Toyota enters business and capital alliance with Mazda, investment in PFN
Toyota Motor Corp. and Mazda Motor Corp. signed an agreement to enter a business and capital alliance with the aim of further strengthening their lasting partnership. Today's agreement follows two years of collaborative and deliberate discussions between the two companies. Specifically, the companies agreed to: 1) establish a joint venture that produces vehicles in the US, 2) jointly develop technologies for electric vehicles, 3) jointly develop connected-car technology, 4) collaborate on advanced safety technologies, and 5) expand complementary products.
Along with the aim of advancing and strengthening their long-term collaboration, Toyota and Mazda agreed to a capital alliance arrangement that preserves independence and equality for both companies. In the capital tie-up, the two companies have agreed that Toyota will subscribe for and acquire shares to be newly issued by Mazda through a third-party allotment; simultaneously, Mazda will subscribe for and acquire third-party allocation shares of treasury stock disposed of by Toyota in the equivalent amount in value to the Mazda shares. The value of the shares mutually acquired by both companies will be equivalent (the anticipated date of share acquisition is October 2).
Details of the agreement on business alliance
- Establish a joint venture that produces vehicles in the US
As part of the new alliance, Toyota and Mazda have agreed to explore establishing a joint venture plant in the U.S. with equal funding contributions. The plant would have an estimated annual production capacity of approximately 300,000 units. Pending approvals and authorization by relevant government agencies, the companies will begin to examine detailed plans with the goal to starting operations of the new plant in 2021. The plant will require a total investment of approximately $1.6 billion and will create up to 4,000 jobs. In addition to the collaboration in product and technology areas that the companies have enjoyed thus far, Toyota and Mazda intend to improve competitiveness in manufacturing through this new production collaboration.
- Jointly develop technologies for electric vehicles
With increasing demand and expectations for electric vehicles worldwide, Toyota and Mazda are to explore joint development of technologies for the basic structure of competitive electric vehicles, mobilizing and exchanging expertise freely and actively. These technologies will allow the companies to respond quickly to regulations and market trends in each country. Specific details of the collaboration will be determined as the companies work together going forward.
- Jointly develop connected technology and collaborate on advanced safety technologies
Toyota and Mazda will work together to jointly develop technologies for onboard multimedia infotainment systems in preparation for increased use of in-car information technologies and the increasing demand for connected technologies. In addition, Toyota will cooperate with Mazda in Toyota's vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) technologies with the ultimate goal of creating a mobile society devoid of accidents.
- Expand complementary products
Currently, Mazda is supplying a compact sedan to Toyota in North America. In addition, Toyota is to supply a compact commercial "two-box" van to Mazda in Japan. Beyond this, the companies will further explore the possibilities of other complementary products on a global level.
Toyota to make additional investment in Preferred Networks, Inc.
In a separate announcement, Toyota Motor Corporation and Preferred Networks, Inc. (PFN) agreed to an additional Toyota investment in PFN for the acceleration of joint research and development of artificial intelligence technologies in mobility-related fields, such as automated driving. The investment will amount to 10.5 billion yen ($95 million), and Toyota will acquire stock in PFN through the allocation of new shares to a third party. PFN’s intelligence-related technologies, including machine learning, deep learning, and big data processing, are essential to Toyota, which is actively researching and developing automated driving and other technologies.
Toyota and PFN have been working on joint research and development since October 2014, and for the purpose of strengthening the relationship, Toyota invested approximately 1 billion yen ($9 million) in PFN in December 2015. To date, the joint research and development has focused on object-recognition technology and analysis technology of vehicle information. This additional investment will further enhance the relationship between Toyota and PFN and spur joint research and development.