If you've paid attention to the news lately, you'll know that Toyota and Mazda have been working together on a few projects. Most recently it was e-Palette EV autonomous transport concept shown at CES. While that project was mostly all Toyota, Mazda made a few contributions. In addition, Toyota sells a rebadged version of the Mazda2 sedan in the US as the Yaris iA.According to a report from The Detroit Bureau, there could be more talk of a tie-up happening behind the scenes.

Of course both sides are denying anything, but there could benefits for both automakers if the right deal can be reached. For example, Mazda does not have any EVs, let alone hybrids, on the market right. Toyota can help with that. What's in it for Toyota? One possibility is Mazda's new but still in development rotary engine which can be further utilized as a range extender for electric motors. But what's really got industry analysts talking about a potential merger is the recently announced partnership between the two to build a new production plant in Alabama to build EVs.

Mazda North America CEO Masahiro Moro continues to deny anything related to a merger, but did acknowledge that "Our two companies will jointly work on electric vehicles and vehicle system. However, despite the technology partnership, Mazda intends to remain an independent company. We are driven to make cars and SUVs our way, focusing on making driving better." Mazda is still bullish with internal combustion engine technology, as we already knew. Its SkyActiv-X engine will hit the market next year and will be 20% to 30% more fuel efficient over the automaker's existing SkyActiv engines.

For the time being, Mazda is sticking with internal combustion tech, but a possible merger of any sort with Toyota would immediately give it immediate access to a host of interesting tech. Toyota could also stand to gain some expertise on that age-old emotional appeal it's long lacked.