TOKYO -- Toyota and Subaru will work on a second generation of their shared rear-wheel drive sporty coupe and collaborate more closely on other projects under a new agreement that raises Toyota's stake in the smaller Japanese automaker to 20 percent.

Under the accord Subaru will also take a small token stake in Toyota to help cement their deepening ties.

Toyota already owns a 17 percent share of Subaru, while the smaller partner currently has no stake in Toyota.

The companies said they would collaborate more closely on a wide range of next-generation technologies, including safety and electrification systems.

Toyota President Akio Toyoda said teaming up on technologies such as sports cars and all-wheel-drive vehicles will help the companies keep their cars fun to drive in an age of automated driving.

"During this once-in-a-century period of profound transformation, driving enjoyment will remain an inherent part of automobiles and is something that I think we must continue to strongly preserve," Toyoda said on Friday in a news release.

Among the plans, Toyota will expand its supply of hybrid drivetrain systems to a wider range of Subaru vehicles. It currently supplies the drivetrain for the Subaru Crosstrek Hybrid.



The partners will also expand their development of all-wheel-drive technologies, leaning on Subaru's expertise in that field.

Another joint project they reaffirmed in the cross-shareholding announcement: the development of a next generation of their rebadged sporty small car, the Toyota 86 and Subaru BRZ.

The Toyota alliance with Subaru dates to 2005, and it has expanded recently to include the joint development of an electric-vehicle platform and an upcoming all-electric crossover.

Toyota is by far the larger manufacturer, with 10.6 million cars and trucks produced in 2018. Subaru made 1 million vehicles last year, a 5 percent decline and the first drop in seven years.

Subaru, which produces the Outback and Forester crossovers, is known for its horizontally placed boxer engines, along with its EyeSight autonomous driver assist and all-wheel-drive technologies.

In recent years it has departed from selling cars as high-performance machines, marketing them instead as lifestyle products using an approach which has been successful in the United States, its biggest market.

Automakers around the world are joining forces to slash development and manufacturing costs of new technology.

Traditional car companies, especially smaller ones such as Subaru, are struggling to meet the fast pace of change in an industry which is shifting to a business model of providing transportation services from simply selling cars to drivers.

Ford Motor Co. and Volkswagen Group have said they will spend billions of dollars to jointly develop electric and self-driving vehicles.

Friday's deal cements Subaru's place in Toyota's expanding group of Japanese partners, which include Mazda Motor Corp. and Yamaha Motor Co.

Toyota seems to be keen on investing in smaller, domestic automakers, rather than forging cross-border tie-ups like some of its rivals.

The partners will also expand their development of all-wheel-drive technologies, leaning on Subaru's expertise in that field.

WASHINGTON — Toyota is investing $210 million to expand engine production in West Virginia and add 100 new jobs.

The Japanese automaker said it would boost capacity by 70,000 engines a year at the Buffalo, West Virginia plant, up from the nearly 1 million transmissions and engines it produces annually for vehicles assembled in North America.

The investment will increase assembly capacity of its four-cylinder engine line. The plant makes four- and six-cylinder engines for Avalon, Camry, Corolla, Highlander, Lexus ES, Lexus RX350, RAV4 and Sienna.

The investment comes as automakers around the world are shifting more focus to electric vehicles and away from vehicles powered by internal combustion engines.

Toyota says hybrid vehicles, which includes internal combustion engines, will be a key part of its vehicle strategy in the coming decade as other automakers focus more heavily on battery electric vehicles, which only run on electric power.

Toyota said last week that 16% of its U.S. sales were hybrid vehicles in 2020, a figure that will jump to at least 20% in 2021.

ToyotaMotor outsold General Motors in the U.S. for the first time ever during a quarter and is expected to be America’s best-selling automaker.

The Japanese automaker on Thursday reported sales of 688,813 vehicles in the U.S. from April through June. That compares to GM at 688,236 vehicles during the second quarter. Toyota beat analyst expectations, while GM slightly missed forecasts.

The shake-up was caused by a global chip shortage that has significantly hampered vehicle production. Japanese automakers, specifically Toyota, have been able to manage the crisis better than their American competitors.

“They’ve kind of defied gravity the last couple of months,” Cox Automotive senior economist Charlie Chesbrough said. “We’re tracking them having very weak inventories out there and yet their sales have actually held up quite well. … We’re really kind of surprised by Toyota’s strength, and having a decent quarter relative to some of the competition.”

The only way Toyota won’t take the mantle as the top-selling automaker is if Ford Motor, which reports sales Friday morning, significantly beats analyst’s sales expectations of 645,000 vehicles during the quarter. Ford previously said it expected to lose half of its production during the second quarter due to the chip problem.

