Posted by: David Welch on July 15, 2010
Here’s a matchup I thought I’d never see: Toyota and Tesla Motors. Toyota is a conservative money maker that likes to develop technology in-house. It has quite a nice hybrid program that the company developed while making billions selling cars and trucks. The Japanese giant shuns controversy. Yet the company is teaming up with tiny Tesla, a company that has lost $246 million on $148 million in revenue since 2007. Tesla Chairman and CEO Elon Musk is very un-Toyota, finding controversy like a moth to a light bulb. In the past, he has been in litigation with a former Tesla CEO, a past design firm he hired and has a rather public divorce going on. So what does Toyota see in Tesla?
Toyota’s brain trust thinks that maybe, just maybe, Tesla might be onto something. Tesla’s lithium ion battery pack strings together 6,831 cylindrical cells that are typically used for laptops. Major carmakers like General Motors and Nissan use prismatic cells, which are usually flat, resembling a thick notebook. They are larger than Tesla’s cells, therefore the battery pack doesn’t need as many of them. There are fewer connectors and less chance of a breakdown, says Jim Hall, principal of consulting firm 2953 Analytics. Tesla’s advantage is that there is an entire computer industry out there using those small cells, so the capital costs are lower. If Tesla’s battery is durable in the long run, it could be an option for carmakers.
So Toyota wants to get Tesla’s battery and electric drive technology, hook it up in to a couple of Rav4 SUVs and put it through some rigorous testing. The sports car buffs who drive Tesla roadsters may give the car a thrashing on the highway, but not many people drive a $109,000 two-seater in bad weather or every day. Toyota wants to test the battery pack out and see how durable it is and how simple it would be to produce, Chairman Akio Toyoda told reporters in a round table session last week. “Tesla’s battery should fail, but it doesn’t,” Hall says. “Toyota wants to understand why it hasn’t failed.” Despite its troubles, Toyota has $43.3 billion in cash. Consider its $50 million investment in Tesla as a venture capital investment. Many of those don’t pan out.