Toyota will build the RAV4 EV on the same Ontario assembly line producing the conventional version of the crossover.
Is there a billion-dollar deal in the works between Japanese auto giant Toyota and the American battery-car upstart Tesla Motors? That appears to be a very real possibility according to comments by Tesla’s founder Elon Musk.
The relationship between the two manufacturers has rapidly been picking up speed since Toyota first decided to turn to Tesla to help develop a battery-electric version of the RAV4 crossover. Scheduled to go into production next year, the partners today confirmed the RAV4 EV will be produced at the Toyota assembly plant in Woodstock, Ontario.
The $100 million project is just the start, however, and the makers have already confirmed they are looking at a variety of options to stretch their partnership. But this week, Tesla Chief Executive Elon Musk put a framework around things by suggesting the projects under study could expand the existing arrangement by “an order of magnitude.”
Asked to help better define that, a senior Tesla official confirmed that by traditional math Musk’s comment would suggest a figure of $1 billion. But various sources reached by TheDetroitBureau.com declined to discuss specific details of what is in the works.
A separate source stressed that Tesla is not discussing a sale to Toyota. The Silicon Valley start-up “has plans of its own” that include the launch of the Model S sedan, in the coming months. The battery-powered 4-door – and planned variants – will be the first vehicle developed entirely inside the Tesla organization, as opposed to the company’s little Roadster which was based on a platform and body provided by Lotus.
The Model S will be the first battery-electric vehicle, or BEV, offered with a choice of battery packs: a stock version providing 160-mile range, as well as optional 230-mile and 300-mile packs.
The RAV4, meanwhile, will offer something close to 100 miles per charge on a lithium-ion battery pack of something on the order of 25 to 30 kilowatt-hours. Toyota will pay Tesla $100 million to provide the entire electric drivetrain, including battery, motor, gearbox and power electronics.
The Japanese maker, though an early proponent of gas-electric propulsion systems – its Prius model accounting for roughly half of global hybrid sales – is a relative latecomer to pure electric drive in part because of early problems with its lithium-ion development program. That led to Toyota’s distinctly out-of-character decision to partner with Tesla on the RAV4 EV project.
Putting a more positive spin on the move, Ray Tanguay, Chairman of Toyota Motor Manufacturing Canada described it as, “a great example of Toyota’s determination to collaborate with companies with leading edge technology.”
“Tesla has a lot to learn from Toyota,” said a source with the California company, “but they’ve come to really value what we do.”
Producing the new electric crossover at the Ontario factory, noted Tanguay, “will streamline and simplify the production process and guarantee the highest level of quality control.”
The possibility of another big deal with Toyota should come as good news for Tesla investors who have been hammered – as anyone betting on the auto industry has – in recent days by the correction on Wall Street.
It didn’t help that the small maker reported a sharp increase in its losses during the second quarter, earlier this week. Tesla ran up a $58.9 million deficit compared to a $38.5 million loss during the year-earlier quarter. Revenues, however, more than doubled, climbing from $28.4 million to $58.2 million.
Part of the problem is that Tesla is investing heavily in the final phase of development for the Model S, which launches in mid-2012. The company claims to have already logged 5,600 reservations for the car – which requires a $5,000 downpayment.