The last time GM wasn’t the best-selling automaker for a quarter in the U.S. was when Ford outsold them during the Great Recession in the third quarter of 1998, Edmunds reports.
Jessica Caldwell, executive director of insights at Edmunds, said Toyota is known for seeing far into their supply chain and has more experience managing lower inventories. She expects there could be major swings in U.S. market share this year due to the parts shortage.“I would definitely expect a bit of a change in some of the market share,” she said. “Toyota has done really well, the Asian brands overall have done pretty well.”

In May, Reuters reported that Toyota was stockpiling semiconductors chips, which are critical for modern vehicles, and was not seeing any major short-term impact from the chip shortage.

Toyota declined to comment specifically on the sales achievement but released the following statement: “We are grateful to our loyal customers for putting their safety and trust in Toyota and Lexus vehicles. Our focus has always been - and will continue to be - on being the best brand in terms of safety and quality in our customers’ minds. And as part of our continuous improvement philosophy, we are always finding better ways of doing things, and ultimately make better products our customers love and trust.”

The Toyota Prius hybrid was a milestone in the history of clean cars, attracting millions of buyers worldwide who could do their part for the environment while saving money on gasoline.

But in recent months, Toyota, one of the world’s largest automakers, has quietly become the industry’s strongest voice opposing an all-out transition to electric vehicles — which proponents say is critical to fighting climate change.

Last month, Chris Reynolds, a senior executive who oversees government affairs for the company, traveled to Washington for closed-door meetings with congressional staff members and outlined Toyota’s opposition to an aggressive transition to all-electric cars. He argued that gas-electric hybrids like the Prius and hydrogen-powered cars should play a bigger role, according to four people familiar with the talks.

Behind that position is a business quandary: Even as other automakers have embraced electric cars, Toyota bet its future on the development of hydrogen fuel cells — a costlier technology that has fallen far behind electric batteries — with greater use of hybrids in the near term. That means a rapid shift from gasoline to electric on the roads could be devastating for the company’s market share and bottom line.

The recent push in Washington follows Toyota’s worldwide efforts — in markets including the United States, the United Kingdom, the European Union and Australia — to oppose stricter car emissions standards or fight electric vehicle mandates. For example, executives at Toyota’s Indian subsidiary publicly criticized India’s target for 100 percent electric vehicle sales by 2030, saying it was not practical.

Together with other automakers, Toyota also sided with the Trump administration in a battle with California over the Clean Air Act and sued Mexico over fuel efficiency rules. In Japan, Toyota officials argued against carbon taxes.

“Toyota has gone from a leading position to an industry laggard” in clean-car policy even as other automakers push ahead with ambitious electric vehicle plans, said Danny Magill, an analyst at InfluenceMap, a London-based think tank that tracks corporate climate lobbying. InfluenceMap gives Toyota a “D-” grade, the worst among automakers, saying it exerts policy influence to undermine public climate goals.

In statements, Toyota said that it was in no way opposed to electric vehicles. “We agree and embrace the fact that all-electric vehicles are the future,” Eric Booth, a Toyota spokesman, said. But Toyota thinks that “too little attention is being paid to what happens between today, when 98 percent of the cars and trucks sold are powered at least in part by gasoline, and that fully electrified future,” he said.

Until then, Mr. Booth said, it makes sense for Toyota to lean on its existing hybrid and plug-in hybrid vehicles to reduce emissions. Hydrogen fuel cell technology should also play a role. And any efficiency standards should “be informed by what technology can realistically deliver and help keep vehicles affordable,” the company said in a statement.

Last year in the United States, a group of leading automakers reached a compromise on tailpipe emissions standards with California, which sought to impose tougher emissions standards than the Trump administration wanted. Toyota didn’t join that compromise agreement.

More recently, the Alliance for Automotive Innovation, an industry lobby group, argued in closed-door meetings in Washington that the California compromise, which is expected to be a model for new standards from the Biden administration, is in fact not feasible for all of its members, according to two of the people with direct knowledge of the discussions. The chairman of the alliance is Mr. Reynolds, the Toyota executive.

The Biden administration wants to use tougher emissions rules to rapidly increase sales of electric vehicles. Congress could also approve billions of dollars for construction of charging stations as well as tax incentives for electric cars and trucks.

Don Stewart, a spokesman for the alliance, said he was unaware that any of the group’s representatives had said the California compromise was not feasible. The alliance supports standards roughly midway between what the Trump and Obama administrations had adopted, he said.

Toyota’s strategy is that, in the longer term, hydrogen fuel cell cars can still be a major technology for passenger cars, with gas-electric hybrids helping reduce emissions in the short term. However, hydrogen cars remain costlier, and hydrogen as a fuel for passenger cars isn’t widely available. Various studies have shown, meanwhile, that hybrids achieve more modest near-term emissions reductions.

Toyota, a major sponsor of the Tokyo Olympics, has used that platform to promote its message of sustainability. Hydrogen fueled the Olympic torch for part of its journey, and Toyota’s fleet of sleek Mirai hydrogen fuel cell cars have been whisking Olympic dignitaries around Tokyo.

