Ford Motor Co. (F) and Toyota Motor Corp. (TM) have signed a memorandum of understanding on the equal product development collaboration in order to develop a gas-electric hybrid engine for pickup trucks and sport utility vehicles (SUVs). However, both the automakers would retain the uniqueness in their products.
The automakers have decided to sign a definitive agreement next year that would lay out timelines to develop the technology. They expect to market the product by the end of this decade.
The development of electric hybrid engines would help both the companies meet stringent fuel economy and pollution standards in the U.S. and elsewhere in the near future. The U.S. fuel economy standards require vehicles to deliver 56.5 miles per gallon (mpg) by 2025.
Both the automakers have targeted pickup trucks for the project as they are the big sellers for both the companies.
Ford’s popular F-150 pickup trucks have a six-cylinder turbocharged engine that gets an estimated 16 mpg in the city and 22 mpg on the highway, while six-cylinder Tundra gets 16 mpg in the city and 20 mpg on the freeway. Therefore, both the products need to be developed in terms of fuel-efficiency in order to meet U.S. fuel economy standards.
Both the automakers are also looking forward to develop systems that would link smartphones with cars and trucks. However, they would each retain their own touch screens and unique systems in their dashboards in the vehicles.
Toyota occupied the No.1 spot in hybrid offerings since it introduced the Prius sedan (which has front-wheel drive) in 1997. Since then, the automaker sold more than 3.3 million hybrid vehicles to date.
The automaker even helped Ford to use hybrid systems in the Ford Escape SUV in 2004 by licensing its technology. However, the latter no longer uses Toyota’s technology or hardware in its products.
However, Toyota is lagging behind other automakers in terms of on-board navigation and entertainment systems. Therefore, the partnership will help the automaker fill that gap as Ford has already pioneered in that technology by introducing the highly acclaimed Sync system.
Toyota has also partnered with Tesla Motors Inc. (TSLA) to collaborate on producing electric vehicles based on its small SUV RAV4.
The deal comes at a time when Toyota is struggling with waning sales in the U.S., its most important market, due to the production disruptions resulted from the twin disaster in Japan. It has already lost its No.1 position to GM in terms of sales. In the first seven months of the year, its sales fell 7% in the U.S.
On the other hand, Ford’s sales increased 12% in the U.S. in the first seven months of 2011. The automaker expects to incorporate hybrid or electric powertrains in 10%–20% of its vehicles by 2020.
FORD MOTOR CO (F): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment