Toyota And BMW Play Footsie. Batteries Included

Yesterday, first media day at the Tokyo Motor Show, the press corps was chased from press conference to press conference in 15 minute intervals. Today, the Fourth Estate was looking forward to lazy strolls through the halls, snapping pictures of attractive ladies cars, when an urgent email, followed by urgent telephone calls disturbed the peace: Come to the Grand Pacific Le Daiba at 4pm, when Toyota and BMW will hold a joint press conference. The local gang knows: When these short notice calls come, drop everything and show up, it will be interesting.

Toyota AND BMW? Let’s go!

The Tokyo Motor Show was instantly sucked empty, and hundreds of journalists packed the hotel’s ballroom. Klaus Draeger, Development Chief at BMW, announced “a long-term technological partnership” between the Bavarian Motor Works and (officially, still) the world’s largest automaker. In the beginning, it will only be development of lithium ion battery cell technologies (where Toyota is leading) and the supply of BMW’s clean diesel engines to Toyota (which they need for the hybrid-skeptic European market). However, “the two companies have agreed to ongoing discussions as a way to identify other possible collaborative projects.”

Is it just a battery and diesel engine deal? It doesn’t look like it. Today, we hear that BMW and Toyota had been exchanging notes for quite a while in secret, and took a liking to each other. The engineers work well together, despite Bavarian on one and Japanese on the other side they “speak the same language.” There is mutual admiration for the partner’s engineering prowess. Said Draeger:

Does that sound like only batteries and diesel engines?

Draeger was followed by Toyota’s Exec VP Takeshi Uchiyamada. Hey stayed a bit longer to the battery and diesel script, but eventually said:

Does that sound like only batteries and diesel engines?

But wait, doesn’t BMW have a new energy collaboration with France’s PSA? When asked, Draeger has a somewhat unconvincing answer:

“The agreement we hat signed with PSA is about developing and producing today’s technology for the cars of tomorrow, meaning we are developing electric motors, we are developing electric control units and we are also developing batteries, but based on lithium ion cells which currently exist. There is a clear difference between the joint venture with PSA and the area we are entering with our memorandum of Understanding.”

Uchiyamada is asked whether any shares could change hands. A moment of silence and glances to the other men on the podium. Then:

“Currently, mutually investing and partner shares are not something that we have in mind. If we may think that going beyond this is a sensible approach, we may think about that in the future.”

No, this doesn’t sound like a battery and diesel engine deal only. The podium was filled with board members of both companies. Any higher, and CEOs would be announcing nuptials. As explained in our interviews with Toyota’s Chief Engineer Satoshi Ogiso, the future brings high demands on expensive multitrack research with no immediate payback. Premium brands are best to market these technologies, because they will be expensive in the beginning, a fact that is better camouflaged in a car that is expensive anyway. However, to bring the price down, you need scale. You need the raw millions of cars of volume makers. Renault/Nissan has partnered with Daimler Benz, ad Toyota seems to do the same with BMW. Both Renault/Nissan and Toyota are great admirers of the current success of the Germans in the premium segment, and are very much for friends with benefits.

In the morning before the press conference, Klaus Fröhlich, Strategy SVP at BMW and resident chief ideologue, took a stroll across the Toyota display with Takeshi Uchiyamada. Fröhlich seemed to like what he saw, and both exuded oodles of good chemistry.

It is a safe assumption that this battery/diesel engine deal is a test whether the great chemistry and mutual admiration have staying power. If they do, expect a further cozying up. Volkswagen and Suzuki did not work, because money changed hands first and jointness was to follow. Both Nissan/Renault and Toyota start their cooperation with cooperation.