Mygreenwheels

Guest blog post by Ash Gupta

Last week a momentous event took place. Toyota paid US$50 million for a stake in Tesla.

Elon Musk and Akio Toyoda, President of Toyota, announced this epoch-making deal at a joint news conference in Palo Alto on 20 May. Mr. Toyoda said he hoped the partnership would inject some of Tesla’s startup management culture into Toyota, whose large size and bureaucratic structure have been blamed by some for its less than customer-centric response to the recall crisis. “Toyota would like to learn from the challenging spirit, quick decision-making, and flexibility that Tesla has,” Mr. Toyoda said.
 
Now this is a very special happening. The world's largest and most powerful player in the auto industry stoops down to hold the hand of a cheeky but smart upstart EV maker who has leveraged the design flare of Lotus to make a product that is now a better known brand name than many of the Old World's 'new kid on the block' car rivals like Kia or Proton. But Elon Musk is a past master at knowing how to harness the power of the internet. Tesla's move was a smart one. They purchased the former Toyota NUMMI factory in Fremont, California. Then last Thursday the two new pals announced they would work jointly on EVs and components like drive systems.

The NUMMI factory was standing empty, last used in April 2010 for the Toyota Corolla and Tacoma. Tesla said it is one of the largest, most advanced and cleanest automotive plant globally, set up to produce 500,000 units annually. Tesla is expected to build the Model S here, the first pure EV family car. Unveiled in March 2009, it is expected to cost under $50,000, if you include the federal tax credit. With the long-range battery pack in place, the Tesla S will have a range of 300 miles on a single charge.

“The Tesla factory effectively leverages an ideal combination of hardcore Silicon Valley engineering talent, traditional automotive engineering talent and the proven Toyota production system,” said Elon Musk, CEO of Tesla. “The new Tesla factory will give us plenty of room to grow.”

This is such a brave move from a car giant, stooping to learn a lesson from a cheeky wee upstart, even though Tesla's certainly a wily one. The new auto world needs more JVs like these. Maybe they have been taking lessons from British politics. However, the real driver was the fear of competition. Nissan's Leaf EV is shaking the stable auto land tree, and when Nissan shakes that tree, auto world trembles.

Where to now for Volt and what does the future hold for the niche players like Think who should have been world market leaders by now? Buy a stake in Think again, Mr. Ford. You let the jewel in the crown 'slip doon the shankey!' (as we say in Scotland) when you sold Think back to Norway.