What does the Toyota-Mazda partnership mean for shoppers?

August 7, 2017

Last Thursday, we reported on a rumored partnership between Toyota and Mazda involving a shared plant and collaboration on electric vehicles. 

The following day, Toyota confirmed that the rumors were true and provided additional details about the tie-up, including: 

1. Plans for a joint manufacturing facility: Per the agreement between Toyota and Mazda, the two automakers will "explore establishing a joint venture plant in the U.S." That's not the same as confirming that they're shacking up tomorrow, but it's a commitment, to be sure.

If all goes according to schedule, the shared plant will cost $1.6 billion (split evenly between the two automakers) and create 4,000 jobs. It's slated to open in 2021 and have an annual production capacity of 300,000 vehicles. The Mazda-branded models rolling off the assembly line will be crossovers targeted at North American consumers, while Toyota plans to use the factory to build Corollas.

2. Tacoma production shifts to Mexico: Toyota is already in the process of building a new factory in Guanajuato, Mexico, where it had intended to manufacture the Corolla. To streamline distribution and management efforts, though, the company has re-evaluated that plan, moving Corolla production to the U.S. Now, the Tacoma pickup will be made in Mexico.   

3. Joint development of electric vehicle technology: You know it, we know it, Sergio Marchionne knows it: to remain competitive in the rapidly changing world of automotive tech, car companies need to collaborate. That's especially true when it comes to electric vehicles, which require developing new, energy-efficient technologies and rethinking decades of auto engineering. Toyota has done plenty of work in the field of electrification, most notably with its lineup of Prius hybrids. Mazda hasn't been so enamored of electric cars, but with Toyota's help, it could catch up quickly.

4. Collaboration on auto safety initiatives: Two of the biggest developments in the field of safety tech are vehicle-to-vehicle and vehicle-to-grid communications, which allow cars to talk to one another, to stop lights, and other infrastructure elements. Paired with self-driving technology, V2V and V2G could play a huge role in making roads safer for motorists and pedestrians alike. Before that can happen, though, the technology needs to be developed, and the more collaboration there is on that front, the faster we're likely to see it deployed. 

5. Continued efforts to complement one another's product line-ups: The nice part about partnerships is that automakers are often able to take another company's model and rebrand it as their own. (For example, Mazda's partnership with Ford yielded the Mazda B-Series pickup, which was a rebadged Ford Ranger.) Toyota and Mazda already supply vehicles to one another, and although the new deal has no details about what they'll do for each other in the future, they say that they'll "further explore the possibilities of other complementary products on a global level."

6. Ownership stakes in one another: As part of the tie-up, Toyota will acquire a 5.05 ownership stake in Mazda. Mazda will acquire shares in Toyota, too, though its stake will be lower, at around 0.25 percent. 

What does all that mean for you?

It's not unusual to see companies partnering on various projects. In fact, Toyota in particular has a long history of doing just that--think of the Tesla Factory in Fremont, California, which used to be the NUMMI plant where Toyota and General Motors built vehicles side-by-side. Or consider Toyota's partnership with Subaru, which yielded the twin sportscars known as the Subaru BR-Z and the Toyota 86 (formerly, the Scion FR-S)

That said, a partnership of this size and scope is a little unusual, and it could have big payoffs for consumers like...

1. A wider array of electrified cars: The cars that Toyota and Mazda build at their hypothetical new plant may or may not be full electric. However, there's a good chance that they'll be electrified to some degree--perhaps light hybrids, perhaps plug-ins with range-extending combustion engines. And if they are, they'll almost certainly broaden the array of choices that consumers have when it comes to electrified cars. Paired with the lower EV prices expected down the road, that'll make the vehicles more attractive and eventually broaden their market share.  

2. Speedier deployment of V2V and V2G technology: V2V and V2G are major developments in the auto industry, but like all tech advances, there are differing ideas about which path they should take. (Remember the VHS vs. Beta battle? Or Blu-Ray vs. DVD?) By getting two of the world's major automakers on the same page, it may encourage other companies to fall in line so that this technology can finally hit the road. 

3. More Mazdas on the road: Mazda may be a popular brand, but its sales can't compare to those of Toyota: as of July 31, Toyota had sold nearly 1.4 million vehicles in the U.S. for 2017, while Mazda had sold 169,000. Not only will this partnership improve Mazda's production capacity in the U.S., but it will almost certainly provide a new model or two that have greater appeal for American consumers. 

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