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Toyota, Tesla Team Up On Electric Vehicles

Tesla Teaming up with Toyota

Toyota is teaming up with Tesla Motors to develop and build electric vehicles, and the Japanese automaker will buy $50 million worth of common stock when Tesla goes public. Under the partnership announced late today, the two companies will develop electric vehicles and components, including a Toyota EV driven by a Tesla drivetrain.

Tesla Motors also will invest “a couple of hundred million dollars” retooling a shuttered Toyota factory near San Francisco to build the Model S sedan. The partnership gives Toyota — which until now has shown little public interest in EVs — access to proven EV technology and gives Tesla a crash course in engineering and building a mass-market car.  That expertise will serve Tesla well as it scrambles to build the Model S, a car it keeps promising to have on the road in 2012.

“This seems like a good deal for both parties, especially Toyota, from being able to avoid the political fallout from shutting (the Calfornia factory) down to being able to offering a new electric vehicle with just a low initial investment cost,” Jeremy Anwyl, CEO of, told the San Jose Mercury News.

Toyota President Akio Toyoda, speaking during the announcement at Tesla’s HQ in Palo Alto, California, said he admired the Silicon Valley firm’s entrepreneurial spirit and believes Tesla has a lot to teach Toyota about quick decision-making and flexibility. “Decades ago, Toyota was also born as a venture business,” Toyoda said, according to Automotive News. “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.

” What Toyoda didn’t say, but the Times notes in an excellent analysis, is Toyota finally realizes EVs are for real and is scrambling to catch up with the Nissan Leaf and the Chevrolet Volt, both of which go on sale at the end of this year. Toyota has bet the farm on hybrids like the Prius, and while it isn’t giving up on gas-electric propulsion, it clearly has been shaken by Nissan and GM. That’s almost certainly why Toyota will build an electric vehicle using a Tesla drivetrain. Tesla CEO Elon Musk told the San Francisco Chronicle that car is slated to hit the market before the Model S.

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