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Toyota, Mazda to form capital tie-up for EVs, to open new U.S. plant

Toyota Motor Corp. and Mazda Motor Corp. said Friday they will
form a capital tie-up to strengthen cooperation in such areas as
electric vehicle development while announcing a plan to begin
building cars together in the United States.

The two companies said they will launch a joint venture in the
United States and to build a factory capable of producing about
300,000 vehicles per year.

Mazda will produce crossover models and Toyota will build the
Corolla for the North American market at the plant due to begin
operations in 2021.

"The new factory will be the key production plant of the
Corolla," Toyota President Akio Toyoda said. The carmakers will
invest some $1.6 billion to build the new U.S. plant and create 4,000

U.S. President Donald Trump welcomed the hiring plan, calling it
"a great investment in American manufacturing!" in his Twitter post.

Toyota and Mazda also aim to deepen their partnership,
apparently to better compete in the intensifying race to develop
self-driving technology and environmentally friendly vehicles, as
global carmakers face growing compliance costs for stricter emissions
and other environmental regulations being imposed by governments.

Toyota is aiming to enter the EV market by 2020 and Mazda aims
to start selling EVs in the United States in 2019.

"The goal in the car industry used to be who will achieve the 10
million sales threshold first," Toyoda told a press conference in
Tokyo on Friday. "But as we all know, new players, including Google,
Apple and Amazon have entered the market."

"Carmakers cannot create the future alone anymore. It is
important for us to start joining hands to compete," he said.

Mazda CEO Masamichi Kogai said at the same press conference, "We
hope to compete and cooperate with the new players...this is an
alliance of people who do not like to lose. We hope to create
leaders, generate talent and lead innovation."

Toyota and Mazda have lagged behind their rivals in developing
electric vehicles. Nissan Motor Co. already mass produces EVs after
it introduced the Leaf in 2010. Mitsubishi Motors Corp., which has
joined Nissan's alliance with Renault S.A., sells the i-MiEV electric
powered car.

The European market is shifting toward green vehicles more than
ever before. Last month, the British government said it will follow
France in banning gasoline-driven cars and diesel-powered vehicles by
2040. India is also considering allowing sales of only EVs by 2030.

Toyoda said that EVs may also be manufactured at the new U.S.

Japan's largest carmaker will take a 5.05 percent stake in Mazda
for 50 billion yen ($454 million) and Mazda will buy a 0.25 percent
shareholding in Toyota, equivalent in value to the Mazda shares.

In 2015, the two carmakers announced they would expand their
partnership to cooperate in developing environmentally friendly and
safe-driving technology.

Toyota fell to third place in global sales in the first six
months of 2017 behind Germany's Volkswagen group, with the
Renault-Nissan alliance becoming the world's top auto seller for the
first time after its addition of Mitsubishi Motors Corp.

The capital tie-up between Toyota and Mazda indicates the auto
industry could still see more reorganization in the face of tougher
competition in developing new technologies.

The influence of technology firms in the industry has also grown
with Google Inc. entering the race to develop self-driving
technology, while U.S. electric vehicle maker Tesla Motors Inc. is
showing rapid growth. Chinese rivals are also becoming a threat to

Mazda is known for its strength in design and diesel engines but
has seen slow progress in developing technologies for self-driving
cars and eco-friendly vehicles.

Through the capital tie-up, the two automakers are aiming to
cover for each other's weak points to become a leader in
next-generation technology and establish a stable revenue base.

Toyota has been forging alliances with domestic rivals in an
effort to boost competitiveness. In 2016, Toyota made Daihatsu Motor
Co., which has strength in minivehicles, a wholly owned subsidiary.
Toyota has also invested in Subaru Corp. and Isuzu Motors Ltd., while
it is currently mulling a tie-up with Suzuki Motor Corp.

On Friday, Toyota said its group net profit in the April to June
period rose 11.0 percent from a year earlier to 613.06 billion yen,
while upgrading its profit and sales estimates for the full year
through March. (Aug. 4)

Toyota Motor Corp. President Akio Toyoda (L) and Mazda Motor Corp.
CEO Masamichi Kogai attend a press conference in Tokyo on Aug. 4,
2017, as the two automakers announced they have signed an agreement
to form a capital alliance to boost joint development of electric vehicles. (Kyodo)