Toyota and Tesla announced a new partnership at Tesla’s headquarters in Palo Alto today, the auto makers will collaborate on technology, the development of new electric vehicles and Toyota will purchase $50 million of Tesla’s common stock (to be completed after Tesla’s pending IPO). The press conference featured the Governor of California, Arnold Schwarzenegger, Tesla CEO, Elon Musk and TMC President, Akio Toyoda.
Calling it an “explosion” for California (I think he meant this in the positive sense, not the Terminator sense) Schwarzenegger framed it as a victory for California’s environmental agenda and the economy. He predicts it will create 1,000 jobs for the state’s embattled economy.
“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,” Musk said in a statement. “We look forward to learning and benefiting from Toyota’s legendary engineering manufacturing, and production expertise.”
Significantly, Tesla announced that it will takeover the NUMMI plant in Fremont and expects to produce the Model S EV (a seven-seat SUV) at that location, starting in 2012. The hope is that once production truly ramps up, Tesla will produce 20,000 EVs from the plant (Musk predicts it will take 12 months, from the beginning of production, to reach this level). The company is currently adding 50 employees per month to keep pace with the expansion, Musk says that will likely accelerate in the coming months. Over the next few years, he says it’s reasonable to expect Tesla to grow to 2,000 employees, with roughly half of that working in NUMMI.
Earlier today, Schwarzenegger unexpectedly announced (at a separate Google event in Mountain View ) that Toyota was partnering with Tesla to build electric cars in California, according to reports. The possibly accidental announcement took some thunder out of Tesla’s 5 p.m. PST press conference.
For Toyota, it’s a chance to curry favor in the California and larger US market, for Tesla, the car maker gets Toyota’s resources (especially cold hard cash) to help it transition from a highly niche player to a more robust force in the domestic auto market. This is of course not Tesla’s first partnership with a big automaker. Last year, the company signed a deal with Daimler that gave Daimler a 10% stake and technology in exchange for roughly $50 million, according to reports.
Tesla hasn’t had a lot of trouble attracting capital, with investors like Google’s Sergey Brin, Larry Page, Capricorn Management, Compass Technology, JPMorgan— it’s a really long list. Even the US Deparment of Energy threw down a $465 million low-interest loan for Tesla last year. Attracting money is one thing, the real struggle for Tesla has been building on that base. The company has recorded net losses for virtually every previous quarter—investors should expect further losses until Tesla really ramps up production and deliveries of it’s more affordable Model S sedan.