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Toyota takes stake in Mazda, links up for $1.6 billion U.S. plant

TOKYO - Toyota Motor Corp said on Friday it planned to take a 5 percent share of smaller Japanese rival Mazda Motor Corp, as part of an alliance that will see the two build a $1.6 billion U.S. assembly plant and work together on electric vehicles.

The plant was a surprise for investors at a time of cooling U.S. sales, but marked good news for U.S. President Donald Trump who came to office on the back of promises to bring back manufacturing and jobs for U.S. workers. He commented on Twitter that it was a "great investment in American manufacturing".

The plant, whose location is not yet public, will be able to produce 300,000 vehicles a year, with production divided between the two automakers, and employ about 4,000 people. It will start operating in 2021.

Analysts said the plan was more than a political ploy. The alliance is also an attempt to catch up with rivals in the race for electric car technology, as tighter global emissions rules loom, along with the entry of new players into the market.

"There will be new rivals appearing - Apple, Google - these are IT companies, we also need to compete with them, too," Toyota President Akio Toyoda, grandson of the company's founder, told a news conference in Tokyo.

He was appointed last year to lead Toyota's newly formed electric car division, flagging the group's commitment to a technology it has been slow to embrace.

"What's different from the past is that there are no nautical charts for us to follow. It's without precedent," he said of the push into alternatives to the internal combustion engine.

Other traditional automakers such as Daimler and BMW are also weighing how best to work on new, disruptive technology, from electric vehicles to autonomous driving, that require hefty investment and have turned firms like Google and Tesla into