Friday, 20 July 2012

BMW and Toyota: When foes agree to unite

The race for clean propulsion between automotive companies is well underway, and you now find cars twice as fuel efficient compared to those from a decade ago, this car being a case in point.  Small, punchy turbocharged engines are helping to achieve excellent fuel efficiency without sacrificing power.  But improving the efficiency of fossil fuel burning engines is an interim measure automotive companies are taking before eventually making a complete transition to wholly clean propulsion like electricity, solar and/or hydrogen.  100 percent clean power is the ultimate goal in this race.

Toyota got a head start on the competition in 1997 when it mass produced the world's first hybrid vehicle using a combination of petrol (gasoline) and an electric motor for motivation.  Toyota's European and American competitors were slow to the draw, but in retaliation Europe decided to develop their strength: diesel power.  The gap to the Prius is now all but closed, with several diesel cars from Volkswagen, BMW, Mercedes, Renault and even Ford matching the efficiency of the Prius.

Now diesel engines consume less fuel than petrol ones and of course electric engines consume no petrol, so the best hybrid should be one that combines a diesel engine with an electric motor.  BMW lag in battery and electric motor technology, while Toyota struggles to produce diesel engines on par with most European rivals.  So this new agreement between the two to collaborate on lithium-ion battery research and for BMW to start supplying Toyota diesel engines from 2014 makes sound business sense.  While they speak of "collaboration" on lithium-ion technology, rest assured Toyota is streets ahead in this and will be disseminating more than they receive from BMW.

This highlights how truly global the economy has become: sworn enemies from different lands can unite in the interests of patching their own weaknesses or gaining a competitive advantage over other companies.    It's early days yet, but this cross pollination of expertise and knowledge will no doubt produce benefit for both parties and result in better engines.  

Toyota can wipe off the advantage that Volkswagen and the like have in diesel by simply using a ready-made, state of the art solution from their new partner.  The two don't compete head on in most markets (even if you count Lexus as part of Toyota) and importantly their weaknesses (diesel for Toyota and  battery technology for BMW) will not cause them to fall behind other rivals.  From this joint venture a diesel hybrid effort can't be too far away and you can expect other automotive companies to start forming strategic alliances with someone that can complement their weaknesses, in order to prevent falling behind in this newly ignited race towards clean engines.



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