Japanese automakers Toyota Motor Corp. (NYSE:TM) and Mazda Motor Corp. (FRA:MZA) are reportedly planning a deal that would see them partnering on electric vehicles. Toyota and Mazda both released statements saying their directors will discuss a partnership at board meetings Friday. The companies gave no further details on the proposal.
The Japanese automakers are apparently negotiating an agreement in which Toyota will take about a 5 percent stake in Mazda, according to a person briefed on the matter. Mazda would also take a stake in Toyota in return. According to reports, the agreement will include cooperation on electric vehicle technology. Toyota and Mazda are also planning to work together to develop connected-car technologies.
The deal may also lead to the companies setting up an assembly plant in the U.S. A location for the facility has not yet been picked, but it’s expected to cost $1.6 billion and have the capacity to build 300,000 vehicles annually while employing 4,000 workers. The companies hope to open the plant in 2021.
A collaboration between the Japanese automakers would help them save money on developing electric vehicles and future technologies. A deal with Mazda would also expand Toyota’s sprawling empire, which already includes Japanese truck maker Hino Motors, minicar maker Daihatsu Motor Co. and a stake that makes it the top shareholder in Fuji Heavy Industries, the maker of Subaru cars.
Toyota and Mazda has agreed to find new areas where they can work together in 2015, but had not announced specifics. Mazda makes compact cars for Toyota at its Mexico plant and Toyota already provides hybrid technology to Mazda. Both companies also have a history are working with other automakers.
The substantial investment in U.S. manufacturing will help the automakers withstand criticism from the current administration. President Donald Trump has been urging Toyota and other Japanese automakers to invest and build more vehicles in the U.S. Early in his presidency, President Trump threatened to tax auto imports and specifically attacked Toyota’s plan to open a new plant to make Corollas in Mexico. Mazda does not currently have any factories in the U.S.
News of the potential deal resulted in Mazda shares jumping as much as 5.8 percent during Friday’s trading, while Toyota declined as much as 0.8 percent. Concerns about global warming and the environment have made electric vehicles an increasingly competitive market segment. Japanese rival Nissan Motor Co. is currently the global leader in electric vehicles.