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Ford, Toyota Unite on Hybrid Truck, SUV System

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August 23, 2011 by   Leave a Comment

An unusual pairing of major auto makers is seeking to develop a gas-electric hybrid system for light trucks and sport-utility vehicles, a move to share the cost of new technology as both work to achieve the latest U.S. fuel-economy targets set by the Obama administration.

As reported by the Wall Street Journal, Ford Motor Co. and Toyota Motor Corp. on Monday signed a memorandum of understanding on the collaboration, with a formal agreement expected to be signed next year. If an agreement is reached, Ford and Toyota would co-develop a hybrid powertrain system for larger, rear-wheel-drive vehicles such as big pickup trucks and SUVs.

Both companies already have hybrid systems that power front-wheel-drive passenger cars such as the Ford Fusion and the Toyota Prius, the top-selling hybrid in the U.S.

The Obama administration’s new fuel-economy requirements—known as the corporate average fuel economy, or CAFE—call for auto makers to produce a fleet of vehicles that averages 54.5 miles a gallon by 2025, from the current level of 27.6 miles a gallon. Under the administration’s plan, auto makers that offer hybrid pickup trucks can earn credits that make it easier for them to reach the higher target.

“Why now and why these companies is a reflection of the way CAFE standards are heading,” Barclays Capital analyst Brian Johnson said in an interview. “The simultaneous regulatory requirements to cut emissions, combined with the need to keep capital expenditures in line, means engineering is now getting ahead of company egos. We will see more of these partnerships in the future.”

WSJ reported that Ford and Toyota need to move quickly to develop fuel-saving technology for larger vehicles. General Motors Co. already has hybrid cars and a hybrid version of its full-size trucks on the market. It pushed the administration to allow credits for hybrid trucks, according to people familiar with the matter.

“The [Environmental Protection Agency] requirements are a big challenge for us auto makers,” Toyota research and development chief Takeshi Uchiyamada said during a news conference at Ford’s headquarters. “American society can’t do without trucks and SUVs. This collaboration we are forming with Ford is not only about lowering carbon dioxide but making trucks and SUVs more affordable for the customer.”

Toyota initially resisted the Obama administration’s new fuel-economy and emissions requirements, the people familiar said. The company argued that exceptions for full-size trucks benefited Detroit auto makers, they said. Toyota later supported the administration’s move to raise the standards.

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