Toyota, Mazda to build $1.6B U.S. plant, develop electric cars

Toyota to take 5 percent stake in Mazda Nikkei

A source told Reuters that the new joint venture will mean that the plant will be able to produce 300,000 vehicles a year as well as employing around 4,000 people when it is opened in 2021.

"In the past, competition [in the auto industry] was about the race to 10 million unit production, and partnerships were about scale expansion", Toyota President Akio Toyoda said at a press conference in Tokyo on Friday.

Mazda and Toyota's new US plant is estimated to have an annual production capacity of 300,000 units.

This development would be a boost to U.S. president Donald Trump, who has chastised automakers setting up shop in neighbouring countries. That's why Toyota and Mazda are now teaming up to build electric cars together. Toyota and Mazda will invest $1.6 billion to produce crossover models and Toyota's Corolla sedan in the United States starting 2021.

Toyota Motor Corp. and Mazda Motor Corp. plan to form a capital tie-up to jointly deal with stricter worldwide environmental regulations, sources said August 4.

In his Friday-morning tweets, Trump also highlighted another foreign company's recent investment in the US. Under the new deal, each firm will take a share in the other worth ¥50 billion (£345 million).

Toyota, the world's largest auto maker, already has a major manufacturing presence in the Midwest and South with factories in Indiana, Kentucky, Mississippi and Texas.

There are plans to jointly develop electric vehicle tech 'for the basic structure of competitive electric vehicles'. Mazda has not made cars in the USA since a joint partnership with Ford ended. In recent years, Japanese auto makers have shifted more manufacturing to North America to be closer to the USA market and reduce exposure to currency fluctuations. Production of the mid-size pickup truck will also continue at the current sites in the USA and Mexico.

Toyota now builds Corollas for the US market in plants in Ontario, Canada, and Mississippi.

Both Japanese automakers will take small amount of stakes in each other as part of the link up.

Neither Toyota nor Mazda would comment when asked about the joint venture.

It also gets a boost in electric cars.

Toyota said it is assuming an average USA dollar rate of 110 yen and euro rate of 124 yen for the year, compared to earlier estimates of 105 yen and 115 yen, respectively.

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