Toyota And BMW Sign Formal Development Pact That Can Develop Into More

Just married: Toyoda, Reithofer

Ever since Toyota and BMW started their trial marriage a year ago while sharing secrets and the occasional good time, things went very well for the Japanese/Bavarian couple. Japanese and Bavarians (and I can say that from years of experience) love to have fun, but also are stickler for form. In summer, the happy couple was formally engaged via a Memorandum of Understanding. In the rural parts of old style Bavaria and old style Japan, formal marriage often did not commence until there was proof that the arrangement would indeed be fruitful. With successful fertilization having been achieved, today, papers were signed for a formal and official alliance between Toyota and BMW.

Here is the proof. Ihara, Uchiyamada, Toyoda, Reithofer, Diess, Fröhlich

While CEOs Akio Toyoda and Norbert Reithofer went off doing whatever CEOs do after they signed marriage vows, their best men gave a press conference in Nagoya that was beamed to Toyota’s auditorium in Tokyo. On Toyota’s side, Yasumori Ihara represented the management, Takeshi Uchiyamada spoke for the board and the future. On the Bavarian side, technology, strategy, and future were well represented by Klaus Fröhlich and Herbert Diess.

When Diess started talking in a Bavarian-tinged English, it quickly became clear that yesterday, the Nikkei was asleep at the wheel when they wrote that there would be just hydrogen-powered news today. I also realized what the always polite Toyota spokesfolk meant when they yesterday advised to be careful with some facts in the Nikkei story. It quickly turned out that hydrogen is only a small part of the story. Toyota and BMW formally joined forces to:

• Jointly develop a mid-size sports car
• Jointly develop lightweight technology
• Jointly develop a lithium-air battery
• Jointly develop a fundamental fuel-cell vehicle system

As far as the sports car goes, it will be a combination of “Toyota’s environmentally friendly hybrid and fuel cell technology, and an efficient and highly dynamic premium vehicle from BMW,” said Diess. I am sure the Japanese will want to contribute a little more. They remained poker-faced when Diess made that underhanded swipe at vanilla cars.

A lot of the lightweight technology will come from BMW. BMW invested a lot in carbon fiber and carbon fiber specialist SGL. Toyota also can look back on many years of hands-on CFRP experience with the Lexus LFA. However, I am hearing that the CFRP shop in Motomachi is being mothballed, and that the leaders of the LFA group will sit out the years before retirement doing customer support for 500 LFAs. The challenge of CFRP is how to scale the technology. “If composites can be brought to market at affordable prices, it will change the future of cars,” said Uchiyamada. Prices will come down when composites master the challenge of mass production, and in that regard, there is no bigger mass than that produced by Toyota.

The lithium-air battery is a very promising technology “towards which” Toyota and BMW will work together. As Uchiyamada explained today, this battery will have Lithium as an anode, and air as the cathode. This way, the battery can be nearly all anode, the cathode comes courtesy of the surrounding air. This promises “a very high capacity battery” if the battery will ever be commercialized. Uchiyamada was cautious.

Fuel cell vehicles were praised by Uchiyamada as “the ultimate eco car.”

“Fuel cell vehicles run on electricity produced from hydrogen on board and from oxygen of the air. All that comes out of the exhaust pipe is water. On a full tank, a fuel cell vehicle can travel as far as, if not farther than a conventional gasoline engine vehicle. Refueling is just as quick and easy as in a gasoline powered car.”

There is just one nasty drawback, says Uchiyamada:

“Costs are still high. They need to come down for fuel cell vehicles to gain widespread use. This will take a lot of time and money.”

I am known to be a skeptic when people think they can become a carmaker by spending a few hundred million. (Or less, I am looking at you, Victor Muller.) If that’s all they have, it will be lost. (I am looking at you, Victor Muller.) The challenges of the future are so high and so costly that even two of the most profitable car companies in the world must join forces to share the momentous expense and their best brains. According to Diess, “this is the most important time in the history of our industry. Car companies, design and manufacture will be changed in ways which were previously unthinkable.” With that change also come heretofore unthinkable investments.

No old-style cross-share holdings are involved. There are none between the Renault/Nissan Alliance and Daimler, and there won’t be any between BMW and Toyota. “We don’t need a capital relationship,” said Diess. “We already have a common interest.”

Ihara, Uchiyamada, Diess, Fröhlich

A year ago, TTAC predicted that out of this Japanese/Bavarian relationship more will come than just the then announced batteries and diesel engines. Already it does, and there is more to come. Uchiyamada stressed that this is not an alliance “for the supply of parts. This is about development” and it is a developing relationship.

Both the Japanese and the Bavarian sides don’t stop mentioning that they have found the perfect partner and that there are “very close relationships.” Diess praised Toyota as “by far the most competitive and most productive car company worldwide,” an ideal combination with BMW’s “emotional cars, the fun of driving and sheer driving pleasure” that comes with them. Rub it in, Herbert, rub it in.

Uchiyamada vowed that “we are going to work together, we will develop new technology, work on a new breakthrough. Development needs a long time and total trust,” and that he has that in BMW.

I am glad to see another happy Japanese/Bavarian couple, and I hope they will be fortuitous where this couple failed so far: In the production of many happy offsprings.