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Mazda Goes for Toyota Hybrid Tech

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Toyota Motors ([url=https://www.zacks.com/stock/quote/tm]TM[/url]) has agreed to provide inputs to its fifth largest domestic rival Mazda in a hybrid technology deal. Under the agreement, Toyota would supply key components of hybrid systems -- batteries, motors, control units and other electronic parts -- to Mazda.

The two automakers entered discussions about the tie-in in early 2009 in order to take advantage of a surge in the popularity of hybrid cars -- which improve fuel efficiency by twinning internal combustion engines with electric motors -- in Japan. Demand for hybrids was boosted by government incentives in the nation such as exemption from certain taxes for gasoline-electric and other next-generation vehicles for 3 years.

Over the recent years, Mazda has been struggling to carve a niche for itself in the environment-friendly and fuel-efficient vehicles market. In an effort to reduce CO2 emissions, the company has targeted to raise the average fuel economy in all its vehicles by at least 30% by 2015 compared with 2008 levels through powertrain renovations and the introduction of new platforms.

With this goal, Mazda intended to introduce highly efficient gasoline hybrid vehicles using Ford Motor’s ([url=https://www.zacks.com/stock/quote/f]F[/url]) technologies and its own systems through its strategic alliance. However, problems crept up when Ford decided to sell the majority of its 33.4% stake in Mazda in order to raise liquidity in troubled times last year. Ford currently holds only 13.8% of the company.

All these have led Mazda to seek Toyota’s help gaining access to the Green Cars market. Mazda aims to begin selling a vehicle that combines Toyota's hybrid system with its own next-generation gasoline engine in Japan by 2013.

Toyota possesses the technology that created the hybrid market by producing many sophisticated and technically advanced cars including the Prius. The company has already lent its technology to its third largest domestic rival Nissan Motors for its Altima hybrid and to Ford for its Escape hybrid.

Currently, Mazda has only one hybrid model, the Tribute SUV, which is produced by Ford using technology partially licensed from Toyota. The alliance with Toyota would enable Mazda to sell hybrids in its own name with an annual sales target of 100,000 vehicles.



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