Tesla’s Musk Keeps Door Open to Future Electric Vehicle Projects with Toyota

Tesla Motors Inc.’s Elon Musk said the electric-car maker may form another partnership with Toyota Motor Corp., as the companies conclude an initial vehicle project that met with mixed results.

“If you look out maybe two or three years from now, I would not be surprised if there was a significant deal with Toyota and Tesla,” Musk, Tesla’s chief executive officer, told reporters yesterday in Tokyo. While Tesla and Toyota have no definitive plans, Musk said he envisioned a larger project than their deal for the RAV4 electric vehicle.

The comments come as the two carmakers wind down sales of the jointly developed RAV4 EV after delivering only about 2,000 units since it went on sale two years ago. Since that project, both companies have taken separate paths, with Toyota now preparing to sell its first fuel-cell vehicle, a technology Musk has ridiculed.

Toyota has no comment on Musk’s remarks, said Ryo Sakai, a spokesman for the Toyota City, Japan-based automaker.

Toyota shares rose 0.3 percent to close at 6,127 yen in Tokyo, while Japan’s Topix Index climbed 0.1 percent.

Tesla plans to build the world’s biggest lithium-ion battery plant to cut the cost of the cells used to power its electric vehicles. Such a facility would provide an opportunity to supply other manufacturers as sales of its own vehicles ramp up, Barclays Plc equity analyst Brian Johnson said.

“With Tesla, you can never rule anything out. The gigafactory is huge capex for Tesla, so the more outlets you can spread it to, the better,” said Johnson, who rates Tesla the equivalent of a hold. “There’s also an interest in maintaining good diplomatic relations with Toyota,” he said in a phone interview.

Battery Supplies

While people with knowledge of the matter have told Bloomberg News that the RAV4 EV project was marred by clashes between engineers, Musk said yesterday that Tesla has “a very good relationship with Toyota.”

After having panned hydrogen-powered cars as “fool cells” in the past, he told reporters yesterday at an event marking the start of Model S deliveries in Japan that there was some value in experimenting with other technologies.

At an annual shareholders meeting in June, Musk, 43, cited a squeeze in battery pack supplies as one reason why Palo Alto, California-based Tesla and Toyota would take a year or two before making any plans to build another vehicle together. Tesla selected Nevada last week as the site for its gigafactory.

Panasonic Participation

The company is courting Panasonic Corp., another Japanese company and shareholder, to invest in the factory to supply cheaper batteries and help transform the maker of the $71,000 Model S sedan into more of a mass-market manufacturer.

Musk reiterated that he envisions Panasonic providing 30 percent to 40 percent of the investment needed for the facility. Tesla has estimated that the plant could cost as much as $5 billion by 2020.

“We are probably pushing Panasonic faster than they would normally go,” Musk said yesterday. “I think it will turn out well for both companies.”

Panasonic spokeswoman Yayoi Watanabe declined to comment on Musk’s remarks, saying only that the company would be a major partner to Tesla.

“The speed at which Panasonic is making decisions is extremely impressive,” Musk said. “We really feel very honored that they would take a risk on Tesla.”

Tesla rose 1.7 percent to $282.11 yesterday in New York and has gained 88 percent this year.

Copyright 2014 Bloomberg

Lead image: Katherine Welles via Shutterstock

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