Toyota, Mazda tie-up comes as EV, self-driving vehicle competition heats up

An agreement by Toyota Motor Corp. and Mazda Motor Corp. to form a capital tie-up comes largely due to the sense of crisis they have over intensifying competition across industrial sectors in developing next-generation technologies such as electric vehicles (EVs) and self-driving cars.

Toyota led the industry in developing hybrid vehicles (HVs) but is lagging behind in EV development. It is poised to develop EVs jointly with Mazda through the tie-up to secure competitiveness in that field.

As regulations on environmental protection standards are stiffened across the world, the competition in developing EVs is expected to further intensify.

"New players, including Google, Apple and Amazon have entered the market. Automakers alone can't create the future," Toyota President Akio Toyoda told a news conference on Aug. 4, emphasizing that information technology-related businesses have a huge impact on the automobile industry.

Particularly close attention is focused on the joint development of EVs between Toyota and Mazda. In 2010, Toyota formed a capital and business tie-up with U.S. EV manufacturer Tesla, Inc. However, Toyota was not proactive in developing and selling EVs, as is shown by the fact that Toyota abandoned an increase in production of a sport utility vehicle they had jointly developed.

Behind Toyota's passive attitude toward EVs was its wariness that the spread of EVs could cause cataclysmic changes to the automobile industry.

"The competitiveness of EVs depends solely on the performance of batteries mounted on such vehicles. If engine-making technology were no longer necessary, cars could end up as commodities, just like electric appliances," a board member of Toyota said.

Car manufacturers have the upper hand in technology to create gasoline engines, and the spread of EVs could cause these companies to lose their own advantage.

However, technological innovation involving EVs has advanced at a far higher speed than Toyota executives had imagined.

The performance of batteries for EVs has advanced year by year and Tesla's EVs enjoy high popularity mainly among the wealthy class. Google, which is stepping up efforts to develop artificial intelligence (AI), the core of self-driving technology, aims to enter the automobile industry. Competition in developing EVs is accordingly intensifying across industrial sectors.

Self-driving technology is more suited to EVs, as an executive of one major automaker puts it. This is because self-driving technology requires prompt judgments on acceleration and braking, and EVs are quicker to react to commands.

Moreover, car-sharing has been increasing throughout the world with the rise of Uber Technologies Inc. in the United States and other firms.

As such, "cars are rapidly transforming from something that one owns into something that one uses," an automobile analyst says. The automobile industry is increasingly worried about future car sales.

Under the circumstances, Toyota set up a new company to conduct research and development of AI in Silicon Valley in January last year, stepping up efforts to develop EVs.

With the goal of putting its own EVs on the market by 2020, Toyota went ahead with a capital tie-up with Mazda. "We need to make friends in developing next-generation vehicles," a Toyota executive said.

Mazda, for its part, is aiming to put its own EVs on the U.S. market in 2019. However, since the burden of costs and personnel is too heavy for Mazda, the company urged Toyota to jointly develop such vehicles.

Toyoda displayed his sense of crisis over intensifying competition at the news conference. "An unprecedented battle without a chart is underway," he said.

As the situation of keen competition for EV development, which also involves the IT industry including Google and Uber, is constantly changing, there is not much time left for Toyota, which had a late start in this field.