Toyota And BMW Edge Closer

Today, Germany’s Spiegel Magazin reports what we suspected since last December: “BMW and Toyota edge closer.” Both, says the magazine, will “enter a close partnership that transcends the projects that were agreed in the past.”

Last December, Toyota and BMW announced “a long-term technological partnership.” Ostensibly, it was about developing batteries together, and about BMW supplying diesel engines. In March, the happy couple announced that they indeed are developing batteries, and that BMW indeed will supply diesel engines.

Toyota’s people in Europe had complained that one of the reasons for Toyota’s measly sales in Europe is the lack of diesel mills. Around half of the cars sold in Europe are oil burners. Hybrid-happy does not have the bandwidth to tinker with its own diesel engine and will buy them instead from BMW.

For hybrids and EVs, BMW currently has another alliance with PSA Peugeot Citroen. That alliance is said to be coming apart. PSA is short of money, and it entered a partnership with GM, BMW wants out. “Toyota is a leader in hybrid technology,” writes Der Spiegel, “in contrast to the financially underpowered French, Toyota has money to invest into new technologies.”

BMW needs a strong partner. Investments in new technologies need high volumes for a return in an appreciable time. BMW, or for that matter Daimler, don’t have that volume. Only a mass market manufacturer can provide that scale. Daimler cozied-up to Nissan and Renault, BMW cozies-up to Toyota.

In the new “broadened partnership” Toyota will supply hybrid systems and fuel cell technology to BMW, The Nikkei [sub] heard over the weekend. Supposedly, an announcement will come within the next days.

Toyota spokesfolk in Tokyo maintain strict radio silence when it comes to that matter, saying that they currently have nothing to say. When something is bunk, they usually say so. Toyota invited the crème of international business reporters on a plant tour in Tsutsumi on July 3rd to show how the plant deals with anticipated power shortages. It would be a handy occasion for a surprise appearance of Herr Reithofer and Toyoda-san. Just thinking …

What will BMW offer in return? The talk in Tokyo is that the Bavarians proposed to share their expertise in developing carbon fiber bodies. BMW is heavily invested in industry leader SGL Carbon. Volkswagen also bought shares. However, says the scuttlebutt, Toyota feigned disinterest, saying that it already had developed significant carbon fiber expertise in-house. Toyota has been doing carbon fiber research for nearly ten years. The Lexus LFA supercar is made from 65 percent carbon fiber and 35 percent aluminum.

However, there are many unanswered questions in the carbon fiber business, notably how to produce CFRP bodies quickly and therefore at low cost.