Reports indicate that U.S. states looking to land the joint car factory being built by Mazda Motor Corporation and Toyota Motor Corp (ADR)(NYSE:TM) will have to prepare an incentive package worth $1 billion at least. According to sources the two Japanese auto makers are planning to have their boards briefed on the shortlisted states which are vying for the factory in the next couple of weeks. It is expected that the final decision will be announced before the year ends.
The tax breaks as well as other incentives that Mazda and Toyota are reported to be asking for are believed to be close to what the state of Nevada offered in order for Tesla to locate its battery factory there three years ago. The electric car maker is said to have received incentives worth approximately $1.25 billion.
Job creation
In the case of Japanese carmakers, they are driving a hard bargain on the basis that the number of jobs the factory will generate could hit 4,000.
“There haven’t been any big prizes like this in a while, and there isn’t expected to be any more for some time as overall auto production plateaus. The competing states may be willing to put more on the table than they would have previously,” said Center for Automotive Research’s industry research director, Kristin Dziczek.
Mazda’s and Toyota’s shared factory, which is the first and only motor vehicle assembly facility to be announced since President Donald Trump took over, is expected to be opened in 2021. During his election campaigns Trump promised to reclaim jobs that had been lost overseas in the car manufacturing sector. He has also pressured carmakers to ensure that they do most of their manufacturing in the United States.
Crossovers and compacts
Currently all the Mazda models sold in the United States are imported. At the new assembly facility the Japanese automaker intends to produce crossovers while Toyota is expected to produce Corolla cars.
Some of the states that have shown interest include South Carolina, North Carolina, Alabama, Texas, Indiana, Ohio and Michigan.
On Friday shares of Toyota Motor Corp edged up by 0.15% to close the day at $123.38.