Toyota is promoting itself as strongly backing a green transition, but in effect, it is opposing efforts that others say are crucial to a swift green transition.

(Amid mounting Covid-19 concerns, Toyota canceled its Olympic-related advertising in Japan.)

Toyota’s lobbying also comes as the Japanese automaker’s political donations have come under scrutiny. Last month, the nonprofit watchdog Citizens for Responsibility and Ethics tallied campaign contributions and found that Toyota was the largest corporate donor by far this year to Republicans in Congress who disputed the 2020 presidential election result.

According to a New York Times analysis, at least 22 of those lawmakers have also denied the scientific consensus on human-caused climate change.

Toyota initially defended its contributions, then changed course, saying it would halt its donations.

Mr. Booth, the Toyota spokesman, said Toyota believes climate change is real. “The opinions expressed by members of Congress are just that — their opinions and theirs to be accountable for,” he said. He also noted that politicians who hold such beliefs have received contributions from other automakers as well.

The findings surprised some longtime auto industry experts. Toyota has generally kept a low political profile but has recently become a major donor and lobbying force in Washington.

“They really were on the right path, especially with the introduction of the Prius, and they still talk about climate change,” said Margo T. Oge, former director of the Office of Transportation Air Quality at the Environmental Protection Agency. “But they’re fighting policies for electric vehicles across the globe, and that’s hurting the effort of policymakers in setting any ambitious measures.”

On paper, Toyota’s approach to zero-emissions vehicles, the hydrogen fuel cell, is a dream: Unlike battery-powered electric vehicles, these cars carry hydrogen tanks and fuel cells that turn the hydrogen into electricity. They refuel and accelerate quickly, and can travel for several hundred miles on a tank, emitting only water vapor. And hydrogen, theoretically, is abundant.

But a high sticker price, as well as lack of refueling infrastructure, has hampered the growth of a hydrogen economy, at least for passenger cars.

Toyota has sold only about 11,000 of its Mirai fuel cell cars since introducing the vehicle in 2014. Honda, another hydrogen pioneer, said recently that it was killing its hydrogen model. Many analysts say that hydrogen technology is more suited for long-haul trucks or for use in energy-intensive industries like steel manufacturing.

“I think hydrogen holds promise, but it’s at least a decade behind batteries right now,” said David Friedman, vice president of advocacy at Consumer Reports and former acting administrator of the National Highway Traffic Safety Administration. “And Toyota is saying, ‘No, we’ve got to hold off, we’ve got to wait till they’re ready with hydrogen.’ But the climate can’t wait.”

Toyota also argues that hybrid technology — that is, vehicles powered by an internal combustion engine and an electric motor — is an easier first step toward fully electric cars and could help get more people into cleaner cars more quickly until hydrogen becomes widespread. Toyota has made major investments in hybrid technology as well. The company has outlined a vision for a product lineup dominated by hybrids through 2050 — far later than when many analysts say new cars must be zero-emission.

Toyota currently does not sell any electric vehicles in major markets outside China, but said in April that it plans to sell 15 battery-electric models globally by 2025, part of a wider lineup of 70 battery-electric, hybrid and hydrogen fuel cell vehicles to offer “diverse choices” to buyers.

The automaker, based in Toyota City, Japan, has begun lagging behind in fuel efficiency across its entire fleet, as it has pushed sales of larger trucks and sports-utility vehicles, which bring bigger profit margins. Environmental Protection Agency figures show that Toyota has made relatively little progress on fuel economy over the past five years, going from an industry leader to part of the bottom tier, along with General Motors and Ford.

“Toyota followed G.M. and other American automakers to produce gas-guzzling pickups and S.U.V.s in large numbers,” said Dan Becker, director of the Safe Climate Transport Campaign at the Center for Biological Diversity.

Jeffrey K. Liker, professor emeritus of industrial and operations engineering at the University of Michigan and author of “The Toyota Way,” said that there were other factors slowing Toyota’s push. A famously cautious company, Toyota has researched solid-state batteries, which are safer than the widely used lithium-ion technology, but readying that technology has taken longer than they expected, he said. Toyota has also spoken about not wanting to lay off employees or bankrupt suppliers in a rapid transition to electrics.

“Toyota’s view is also that countries are jumping in with the idea of the electric-vehicle endgame without a real plan, and it’s more political showmanship than sound planning,” Mr. Liker said.

There are several factors that could ultimately force Toyota’s hand. For one, China, an important market for Toyota, has moved aggressively to require automakers there to make electric vehicles. That has spurred Toyota to start producing electric cars under a joint venture.

Mary Nichols, who negotiated with Toyota as the former chairwoman of the California Air Resources Board, the state’s clean air regulator, said she had been surprised by Toyota over the past few years. “I think they, over the years, have produced really good technology, and that they’ve been pioneers,” she said. “But at this moment, they’ve definitely been caught flat-footed.”