The Nihon Keizai Shimbun reports that Toyota Motor and Fuji Heavy Industries, the maker of Subarus, plan to form a technology partnership for the production of hybrids. The newspaper cited no sources from either company.

Under the reported partnership, Toyota will supply its hybrid drive system to Fuji Heavy for the Subaru line in North America, which accounts for 35% of its sales.

In return, Fuji Heavy would supply Toyota with advanced lithium ion batteries for use in hybrids.

Fuji Heavy’s output of vehicles is only about 590,000—too low a volume for it to cost-effectively develop its own hybrid technology, which is the path it had been taking.

The report noted that GM is Fuji Heavy’s top shareholder, but that the hybrid technology being developed by GM and DaimlerChrysler (DCX) was focused more on large vehicles with engine displacements of greater than 4.5 liters, and “is not expected to be applied anytime soon to vehicles with engine displacements of around 3 liters, Fuji Heavy’s strength”.

Hence, the tie-up with Toyota.

If true, very interesting.

First, it sounds like a good partnership, assuming the battery technology comes through. Battery quality and  capability and key factors in a hybrid and battery supply—or the lack thereof—is a critical manufacturing bottleneck.

Second, I’m assuming that Fuji Heavy would have had talks with GM over the two-mode system under development, and that they have a fairly accurate picture of development priorities. However, the notion that the two-mode system will come out first for large displacement engines is countered by the recent introductions of an Opel diesel hybrid concept vehicle (earlier post) and the Mercedes S-Class Diesel Hybrid concept (earlier post)—both of which use early variants of the two-mode system.

So, it’s possible (pure speculation) that:

1. The GM-DCX system really won’t be ready soon enough to suit Fuji Heavy, and that the partnership with Toyota would extend only to the point at which the GM-DCX two-mode system was good to go.

2. Fuji Heavy has some concerns about the technology, prefers the Toyota system, and is using timing as a face-saving excuse.

Either way, I can’t imagine that GM would be all that pleased, since Toyota is breathing down its neck for the position of largest carmaker in the world. GM and DaimlerChrysler suggested at the announcement of their partnership that other automakers would be joining.

But, as noted above, this has yet to be confirmed by either company. Let’s see what happens.