GM And Toyota Announce Future-Vehicle Collaboration; Deny Rumor Of Pending Merger

General Motors Corp. (GM; Detroit, MI; 313-556-5000) and Toyota Motor Corp. (Toyota, Japan) have announced that they will launch a five-year collaboration to develop advanced-technology vehicles. The announcement came the day before Ford, DaimlerChrysler AG, and others were to announce a fuel-cell vehicle collaboration in California. Harry Pearce, vice chairman of GM, denied rumors of a pending merger between GM and Toyota but said that both companies are excited about the future of the collaboration.

Research Goals
Reasons For Collaborating
History Of Cooperation
Merger Talk Termed Premature

Research Goals (Back to Top)
The GM-Toyota five-year research project will focus on electric, hybrid-electric, and fuel-cell technologies. Toyota executive vice president Akihiro Wada and GM's Pearce announced the joint effort on April 19, 1999, but declined to say how much their companies would spend on the collaboration; Pearce hinted that the investment would be substantial. The companies have already identified more than a dozen advanced vehicle and system projects to undertake through the consortium. These will involve hundreds of scientists and engineers in cooperative research.

GM is the world's largest automaker; Toyota is ranked third, behind Ford Motor Co. (Dearborn, MI). The GM-Toyota agreement calls for developing:

• A common set of electric traction and control components for future battery-electric, hybrid-electric, and fuel-cell electric vehicles.
• Batteries and battery-test procedures, vehicle-safety requirements, and continued work on improved inductive charging systems for battery-electric vehicles.
• Powertrain and control systems for next-generation hybrid-electric vehicles.
• Future systems design, fuel selection, and processing to support the production of fuel-cell powered vehicles.

GM-Toyota's announcement came one day before Ford, DaimlerChrysler AG, and fuel-cell developer Ballard Power Systems Inc. planned to announce a deal with three oil companies to develop a demonstration fleet of fuel-cell powered vehicles in California.

Reasons For Collaborating (Back to Top)
Wada and Pearce stressed that while the future for advanced technology vehicles is unclear, the final technology that is adopted must be widely available. According to Pearce and Wada, the joint effort is a natural fit because GM and Toyota are already following similar research paths.

"If we are to elevate vehicles with advanced environmental technology into practical use and have these vehicles widely accepted by the public, we will have to create a trinity comprising innovative technologies, reduced costs, and an appropriate infrastructure," Wada says. "If one of these three elements is missing, we will be unable to achieve satisfactory results."

Pearce says that the deal will allow GM and Toyota to take advantage of their combined size to get the lowest prices for materials and parts, and to define technical standards for emerging technologies.

GM and Toyota have extensive experience developing advanced vehicles. GM was the first to market a modern electric car when it introduced the EV1 in 1996. Toyota brought the first hybrid to market in 1997 with its Prius gasoline-electric compact car. The Prius is currently marketed in Japan, but will go on sale in the United States and Europe in 2000. Wada says that Toyota is working to bring the price of the Prius down to about the price of a Corolla in the United States.

"Pooling our efforts should result in commercially viable advanced technologies faster and at a lower cost to our customers, and as breakthroughs are reached, suppliers will be able to count on the volume of production from two of the world's largest automakers," Pearce says.

History Of Cooperation (Back to Top)
GM chairman Jack Smith and Toyota chairman Shoichiro Toyoda have had a close relationship for more than 15 years, beginning with the creation of New United Motor Manufacturing Inc. (Nummi; Fremont, CA) in 1983. The plant makes Toyota's Corolla and Chevrolet's Prizm compact cars and Toyota's Tacoma compact pickup trucks. Toyota also markets the Chevrolet Cavalier (built in Lordstown, OH) in Japan as a Toyota product.

In June 1998, the companies agreed to develop an improved electric-vehicle inductive-charging system based on the GM Magne-Charge technology. Since the agreement was forged, the system goals have been met and sample production is under way.

"The history of our cooperative efforts is well-documented," Pearce says. "What we are announcing is the latest example of fierce marketplace competitors exploring innovative ways to approach solutions to common challenges."

Merger Talk Termed Premature (Back to Top)
Although Pearce says that it is premature to talk about a merger between GM and Toyota, he says that the companies will keep an open mind about the future of the collaboration. If the two companies should decide to merge, many believe that antitrust issues would make it difficult to complete the deal. A merged GM and Toyota would account for more than one quarter of the world's car and truck sales.

Automakers have become increasingly competitive in trying to establish themselves as leaders in environmentally friendly technology to impress Wall Street and consumers, and to attract high-tech talent.

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