Tesla, Toyota to build electric cars at NUMMI plant

By Dana Hull and Steve Johnson

dhull@mercurynews.com

Posted: 05/20/2010 03:03:46 PM PDT

Updated: 05/21/2010 10:01:45 AM PDT

[from http://www.mercurynews.com/bay-area-news/ci_15127946]

In a stunning deal, Tesla Motors announced late Thursday that it is teaming up with Toyota to build its all-electric Model S sedan at the recently shuttered NUMMI plant in Fremont, creating more than 1,000 new jobs.

The pact, put together in utter secrecy, immediately injects new life into an auto plant once left for dead, is a jolt of positive news for beleaguered Toyota and elevates Silicon Valley's role at the heart of the emerging electric car industry.

Under the agreement, Toyota, the world's largest automaker, will invest $50 million in Tesla, which will buy the NUMMI plant for an undisclosed sum. The joint venture was unveiled by Akio Toyoda, Toyota's CEO, who flew in from Japan for the announcement,

Tesla CEO Elon Musk and Gov. Arnold Schwarzenegger at a heavily attended 5 p.m. news conference at Tesla's Palo Alto headquarters.

The partnership between Tesla and Toyota was first hatched six weeks ago, when Toyoda visited Musk at his Southern California home. The two went for a 30-minute drive in a Tesla Roadster, a two-seat sports car that is the only all-electric vehicle on the road today.

"I was impressed by Tesla's technology and impressed by the company's energy," said Toyoda, who noted that Toyota itself, founded by his grandfather, was once a startup. "I felt the wind of the future."

Musk said the two men hit it off on the drive and had an instant personal connection that quickly led to talks of some kind of partnership.

"We drove around the Westwood area of Los Angeles talking about random things," said Musk. "He's a good driver. He put it through its paces."

Tesla will use the former New United Motor Manufacturing Inc. plant to begin production of the Model S, a sedan that can seat five adults and two children and has a range of 300 miles. Once it reaches full production at the NUMMI plant, Tesla expects to produce 20,000 electric vehicles each year, which will sell for $50,000.

But the Model S would occupy only a small part of the NUMMI plant, leaving room for Tesla and Toyota to manufacture other models of electric cars there.

"Long term, we think we could create 10,000 jobs, half from Tesla and half from our suppliers," Musk said.

The news was hailed by Sen. Dianne Feinstein, D-Calif., who wrote a letter to Toyota last summer urging the company to look at a possible partnership with Tesla.

"I congratulate Tesla and Toyota today," Feinstein said in a prepared statement. "As one who has followed NUMMI since its inception, I was very dismayed and disheartened by its closure in April. I celebrate the new life of opportunity which is inherent in this new venture."

Some industry analysts also endorsed the announcement.

"This seems like a good deal for both parties, especially Toyota, from being able to avoid the political fallout from shutting NUMMI down to being able to offer a new electric vehicle with just a low initial investment cost," said Jeremy Anwyl, CEO of Edmunds.com.

He said his only concern was that the Model S that will be made at NUMMI would arrive years after competing electric cars, such as the Nissan Leaf and Chevrolet Volt, hit dealer showrooms later this year.

"Tesla's credibility has been greatly enhanced thanks to this partnership with Toyota," said John O'Dell, senior editor of GreenCarAdvisor.com. "Many had doubted the company's ability to deliver on all its promises, but Toyota must have conducted substantial due diligence before making this investment."

City Council members from Fremont, where NUMMI is located, were thrilled and raced across the bay to attend the news conference.

Eric Kim, an analyst with the consulting firm AutoPacific, called the partnership a good public relations move for Toyota, which has seen its reputation battered in recent months over safety problems in some of its vehicles. However, he was perplexed at the Japanese company's reasons for being involved with Tesla, since Toyota is expected to have its own all-electric car on the market in two or three years.

"I really wouldn't have thought that Toyota would have a lot to gain from Tesla," he said. "I had not anticipated this."

Among those not cheering were officials in the city of Downey in Los Angeles County. For months, they had been working with Tesla in hopes that the automaker would locate its factory there. The Downey City Council was hours away from voting on the terms of a lease for Tesla. Tesla executives finally told Downey city officials that they were going to Fremont instead on Thursday afternoon, catching staffers who have spent hundreds of hours on the nearly final deal completely by surprise.

"We're shocked, appalled and disgusted," said Downey Councilman Mario Guerra. "We have been dealing in good faith with Tesla and feel stabbed in the back."

The announcement is a remarkable turnaround for the NUMMI plant, which Musk hopes to make the "cleanest and greenest" auto manufacturing plant in the world.

The 50-50 joint venture between GM and Toyota, struck in 1983, was seen as a boost for both carmakers. Toyota got a car-making beachhead in the United States and GM got a chance to learn Japanese manufacturing techniques.

But over time the manufacturing operation became something both GM and Toyota began to view as an unneeded expense, especially as the world tumbled into the recent recession, automobile sales began to seriously slide and GM wound up in bankruptcy.

