Collaboration on Green Car Technologies Makes Good Sense

David Sargent

Earlier this month, BMW and Toyota Groups announced that they will work together to develop lithium-ion batteries for electric and hybrid cars. In addition, BMW will supply diesel engines to Toyota in Europe. Officials from both automakers signed a MOU at the Tokyo Auto Show for mid- to long-term collaboration on next-generation environment-friendly technologies.

The cost of new powertrain technology is very high and so it makes sense for automakers to form alliances in order to share development costs. This is especially so when the two automakers concerned have complementary strengths. BMW produces some of the most highly regarded diesel powertrains, which have been extremely successful in Europe. In turn, Toyota is a clear leader in electric and hybrid powertrains. Therefore, the agreement seems to make a lot of sense.

Further, in Europe, where Lexus is not yet a major player, Toyota and BMW are generally not fighting directly for the same customers and so have little to fear from the shared technology hurting their own vehicle sales.

We should expect to see many more similar arrangements as automakers want to have all their bases covered, but are uncertain as to which powertrain technologies will be ultimately successful. Partnerships are an excellent way of having a foothold in each technology without over-committing resources.David Sargent, vice president, global automotive at J.D. Power and Associates

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