Tesla and Toyota form electric car tag-team

Tesla and Toyota lie in two separate sectors of the electric car market. One has a very sexy and expensive model hitting highways while the other has virtually nothing. A recent deal between the two may give Tesla the power to launch their Model S and give Toyota a boost against Nissan’s Leaf. 

Late last week Toyota announced that they had purchased a $50 million stake in the California based electric car company. The money isn’t a direct injection of cash, but instead it’s tied to Tesla’s future IPO.

The deal is important to Tesla for a myriad of reasons, but the Model S has to be at top of the list. Their only other car in production is the two-seater Roadster that comes a with a base price that’s over $100,000. Many Americans can’t fathom shelling out that kind of money for a house, let alone a car.

So, Tesla dreamt up the Model S as an affordable and sporty electric car for the masses that can go up to 300 miles on a single charge. They were in a tough spot because they would need to find the appropriate location for a factory, a skilled workforce, and a lot more credibility to get the car into production.

The $50 million offer helped Tesla to buy part of a former Toyota facility located near San Francisco called the New United Motor Manufacturing Inc. or NUMMI. NUMMI closed in April and was home to a joint operation between the Japanese carmaker and GM. Tesla has already started hiring former NUMMI employees and plans on adding more workers on a monthly basis.

The partnership between Toyota and Tesla will also result in a sort of tech trade. Tesla gains an important advantage with Toyota’s large scale production methods. The number of Roadsters purchased worldwide is utterly small when compared anything in Toyota’s lineup. The lower price point for the Model S (about $49,000) will certainly create demand for the electric car as well.

For Toyota, the deal with Tesla appears to be a shot at Nissan’s Leaf. Toyota had been reluctant to enter the electric vehicle race in the past, partially due to the lack of EV related infrastructure and the success of the Prius. They now have access to Tesla’s battery technology which may allow them to quickly catch up with rival Nissan.

Toyota and Tesla have made indications that they will collaborate on an electric car in the future, but no details were made public. If the two companies can create a car that combines the sex appeal of the Model S with the rabid fanbase of the Prius, Nissan should be shaking like a leaf.