What Toyota Sees in Tesla

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.

Reader Comments

Aviva Sucher

July 15, 2010 6:31 PM

Toyota's decision to pair up with Tesla is a brilliant move. Tesla's Elon Musk is brilliant in his seeking a technological approach to alternative battery powered vehicles. Initial tests by Tesla owners and race car drivers have drawn rave reviews.
Mr. Toyoda and the Toyota board members recognize pure incomparable innovative brilliance.
I excitedly await an affordable Tesla, hopefully just in time for us to pass along our current Prius

eob

July 16, 2010 6:52 PM

Toyota already had an electric Rav-4 years ago...What do they need Tesla for? This is just more politics. Didn't Tesla recieve 400,000,000 from the Feds

Gman

July 17, 2010 12:34 AM

Tesla must have done something right about Roadstar 300 miles on a full charge. 21st century calls for collaboration between new and old economy. It is a perfect marriage. After a year of bad publicity for Toyota, Tesla alliance is a rumbling Toyota needs. After all, if it is difficult to shake things up the old way, may be Silicon Valley attitude is what is needed to give a kick in the buttock to get 300 mpc (charge) from the battery.

sciotopiker

July 17, 2010 7:24 AM

Trust me friend, Toyota knows everything they need to know about Tesla.
They have undeniable proof of the stupidity of American consumers and investors. Toyota's "interest" in Tesla is the driver behind Tesla stock prices and when they pull it.....pffffft.....no more Tesla. Toyota then becomes the green giant again and all kneel in their presence. Problem solved.

Ed

July 20, 2010 1:36 AM

Tesla is exactly the type of companies America needs to lead us out of the recession. American ingenuity at its best.

Interconnect

July 20, 2010 6:46 AM

Akio Toyoda San Toyota critic see positive development when you co-habit Telsa's battery electric drive technology. We see lot of Toyota in commonly un-Toyota belief. Billions are invested today in many emerging market turning millions of Toyota Corolla cars for poor folks running on conventional Euro 1 or 2 technology investing their liftime savings on Toyota's promise, of safety, and environment friendly. Toyota should build EV cars first in the emerging markets of BRIC, SAARC region particularly in the Indo-Pak sub-continnet, as Pakistan. Pakistan is turning thousands of junk Corolla technology to the poor, naive Toyota loyalists.

Schmeltz

July 22, 2010 8:12 AM

I just got to speculate that Toyota's interest in Tesla is more for the image than the value that could be gleaned in Tesla's battery technology. Tesla's battery pack seems to be more method than actual technology. Further, it is difficult to see anyone being able to mass-produce the Tesla pack at a profit.

My guess is Toyota will likely determine the Tesla battery pack to be too costly to mass-produce and develop their own pack based on automotive lithium ion batteries like other auto makers. Later, Toyota will likely buy or absorb Tesla as a niche EV division to sell along side of their Lexus vehicles.

ArcticFireGuy

July 30, 2010 3:19 PM

Check out how long that things battery lasts when the air conditioner or heater is on.... Can't see anyone wanting to buy one of these battery cars. :(

Madhu

August 30, 2010 6:26 AM

Toyota wants to understand why it hasn’t failed.....
Means...someone predicted his should fail?
quality products always gain fame

Ogden Lafaye

September 1, 2010 7:00 PM

TESLA is a viable concept and will sell well in the mid-upper priced luxury field.

It is beautiful and uses proven technology.

Toyota adds credibility to the concept.

Lee Storey

October 17, 2010 4:13 AM

Tesla,

Are a company that have pioneered a battery technology thats working when others keep falling short of there goals. Renault might be the only major manufacture thats closing that gap and with production cars due later in 2013 all other manufactures are wanted to keep up.
Toyota is taking an easier route to closing that gap by buying whats already working.

personally id be spending the money on the network needed to keep electric cars running on our roads theres more money in that then the cars

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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