UPDATE: Toyota, Mazda Confirm U.S. Factory

Toyota Motor Corp. and Mazda Motor Corp. confirm earlier reports that they have formed an equity partnership to build a new jointly operated assembly plant in the U.S.

Toyota is buying a 5% stake in Mazda, which is issuing new shares for the transaction. Mazda will acquire 0.25% of Toyota. The deal builds on two years of collaboration between the companies.

Under the new agreement, the carmakers will jointly develop connected-car and electric car technologies, collaborate on advanced safety systems, expand “complementary” products and jointly operate a new factory in the U.S.

The planned $1.6 billion plant will open in 2021 somewhere in the South with annual capacity to make 300,000 vehicles. The facility is expected to employ some 4,000 workers.

The new factory will be equally funded by the two carmakers. Its output also will be equally divided between the Toyota Corolla sedan and a Mazda crossover vehicle new to the North American market.

Toyota says about 70% of its sales in the U.S. already involve locally produced vehicles. Mazda currently supplies the market with cars made in Japan and Mexico. Mazda’s Mexican facility in Guanajuato also makes Yaris minicars for Toyota.