Toyota Forges Partnerships

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BMW announced that it has entered into a partnership with Toyota Motor Corporation as to the supply of diesel engines and the joint development of car batteries.

This comprehensive technology alliance was announced as part of the Tokyo Motor Show where the importance of green technologies is underscored. This would also properly manage the costs in the development of power trains depending on customer preferences of a varied market.

Toyota has sustained its gasoline-electric hybrid core business while keeping its top spot in the Japanese auto market. The company though has struggled in Europe where diesel power has lead fuel efficiency and compliance with new stringent environmental rules. On the other hand, BMW has great experience in the European diesel market yet has lagged behind in terms of hybrid systems and lithium ion technologies.

The partnership would entail BMW supplying Toyota with 1.6 liter and 2.0-liter engines for its European models starting in 2014. The companies would also start research and development of the next-generation lithium-ion batteries used in electric cars.

According to Klaus Draeger, member of the BMW Board of Management said, “Toyota and BMW are perfect partners. By carrying out basic research together, we want to speed up development of battery-powered technology. Whoever has the best batteries in terms of cost and function will win more customers.”

For Toyota’s part, Didier Leroy, CEO of Toyota Motor Europe said the alliance would bolster both companies efficiency, improve economies of scale, lower development costs and deliver cars to the European market more quickly. The particular provisions of the equity partnership were not made public.

This partnership came three months after Toyota announced its agreement with Ford Motor Company to collaborate on hybrid powertrain development. Toyota has kept its leadership in hybrid sales, refusing to go into production for an all-electric car citing efficiency, infrastructure and range issues. The Ford-Toyota partnership though did not discuss the inclusion on the development of battery technologies.

Toyota’s move of entering into multiple partnerships is no surprise in light of the ever-increasing fuel efficiency standards worldwide as well as the driving need to reduce the overall developmental costs of hybrids and all-electric vehicles. Particular interest is the development of battery technology as it is the most problematic of all the new vehicle technologies.

According to Takeshi Uchiyamada, Toyota’s Executive Vice President said “We think that this collaboration will allow for development of next-generation batteries to be done faster and at a higher level,” referring to the partnerships with BMW and Ford.