Japanese automotive manufacturers Toyota Motors Corporation and Mazda Motor Corporation signed on Friday an agreement on creating business and capital alliance as well as establishment of a joint venture plant worth $1.6 billion, producing vehicles in the United States, Toyotasaid in a press release.
Toyota had initially been planning to produce Corollas at its new $1bn plant currently under construction in Mexico, but this will now shift to the US.
The joint announcement from the two companies said they had agreed to enter a partnership but did not confirm that the proposed plant would be built, as the President's tweet suggested.
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. The company's Mexico plant will produce its Tacoma truck model instead.
The sheer cost of the plant also makes a partnership logical, as it boosts cost-efficiency and economies of scale. "In the past we focused on selling cars based on their performance, but for years we've been promoting our cars as something which will make our customers' lives more fulfilling", CFO Toshiaki Okada told reporters at a results briefing.
In January, Trump singled out Toyota, threatening the company with a steep border tax if it did not invest in US production.
Trump announced that his administration is working hard on tax reductions and economic reforms, also underlining that consumer confidence is at a 16 year high for a good reason.
Toyota will obtain a 5.05 percent stake in Mazda while Mazda will gain a 0.25 percent stake in Toyota.
The two companies will also work together on electric vehicle and connected technologies and new safety systems among other things.
Toyota lost its title as the world's top automaker to Volkswagen in 2016 after four consecutive years of dominance.
Indeed, the plant reached 500,000 cars faster than any other plant in Toyota history, and past year it won a coveted J.D. Power Initial Quality award.
Japanese rival Nissan Motor Co, which is allied with Renault SA of France and Mitsubishi Motors Corp, is the global leader in electric vehicles.
The two have also agreed to join forces to develop electric vehicle technology. "It has also sparked Toyota's competitive spirit, increasing our sense of not wanting to be bested by Mazda".
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