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Toyota and Tesla Pair for Electric Vehicle Development

18 June 2010 4,481 views No Comment

Toyota Invests $50M into Tesla Motors-


In recent months, Toyota has gotten plenty of press play, but not necessarily the kind the company wanted. The automaker recalled more than 8 million vehicles around the world due to an accelerator-related safety issue and was then levied a $16.4 million fine by the National Highway Traffic Safety Administration for not disclosing the problem with the sticking pedals in a timely fashion. Amid myriad efforts to repair its public image, Toyota has now made a significant “green” alliance with luxury electric vehicle maker Tesla. The arrangement could both infuse needed investment capital in the start-up’s bank accounts and potentially pave the way for more mainstream EVs on America’s roads. And, it gains environmental cachet for Toyota over and above the green street cred the company has already earned for being the maker of the world’s number one hybrid, the Prius. On Thursday, May 20, 2010, Toyota and Tesla announced moves that will cement a working partnership, starting with Toyota’s pledge to buy $50 million worth of Tesla common stock when the company completes its initial public offering. This investment will, no doubt, help to support Tesla’s purchase of the closed New United Motor Manufacturing, Inc. (Nummi) plant in Fremont, California. Tesla plans to use the facility to produce its Model S luxury sedan as well as additional future models. In an article for The New York Times by Jim Motavalli (May 20, 2010), Elon Musk, Tesla’s chief executive, said, “The new Tesla factory will give us plenty of room to grow.” Growth is the very thing Tesla has needed to move beyond making super-expensive electric sports cars for an elite clientlè to breaking into a broader and potentially more lucrative market. In the future, Toyota and Tesla will cooperate on the development of electric vehicles, including parts, production systems, and engineering support. In the same New York Times article, California Arnold Schwarzenegger predicted the joint venture would create more than a thousand green jobs in California — another added plus in recession-plagued America. There’s a significant degree of win/win in this story. Toyota is branching out into a green endeavor with a company that already has a proven EV product, which allows Toyota to play catch-up to a degree with EV competitors like the Nissan Leaf and the Chevrolet Volt, set to debut on showroom floors this fall. Tesla gains needed capital and the marketing connections and experience of a well-established automaker. It’s going to be interesting to see how this alliance grows and the effect it will have on the future of all-electrics on America’s roads.

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