Elite electric car manufacturer Tesla Motors has revealed in a revised S1 filing with the SEC that it will cooperate with Toyota on the development of Tesla’s Model S sedan. To grease the deal, Tesla will pay Toyota $42 million for the New United Motor Manufacturing Inc.( NUMMI) auto plant in Fremont, California where the vehicles will likely be produced.
The NUMMI facility, which had been the site of a joint venture between Toyota and General Motors, had closed its doors earlier this year as part of GM’s financial liquidation. Indications are that several thousand laid-off auto workers from the area could be rehired as a result of the agreement.
The S1 details Tesla’s plan for an initial public offering of stock, set to take place later this year. As part of the deal with Tesla, Toyota has said it will buy $50 million worth of stock in the automaker when it goes public.
First announced on May 19, the agreement has positive benefits for both sides. For Toyota, it provides a strategic vision that will help apply the brakes on the negative PR resulting from its devastating product safety recalls. The world’s largest automobile company, known far and wide for its design innovations and the reliability of its products was watching its reputation go into serious free-fall over the last several months.
Toyota had long realized that in order to remain competitive with Nissan, GM and others already adapting to the rapidly evolving market for all-electric vehicles it would have to boost its green profile beyond its successful Prius hybrid. Now it could leap ahead, resurrecting its faltering public image in America by forming an alliance with a dynamic American auto upstart, a strong contender for leadership in the manufacture of electric cars.
Tesla has, in a few short years, made a name for itself with the development and production of the Tesla Roadster, a snazzy electric sports coupe based upon a modified Lotus Elise that could rocket from 0 to 60 in 3.9 seconds. With a price tag that exceeded $100,000, the Roadster was clearly targeting a well-heeled, select clientele.
Already breezing from a 10% equity investment from Daimler Motors, Tesla CEO Elon Musk knew that the company would need to continue on an audacious path and begin to appeal to a broader market. Bolstered by a $465 million dollar, low interest loan from the US government, Tesla announced it would build the Model S, which it described as “an all-electric family sedan that carries seven people and travels up to 300 miles per charge.”
Though the estimated $50,000 price tag for the Model S will still provide an element of sticker shock for a mass-market electric vehicle, the statement couldn’t be more clear: Tesla and Toyota have seen the future and are headed in the right direction.