Report: GM, Toyota Discuss Joint Venture That Would Produce Environmentally Friendly Vehicles

NAGAKUTE, Japan May 14, 2005; The AP reported that top officials from U.S.-based General Motors Corp. and Toyota Motor Corp. met in Japan on Saturday to discuss the possibility of setting up a joint venture to produce environmentally friendly fuel cell vehicles, a Japanese news agency reported.

The venture would allow the world's two biggest automakers to share the cost of developing fuel cell cars -- vehicles that emit no pollution because they are powered by hydrogen, which is combined with oxygen in the air and makes water as a byproduct.

Many in the industry believe fuel cells will eventually replace gasoline as the primary fuel source for cars.

GM Chief Executive Rick Wagoner, who arrived in Japan Friday, met with Toyota honorary chairman Shoichiro Toyoda at the Aichi Expo in central Japan for talks on a possible fuel cell technology tie up, Kyodo News reported.

Calls to GM and Toyota offices were not answered.

Saddled with huge health care and pension liabilities, GM lost US$1.1 billion in the first quarter. Its bonds were recently downgraded to junk status and its stock hit a 10-year low in April.

Toyota reported US$2.8 billion in profit in the same quarter and commands an edge in the market for environmentally friendly hybrid vehicles, which run on a combination of electricity and gasoline.

Toyota and GM already have a partnership that doesn't involve investment stakes in each other. They run an auto plant in California together and have exchanged research, including a 1999 pact to jointly develop environmental technology.

Toyota said earlier this year it will build hybrid vehicles in the United States, and Kyodo reported Thursday the company had picked Georgetown, Kentucky, as the production site. Company officials refused to confirm the report, Kyodo said.