plan to work together on various advanced auto technology, such as electric vehicles, safety features, and connected cars, as well as products that they could supply each other.
The increasing competition from newcomers in the auto industry like Google, Apple, and Amazon, is a concern as autos seem to be turning into commodities. He praised Mazda as a great partner in that effort.
In the past, Toyota was not much active on electric vehicles part, which has a limited cruise range, however, recent breakthroughs in batteries allow for longer travel per charge. The other company that is rival to the Japanese automaker is Nissan Motor Co. allied with Renault SA of France and Mitsubishi Motors Corp. and is on the global forefront in electric vehicles. Their alliance led world vehicles sales for the first time in the first half of this year.
Friday’s announcement builds on an existing partnership. Toyota also makes the Prius hybrid, Camry sedan and Lexus luxury models are existing in the world of hybrid technology to Mazda, which makes compact cars for Toyota at its Mexico plant.
The partnership seems pretty logical since the cost-efficiency and economies of scale will be amplified. Working together on green and other auto technology is now the need of the hour with the increasing competition in the segment due to concerns about global warming, the environment, and safety.
Toyota reported its April-June profit was $5.6 billion, up 11 percent from $5 billion a year earlier. Quarterly sales rose 7 percent to $64 billion, as vehicle sales improved around the world, including in the U.S., Europe, and Japan.
Toyota kept the projection for global vehicle sales for the fiscal year ending in March 2018, at 10.25 million vehicles.