Toyota announced yesterday it has agreed to buy a $50 million stake in Tesla Motors. Under the agreement, the two car companies will work together on electric vehicles, parts, and production system and engineering support.
Gov. Schwarzenegger announced that as part of the agreement, Tesla will acquire the New United Motor Manufacturing Inc (NUMMI) plant in Fremont, California, which had shut down in April. NUMMI had been a joint venture between Toyota and General Motors. According to Gov. Schwarzenegger, reopening the plant will bring 1,000 green jobs to the area. Tesla will use the plant to begin production of its Model S EV in 2012.
Tesla will also be able to take advantage of a sales tax exemption on the purchase of green-tech manufacturing equipment which was recently signed into law.
The NUMMI factory, which had produced the Corolla and Tacoma for Toyota, is capable of rolling out half a million cars a year.
According to reports, the two will also work together on a new, jointly designed car that will cost under $30,000, and will contain Tesla’s powertrain in a Toyota design. The addition of a lower-cost design to Tesla’s lineup should help it compete in an EV market that is crowding rapidly with competitors like Chevy’s Volt and the Nissan Leaf. Neither models existed when Tesla was founded in 2003, and their introduction to the EV market has significantly altered the competitive landscape.
Toyota, meanwhile, will get access to Tesla’s electric drive technology for its own lineup of hybrids and EVs. The Japanese automaker joins a prestigious group of investors backing Tesla, a group which includes Sergey Brin and Larry Page of Google, German automaker Daimler, and the government of Abu Dhabi. The announcement may also provide a needed public relations boost for the company, boosting its green bona fides at a time when it has come under serious criticism by consumers and the government over fears of faulty accelerator pedals.
The acquisition of Tesla’s common stock will conclude immediately before its planned IPO, which is expected later this year. That sale had been expected to raise up to $100 million prior to the Toyota announcement. Tesla will also be using a $465 million loan from the US Department of Energy to help produce the Model S.