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Thursday, May 20, 2010

Tesla and Toyota to Work Jointly on EV Development

Well we finally know who Tesla's manufacturing engineering partner will be for the Model S plant and they couldn't have picked a better company.

Tesla Motors, Inc. (Tesla) and Toyota Motor Corporation (TMC) today announced that they intend to cooperate on the development of electric vehicles, parts, and production system and engineering support.

The two companies intend to form a team of specialists to further those efforts. TMC has agreed to purchase $50 million of Tesla’s common stock issued in a private placement to close immediately subsequent to the closing of Tesla’s currently planned initial public offering.

The cars will be made at New United Motor Manufacturing Inc., known as Nummi, an auto plant that was a joint venture between General Motors Co. and Toyota in Fremont. Nummi had closed earlier this year.

NUMMI was until last year a joint venture launched in 1983 between Toyota and General Motors. At its peak the factory employed 5,700 people. The last car — a red Toyota Corolla — rolled off the line in April, bringing to nearly 8 million the number of vehicles built there.

Tesla CEO Elon Musk said his company was interested in NUMMI because it already has extensive tooling — which will buy the company some time as it rushes to produce the Model S. Musk said negotiations concluded Monday and Tesla “will be occupying a little corner” of the factory, which sits on 380 acres and cranked out 400,000 cars in 2006. He said Tesla will employ 1,000 people at the factory.

“I sensed the great potential of Tesla’s technology and was impressed by its dedication to monozukuri (Toyota’s approach to manufacturing),” said TMC President Akio Toyoda. “Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from the challenging spirit, quick decision-making, and flexibility that Tesla has. Decades ago, Toyota was also born as a venture business. By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business spirit,’ and take on the challenges of the future.”

“Toyota is a company founded on innovation, quality, and commitment to sustainable mobility. It is an honor and a powerful endorsement of our technology that Toyota would choose to invest in and partner with Tesla,” said Tesla CEO and cofounder Elon Musk. “We look forward to learning and benefiting from Toyota’s legendary engineering, manufacturing, and production expertise.”

TMC has, since its foundation in 1937, operated under the philosophy of “contributing to the society through the manufacture of automobiles,” and made cars that satisfy its many customers around the world. TMC introduced the first-generation Prius hybrid vehicle in 1997, and produced approximately 2.5 million hybrids in the twelve years since. Late last year, TMC started lease of Prius Plug-in Hybrids, which can be charged using an external power source such as a household electric outlet.

This deal will also include the joint development of a brand new, $30,000 electric car, that will contain Tesla’s powertrain design, with everything else built by Toyota. This will effectively replace the Lotus chassis of the Roadster with a Toyota chassis. A steel bodied, standardized platform, vehicle could prove a much faster route to market for Tesla compared to gearing up to manufacture the relatively low volume Model S which is proposed to use an Aluminium Monocoque chassis, an option few auto makes choose due to higher cost and the requirement of non-standard production methods.

Less than one month ago Tesla announced a battery supply deal with Panasonic, which itself is also already in joint battery venture with Toyota, and in February Tesla hired a former Toyota production engineering general manager Gilbert Passin to lead Tesla's vehicle manufacturing operations. It's not hard to imagine that Musk has been networking his way towards this deal for quite some time and full marks for pulling it off. One of the worlds smallest auto makers teaming up with one of the biggest, not bad for a company that owns virtually no IP.


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