Mazda and Toyota announced a strategic economic alliance. As a result of this deal, Toyota will take 5 percent stake in the smaller company, and Mazda will get a 0.25% stake in Toyota.
The companies’ plan revolves around electric cars
The two allies plan to construct and to operate together with a new manufacturing facility in the United States. The location remains undisclosed for now. The new factory will develop a new Mazda crossover SUV, Toyota Corollas, and possible electric cars in the future.
The production at the facility will be $1.6 billion, and it will involve 5,000 workers. It is all planned to begin in 2021. The production is set to a maximum capacity of 300,000 vehicles each year.
Mazda would benefit a lot from this deal, as it currently doesn’t have any manufacturing facilities in the U.S. Mazda also lacks the necessary tech to develop electric cars on its own, and the partnership with Toyota would be incredibly beneficial.
It’s imperative to create electric vehicles to be able to compete with the manufacturers from the market in the near future.
The whole arrangement also involves strategic and political considerations as well. Mazda is well-known for building reliable cars, and it really needs a production facility.
What’s in it for Toyota?
Mazda would be an attractive acquisition for a tech company without expertise in making cars. Toyota might realize that if it buys a 5% stake, it will take Toyota off the table.
Toyota has recently built a new $1 billion in Mexico. The company was planning to build Corollas at its new factory, but instead, it decided to manufacture its Tacoma pickup trucks there.
Toyota forged other alliances with other Japanese car manufacturers; it owns 16.5% of Subaru, and it’s close to partnering with Suzuki. The company realized that it really is imperative that it jumps as soon as possible in the electric vehicle business.