BMW and Toyota announce diesel-engine, green-technology tie-up

BMW and Toyota Motor Corp. said they will work together on green car technologies including the joint development of lithium-ion batteries. BMW will also supply diesel engines to Toyota in Europe as part of the tie-up.

The two automakers on Thursday signed a memorandum of understanding at the Tokyo motor show for a mid- to long-term collaboration on next-generation environment-friendly technologies.

They agreed on joint research in lithium-ion battery technologies for electric and hybrid cars and said they will identify and discuss other possible collaborative projects.

BMW CEO Norbert Reithofer said the automakers are joining forces to expand their innovation leadership.

"Toyota is the leading provider of environment-friendly series technology in the volume segment and the BMW Group is the most innovative and sustainable manufacturer of premium automobiles," he said in a statement.

Reithofer said supplying diesel engines to Toyota is another step in BMW's plans to expand of sales of its engines and powertrain systems.

The diesel tie-up with BMW represents a reversal in Toyota's strategy after it scrapped plans two years ago to develop 1.6-liter diesel engines with Japanese truck maker Isuzu Motors Ltd, in which it owns a 5.9 percent stake.

In 2009, when outlining Toyota's medium-term strategy, President Akio Toyoda said the company would shift its focus in Europe to hybrids and away from diesel so as not to get "lost in the crowd."

But Toyota has lost market share in Europe, partly due to a dearth of diesel cars, which make up more than half of new vehicle sales in the region. Diesel engines use less fuel and emit less carbon dioxide than gasoline engines.

Hybrid technology has struggled to gain traction in Europe and has never accounted for more than 2 percent of global sales.

BMW will supply 1.6-liter and 2.0-liter diesel engines for Toyota's European models starting in 2014.

Toyota said the agreement would allow it to expand its European product lineup.

"Fundamentally we are both engineering companies, so in many aspects we have found we speak the same language, and it is interesting to see what can be achieved when Japanese engineering meets European engineering and when the cooperation really works," Toyota Motor Europe CEO Didier LeRoy told a news conference.

Toyota has forged numerous partnerships, including with Ford Motor Co., Aston Martin, Tesla Motors and Microsoft.

By Paul McVeigh- Automotive News