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Automobiles

Toyota reinvests in Isuzu for self-driving and EV push

Companies aim to collaborate on commercial vehicles

The heads of Japanese automakers Hino, Toyota and Isuzu held an online press conference on March 24 to announce a new partnership.

TOKYO -- Toyota Motor is to reinvest in Isuzu Motors as Japan's largest carmaker tries to step up its push into technologies such as autonomous driving and electric vehicles.

Toyota will spend 42.8 billion ($394 million) yen to acquire a 4.6% stake in Isuzu, just three years after the two domestic automakers ended a previous capital tie-up. The reinvestment is part of a new partnership that also involves Hino Motors, a Toyota subsidiary seen as Isuzu's rival.

Isuzu will buy Toyota shares worth an equivalent amount as part of the transaction.

The companies are billing the partnership as a way to combine Isuzu and Hino's strengths in commercial vehicles with what Toyota calls its CASE technologies -- standing for connected, autonomous, shared and electric vehicles.

"If Hino and Isuzu work together, they can meet the needs of 80% of customers of Japanese commercial vehicles. Toyota's CASE technology on top of it could solve problems of logistics," said Akio Toyoda, CEO of Toyota at a press conference on Wednesday. "Not only competition but co-operation has increasingly become more important than ever for better mobility."

The companies said they will establish a new entity in April to work on developing small commercial trucks powered by both batteries and fuel cells.

Toyota invested in Isuzu in 2006 to work together to develop diesel engines, but the two companies severed capital ties in 2018. The companies said at the time that they remained open to the possibility of future collaboration.

Previously "there was a mismatch, but we have talked frankly this time," said Isuzu CEO Masanori Katayama.

"After dissolving the capital relationship [in 2018], we started talking about electric vehicles and electrification," Toyoda added.

Toyoda emphasized that innovation in the car industry required the involvement of logistics companies. Passenger cars account for about 40% of total vehicle mileage and around half of carbon dioxide emissions.

Toyoda, who assumes 5.5 million people in Japan are involved in the automobile industries -- including manufacturing, transportation and gas stations -- says nearly half of those are in logistics, mostly using trucks.

Having efficient logistics networks through connected trucks would help to reduce the burden on truck drivers when Japan has a serious shortage of such workers, said Yoshio Shimo, CEO of Hino.

The partnership could help the Japanese car giant develop new infrastructure to support a city-building project. Toyota started in February to construct a smart city in Shizuoka prefecture near Mount Fuji. 

While making any synergy between passenger and commercial vehicle is challenging, both types have to be taken into account to reimagine mobility, Toyoda said.

“As we confront CASE, we have to take into account how to create safe and secure traffic when passenger and commercial vehicles are [together] in a road, especially when cars are automated,” Toyoda said. 

Toyoda also said the three companies expect to make use of hydrogen produced in a small town in Fukushima Prefecture for the development of fuel-cell trucks.

The town of Namie was shuttered for years after the region was hit by a devastating earthquake and tsunami ten years ago, due to high levels of radioactivity from the stricken Fukushima Daiichi nuclear power plant. Last year a 10-megawatt facility opened in the town to produce "green hydrogen" using renewable energy.

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