Green dream trumps rivalry as car giants BMW and Toyota clinch deal

BMW and Toyota have joined forces to develop a host of green motoring technologies as car-makers face up to tougher environmental demands.

Under the deal, unveiled yesterday, the two firms will collaborate on research into a new generation of batteries for electric vehicles.

BMW will also supply two advanced diesel engine designs to Toyota, beginning in 2014, for models destined for the European market. The firms said they would identify possibilities for other projects.

Global car-makers face escalating research and development costs in order to meet tougher emissions and fuel-economy standards around the world. They must also meet varying preferences for vehicle powertrains across different regions.

Those needs have accelerated co-operation deals among car-makers, including a recent alliance between Daimler, Nissan and Renault.

Toyota said that, as a result of the agreement with its German peer, it planned to expand its European range and sell more fuel-efficient, diesel cars.

Didier Leroy, boss of Toyota Europe, said: “Fundamentally we are both engineering companies, so in many aspects we speak the same language.”

The agreement to work together on next-generation lithium-ion batteries will give BMW access to Toyota’s long experience in the field. Toyota’s research and development chief, Takeshi Uchiyamada, said the partners would divvy up the fields of research to speed up development and save costs. An equity swap may take place further down the line.

Under Toyota president, Akio Toyoda, the group has forged numerous partnerships, including with Aston Martin, Ford, Microsoft and electric car pioneer Tesla.

In February, BMW signed a deal with French carmaker PSA Peugeot Citroen – with which it already partnered on engines, including for the British-built Mini – for a hybrid technology joint venture.

Toyota executives said the discussions with BMW started in April as its European business sought to cover a weak flank in its diesel car line-up.

The Japanese firm’s decision to source diesel engines from BMW represents a reversal in strategy after it scrapped plans two years ago to develop 1.6-litre diesel engines with Japanese peer Isuzu Motors, in which it owns a 5.9 per cent stake.

Two and a half years ago, Toyoda told his first news conference that Toyota would shift its focus in Europe to hybrids and away from diesel so as not to get “lost in the crowd”.

But the group has lost market share in Europe, where diesel driven cars make up more than half of sales. Diesel engines generally use less fuel and emit less carbon dioxide than their petrol counterparts.

Last month, Toyota provided a £100 million shot in the arm for British industry as it said it had chosen its Derbyshire plant to be its sole European manufacturing centre for a new family hatchback.

It plans to take on 1,500 workers over the next two years as production is ramped up.