Toyota Buys Tesla Stake for Electric Car Tie-Up
Toyota Buys Tesla Stake for Electric Car Tie-Up
May 21, 2010, 5:03 PM EDT
May 21 (Bloomberg) — Toyota Motor Corp., the world’s largest automaker, is buying a $50 million stake in electric-car producer Tesla Motors Inc. as the companies seek to offer low- polluting models.
Tesla also will buy a closed Toyota joint-venture plant in California to build its Model S and other vehicles, Tesla Chief Executive Officer Elon Musk said yesterday. The companies plan to cooperate in developing electric cars, parts, production systems and engineering.
The deal may help Toyota compete with Nissan Motor Co. and General Motors Co. in selling electric cars in the U.S., where regulations on greenhouse gas emissions and fuel efficiency are pushing them to offer advanced vehicles. It may also help Toyota’s image, battered by recalls, by reviving the New United Motor Manufacturing Inc. plant, known as Nummi, an analyst said.
“This seems like a good deal for both parties, especially Toyota, from being able to avoid the political fallout from shutting Nummi down to being able to offer a new electric vehicle with just a low initial investment cost,” said Jeremy Anwyl, chief executive officer at auto-industry researcher Edmunds.com in Santa Monica, California.
Toyota, based in Toyota City, Japan, is the world’s biggest seller of hybrid autos, and Palo Alto, California-based Tesla is the only company selling U.S. highway-legal battery-powered cars. The size of Toyota’s stake in Tesla hasn’t been fixed, Musk said in an interview.
“I’ve felt an infinite possibility about Tesla’s technology,” said Akio Toyoda, chief executive officer of Toyota, founded by his grandfather. “By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business’ spirit.”
Daimler AG, the world’s second-biggest maker of luxury vehicles, in May 2009 invested about $50 million in Tesla, which is supplying the company with battery packs for a test fleet of electric Smart minicars.
Daimler reduced its stake in Tesla to about 5 percent in July by selling a portion of the investment to Aabar Investments PJSC, the German automaker’s largest shareholder. Tesla told Stuttgart, Germany-based Daimler about the Toyota partnership on May 19, Musk said.
The Toyota-Tesla partnership doesn’t impede Daimler’s cooperation with the California automaker, said Brigitte Bertram, a Daimler spokeswoman.
The revival of Nummi, for 25 years a joint venture between Toyota and the former General Motors Corp., will create 1,000 jobs, California Governor Arnold Schwarzenegger said.
Musk declined to say how much his company is spending to purchase Nummi, which was shut down in April. Tesla has hired back about 90 former Nummi workers and expects to add about 50 a month, Musk said.
Nummi, in Fremont, California, had 4,700 workers and was the only factory where employees building Toyota vehicles were represented by the United Auto Workers union.
The plant’s restart “is welcome news for the state’s economy and workers after the closing of this highly productive plant,” UAW President Ron Gettelfinger said in a statement today.
Electric-car technology has been supported by U.S. policy makers including President Barack Obama as a way to reduce the nation’s oil use and dependence on foreign energy sources. Obama set a goal of getting 1 million plug-in hybrids and electric cars on U.S. roads by 2015.
Toyota intends to offer a short-range electric car in the U.S. and begin retail sales of a plug-in Prius hybrid in 2012.
Toyota’s American depositary receipts, each representing two ordinary shares, rose $1.59, or 2.1 percent, to $75.59 at 4:15 p.m. in New York Stock Exchange composite trading. The regular shares fell 65 yen, or 1.9 percent, to 3,355 yen in Tokyo.
Nissan is preparing to introduce its Leaf electric hatchback in Japan and the U.S. this year. Nissan Chief Executive Officer Carlos Ghosn has set a goal of leading sales of rechargeable vehicles, which he estimates may make up 10 percent of global auto demand by 2020, and is spending more than 500 billion yen ($5.54 billion) developing electric cars.
GM plans to introduce its Volt plug-in vehicle late this year. The car will initially be marketed to drivers in California, which requires large automakers to offer some vehicles with little or no tailpipe pollution.
Tesla, which hasn’t posted a profit in the six years since it was founded, is planning to raise $100 million in an initial share sale and has said it may spend the proceeds on acquisitions and for factories and equipment that may cost as much as $125 million this year.
The company was approved to receive a $465 million government loan to help produce the Model S sedan, which the company says will cost less than $50,000 after a federal tax credit.
Tesla has 2,000 reservations for the Model S and intends to begin higher-volume production in 2012, with a projected output of as many as 20,000 a year. The company has delivered about 1,000 of its $109,000 Roadster electric sports cars.
The company’s investors include Google Inc. co-founders Larry Page and Sergey Brin, and the government of Abu Dhabi.