The plant, which will open in 2021, will have the capacity to assemble 300,000 vehicles, according to Reuters Friday. However, as Mazda mainly builds cars in Mexico and Japan, it should help the brand save some dosh when it comes to the threat of further import duties threatened by current US President, Donald Trump, too.
In a joint statement, the two brands said that they will both buy 5 percent of shares in the other company's shares, and will together develop "technologies for electric vehicles", connected technologies, and "advanced safety technologies". It'll be the home for Toyota's Corolla for North American sales, as well as new Mazda crossovers.
Toyota, which previously announced it will invest $10 billion to build vehicles in the United States, said Friday that trucks will be made in Guadalajara, and Corollas in the United States. Just prior to taking office, he took to Twitter to threaten Toyota with a "big border tax" if the company built a factory in Mexico.
Toyota and Mazda are forming a capital alliance and splitting the cost for the plant equally.
Both parties would also be cooperating on electric vehicles. Mazda has not made cars in the USA since a joint partnership with Ford unraveled earlier this decade.
It also comes after Toyota and other vehicle companies vocally opposed Trump's plans to pursue sweeping changes to the North American Free Trade Agreement, which bolstered Mexican manufacturing. "Build plant in USA or pay big border tax".
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Limiting legal immigration is opposed by business groups, which rely on low-skilled workers for agriculture and other jobs. The bill would only allow for spouses and young children to emigrate to the USA and join their green card-holding sponsor.
In that respect the deal resembles the global alliance between Japanese automakers Nissan and Mitsubishi and French automaker Renault.
Mazda also stands to gain a production stake in the United States, which is its biggest market.
But since January, Trump has praised Toyota for its USA investments. It is expected to produce the Toyota Corolla and a Mazda SUV.
Toyota Motor Corp raised its full-year profit forecast by 16 percent on Friday, citing expectations of a weaker yen, after posting a smaller-than-expected drop in quarterly profit.
Toyota said it is assuming an average USA dollar rate of 110 yen and euro rate of 124 yen for the year, compared to earlier estimates of 105 yen and 115 yen, respectively.