Over the decades, Toyota has developed a massive footprint of plants in the U.S. It includes factories in Kentucky, Alabama, West Virginia, Texas and in, from which it exports more than 160,000 vehicles annually to 40 countries.
The assembly site is just part of the Toyota/Mazda joint venture, with the two companies also partnering on the research and development of electric vehicles and connected auto technologies. Toyota will pay about $450 million for a 5% stake in Mazda as part of the deal, while Mazda will buy a stake of the same value in Toyota.
The plant will be capable of producing 300,000 vehicles a year, with production divided between the two automakers, and employ about 4,000 people.
The biggest news is the announcement of a new joint manufacturing plant in the USA, with the aim to start production there in 2021.
The move carries significant political implications following Trump's verbal assault on Toyota and other companies that sell foreign-made cars in the U.S. It was not immediately clear whether Trump's threats factored into the decision.
The location has yet to be decided but the source said that the plant was expected to build Toyota Corolla cars and a Mazda crossover utility vehicle. But recent breakthroughs in batteries allow for longer travel per charge.
The Japanese automakers said in a statement Friday that the facility would be operational by 2021, but did not specify where it would be built.
Toyota, which has been vying against the Japan-France alliance of Nissan-Renault, Volkswagen AG of Germany and US manufacturer General Motors Co. for the spot of world's No. 1 automaker, stuck to its earlier projection for global vehicle sales for the fiscal year at 10.25 million vehicles.
In 2015, Toyota and Mazda reached an agreement to discuss a business alliance.
After reassessing the auto industry market, Toyota has changed its strategy to make Corollas at a plant in Guanajuato, Mexico.
Toyota has been creating alliances with Japanese rivals for years.
A share of Mazda might also prevent incursions in the future by tech companies, said one industry analyst on Friday.
Mazda's sole production base in North America is in Mexico. The stats included the number of Toyota employees in America, how much money the automaker has invested in the US and how much it plans to invest stateside in the future. "Maybe Toyota realizes this", Reuters reported.