Toyota Invests in Tesla, Tesla buys Toyota factoryMay 21, 2010
Toyota has announced that it will invest in Tesla and that the two companies will work together to develop electric vehicles; Tesla has also bought a Toyota factory.
Although this may sound like big news, it’s actually not that surprising that the team at Tesla has created a new electric vehicle business and that a major manufacturer wants to buy into it.
The two companies have said that they intend to cooperate on the development of electric vehicles, parts, and production system and engineering support, and that they intend to form a team of specialists to do this.
Toyota 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.
Tesla has also purchased a Toyota factory in Silicon Valley, California where it will build the Model S sedan and future Tesla vehicles. The factory is one of the largest, most advanced and cleanest automotive production plants in the world and was making Corollas until April.
It is capable of producing half a million vehicles per year or approximately 1 percent of total worldwide car production. The award-winning plant was the first in North America to demonstrate Toyota Production System, a widely copied system that lead to dramatic quality improvements and unprecedented manufacturing flexibility and worker satisfaction.
The Model S is expected to be the first pure electric premium sedan and is designed from the ground up to take full advantage of the electric vehicle architecture. The sedan, which Tesla unveiled in March 2009, has an anticipated base price of $49,900, including a federal tax credit, and is intended to deliver the best design and technology in the automotive world. With an optional extended-range battery pack, the Model S will travel over 300 miles per charge.
The factory is located near Tesla’s Palo Alto headquarters. The location means Tesla can hire best-in-class engineers in Silicon Valley. The short distance also ensures a tight feedback loop between engineering, manufacturing and other divisions within the company.
“The Tesla Factory effectively leverages an ideal combination of hardcore Silicon Valley engineering talent, traditional automotive engineering talent and the proven Toyota production system,” said Tesla CEO Elon Musk . “The new Tesla Factory will give us plenty of room to grow.”
Toyota produced its last car there just last month. Tesla began discussions to acquire the site this spring, when it was also evaluating opportunities in Downey and Long Beach. The turnkey nature of the facility with its recent production of top quality vehicles and its considerable room for expansion made it stand out from other sites.
On the partnership between Toyota and Tesla, Toyota President Akio Toyoda said: “I sensed the great potential of Tesla’s technology and was impressed by its dedication to monozukuri (Toyota’s approach to manufacturing). 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.”
Tesla CEO and co-founder Elon Musk commented: “Toyota is a company founded on innovation, quality, and commitment to sustainable mobility. It is an honour and a powerful endorsement of our technology that Toyota would choose to invest in and partner with Tesla. We look forward to learning and benefiting from Toyota’s legendary engineering, manufacturing, and production expertise.”
Late last year, Toyota started leasing of Prius Plug-in Hybrids, which can be charged using an external power source such as a household electric outlet. The company also plans to introduce EVs into the market by 2012.
Tesla’s goal is to produce increasingly affordable electric cars to mainstream buyers – driving down the cost of EVs. Tesla has delivered more than 1000 Roadsters to customers in North America, Europe and Asia. Tesla designs and manufactures EVs and EV powertrain components. It is currently the only automaker in the U.S. that builds and sells highway-capable EVs in serial production.
Keywords: Toyota Invests in Tesla, Tesla buys Toyota factory, Tesla Model S sedan, Toyota President Akio Toyoda, Tesla CEO and co-founder Elon Musk