The factory was doomed last summer after first General Motors and then Toyota announced they were severing ties with the facility. When a bright red Toyota Corolla rolled off the assembly line at 9:21 a.m. April 2, the last of 7.7 million vehicles produced at the plant, it ended more than 25 years of production at the last auto plant west of the Mississippi.

The plant appears to have gotten this new hope with the talks between Tesla and Toyota. The Downey plant had been planned to make the Model S, but a partnership with Toyota made the giant NUMMI plant more attractive since it gives the two companies room to expand.

Tesla, which was incorporated in 2003, has built its business model and future on the green-technology revolution sweeping the country.

Devoted to making all-electric cars and related vehicle components, the Palo Alto company began selling its first vehicle, the sporty Roadster, in 2008. The $100,000 car immediately drew the auto industry's attention with its advertised ability to hit 60 mph from a stop in just four seconds and a between-charge cruising range of more than 200 miles, and attracted a host of high-profile buyers like Schwarzenegger and actors George Clooney and Leonardo DiCaprio.

"We love our cars here in California," said Schwarzenegger, who used the news conference to talk about how California's strict environmental policies are driving innovation. "But we also love our environment, our coastline, our ocean, our sky. ... I don't have to tell you how much this means to California, where we have 12.5 percent unemployment."

Tags: NUMMI, News, Telsa, Toyota

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Permalink Reply by BryanH on May 21, 2010 at 4:22pm

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Permalink Reply by BryanH on May 29, 2010 at 4:30pm

Tesla says Toyota deal on electric cars not formal
[ http://in.reuters.com/article/idINIndia-48862020100527 ]

Quote:
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Tesla also said in the filing that Toyota's agreement to buy a $50 million stake in the start-up would lapse if its stock is not launched on the public markets by the end of this year.

Toyota will take the stake in a private placement to close immediately after Tesla's initial public offering.
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Permalink Reply by bbox231 on May 30, 2010 at 6:54pm

Gosh - wrong choice of words, Bryan - you might want to look herefor further clarification -

http://dictionary.reference.com/browse/formal

The Toyota offer is certainly a "formal" offer.

It *is* - however - conditional.

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Permalink Reply by BryanH on June 15, 2010 at 11:08pm

Tesla Motors Sets IPO For Week Of June 28

See Tesla Motors: IPO Fueled By Glamour (Wall Street Journal):

Tesla Motors Inc. is a company high on glamour. The automaker, which Tuesday scheduled its initial public offering for June 29, makes "green" sports cars that run on electric power. ......
......
At $15 a share, the company will raise up to $160 million in the IPO. Toyota will invest another $50 million while Tesla is spending $42 million buying a factory from a Toyota joint venture. Meanwhile insiders are cashing out about $33 million, including $21 million for Mr. Musk. That will still leave him with a stake of about $400 million.......

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Permalink Reply by BryanH on June 16, 2010 at 9:32am

Tesla Motors hopes to raise at least $178 million in much-anticipated IPO
[from http://www.mercurynews.com/news/ci_15303406]

By Dana Hull
dhull@mercurynews.com
Posted: 06/15/2010 03:56:25 PM PDT
Updated: 06/16/2010 08:49:22 AM PDT

Palo Alto's Tesla Motors now hopes to raise as much as $178 million in its much-anticipated initial public offering of stock.

In a filing Tuesday with the Securities and Exchange Commission, the electric-car maker said it plans to offer 11.1 million shares of common stock at a price range of $14 to $16, which would raise $177.6 million if it sells at $16 a share. In January, it had given a target of $100 million.

Tesla stock is expected to begin trading June 29, according to Renaissance Capital, a Greenwich, Conn., research firm that specializes in the IPO market.

Following the IPO, Toyota will purchase an additional $50 million worth of the stock in a private placement as part of a deal in which Tesla will begin manufacturing at the former Toyota-GM NUMMI plant in Fremont. Tesla has applied to be listed on the Nasdaq under the symbol TSLA.

Tesla makes the all-electric Roadster, a two-seat sports car with a $109,000 price tag that has limited its appeal to consumers. As of March 31, it had sold 1,063 Roadsters to customers in 22 countries.

Tesla hopes to begin large-scale production in 2012 of its more affordable Model S sedan, which will retail for about $50,000.

In its filing, Tesla said it is designing the Model S to have "an adaptable platform architecture and common electric powertrain in order to allow us to efficiently create other electric vehicles, which may include, as examples, a crossover/sport-utility vehicle, van or a cabriolet."

Tesla reiterated plans to develop a third electric vehicle model at the NUMMI plant. "We intend to offer this vehicle at a lower price point and expect to produce it at higher volumes than our planned Model S," it said in the filing. "We expect that this vehicle will be produced a few years after the introduction of the Model S."

Tesla's IPO has been the talk of Silicon Valley, in part because it is widely seen as a bellwether for the cleantech industry. Though the company has yet to turn a profit, it is backed by several venture capital firms and individuals, including former eBay President Jeff Skoll and Google founders Sergey Brin and Larry Page.

"Tesla's fundamentals are still underwhelming," said cleantech analyst Dallas Kachan. "There are a lot of eyes on the Tesla IPO."