Analysis: BMW and Toyota, Reading the Tea Leaves

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Based on the sparse amount of verbiage that came out of Munich yesterday regarding Toyota’s and BMW’s expanded collaboration agreement, you would be right to …

Based on the sparse amount of verbiage that came out of Munich yesterday regarding Toyota’s and BMW’s expanded collaboration agreement, you would be right to wonder if this is a big deal or not. It’s a big deal. In fact there were some real gems floating on the thin sheet of words.

First, a review of the guiding principles for why BMW felt comfortable expanding their collaboration with Toyota may also provide clues for why they are in the midst of concluding their collaboration with GM. Dr. Reithofer mentioned that, “Three main conditions have to be met in all of our partnerships. First, they have to be based on mutual trust and commitment. Second, they must create a win-win situation. Third, the premium character and independence of our BMW Group brands must be protected.” I doubt that the premium character or independence of BMW was at issue with the GM agreement, so look at reasons one and two for potential issues. And if you don’t have mutual trust you can never believe that both sides are winning.

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From that basis of trust, mutual benefit,and secured independence of BMW, Toyota and BMW agreed to expand their existing cooperation on EV battery R&D. They will work on fuel cells, powertrain electrification, CFRP production, and future vehicle architecture.

Toyota has the powertrain electrification and fuel cell research well in hand. BMW brings its CFRP resin transfer molding technology and flexible platform architecture to the table. It’s the word architecture, however, that resonated loudly with me on reading it. If you substitute the term,platform, for architecture it becomes apparent what is being done.

The current crop of hybrid and electric vehicles are the first generation of EVs. Much like the first generation automobiles were rehashes of carriages and bicycles (Henry Ford’s first automobile was a ‘quadricycle’), so too the current gen of EVs are stuck in another age. The second generation of the EV era will be represented by vehicles like the i3. Optimized for their drivetrains. But there’s more to be done, and incorporating fuel cells will require new designs. So this agreement may be forging the way forward for the third generation of EV architecture.

This tells me that if you expect to see a joint EV sports car from BMW and Toyota you may have to wait awhile. However, knowing that the i8s outer skin panels are simply injection molded plastic panels, it would be easy to do a Toyota specific version of the i8. It would have to be badged a Lexus (and finally there’d be a BMW that LexusLVR could love). But the i8 is well on it’s way to finalization for production so its hard to see Toyota wanting it without any input from their engineers.

What I do know is that both Toyota and BMW value engineering, highly. They both have a strong notion of corporate responsibility and value the driving experience (especially now that Akio Toyoda has taken the reigns of Toyota).

One final observation. BMW has stated on multiple occasions to anyone who will listen that they are in the business of providing personalmobility. They aren’t necessarily in the business of building great internal combustion engines, or cars and motorcycles (though they do all of that very well). They refuse to fall into that trap. And that trap has caught many companies in the past. Why is there no Union Pacific airline? Because the railroads thought they were in the railroad business, not the moving passengers business.