Thursday, 27 May 2010 20:40

Giant Toyota Teams with Tiny Tesla to Build Next Generation Cars at Fremont, CA, Plant

A $50 million investment will create a partnership between Toyota Motor Corporation and Tesla Motors to produce electric vehicles and bring jobs back to the former plant owned by GM-Toyota called the New United Motor Manufacturing (NUMMI) plant in Fremont, CA, said the smiling CEOs on May 21.

CEOs Elon Musk of Tesla and Akio Toyoda of Toyota were joined for the announcement by Governor Arnold Schwarzenegger, who also spoke, saying the deal was aided by tax incentives.

“What we are witnessing today is an historic example of California’s transition to a cleaner, greener, more prosperous future,” Schwarzenegger said.

According to the deal, both giant Toyota and tiny Tesla will be working together to manufacture Tesla model S sedan, which is a high performance electric sedan, competing with cars like the BMW 5-series.

Initially, the automakers are expected to produce 20,000 vehicles. The partnership could create 1,000 jobs initially and eventually as many as 10,000 worldwide. Half of the jobs are expected to be at NUMMI and the other half would be with suppliers, Musk said. Less than a day after the announcement, United Auto Workers (UAW) was urging Toyota to hire workers that were laid off at the old GM-Toyota plant.

UAW president, Ron Gettelfinger, said in a statement, “Our union’s hope is that this venture will give first hiring preference to former NUMMI employees who are already trained and highly skilled.”

Toyota President Akio Toyoda got misty-eyed about his first drive in a Tesla Roadster in Southern California six weeks ago. He enthused, “Not only was I impressed by Tesla’s technology, but I also felt their energy, seeing that they made the vehicle in an extremely short time. “I felt the wind—the wind of the future,” Toyoda said.

“Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from Tesla’s challenging spirit, quick decision-making and flexibility. That is a big part of the reason we decided to partner with Tesla.

Musk said Tesla is purchasing the NUMMI plant for an undisclosed sum. Toyota and GM closed the plant in early April and terminated 4,700 workers, but thousands of others who worked for parts suppliers—as many as 25,000 by some accounts—were also affected.

Tesla will begin production of its Model S electric sedan in 2012. A 300-mile range, seven-seat SUV will also be manufactured at NUMMI, he said. Once it reaches full production, Tesla expects to produce 20,000 vehicles a year at the NUMMI plant.
Initially only a small corner of the 5.4-million-square-foot plant will be used, but Musk said he expects the entire facility will eventually be utilized.

No mention, yet, of an IPO for Tesla, but some in the industry have speculated that this announcement could speed that process, perhaps enabling it even before GM’s likely offering early next year, and Chrysler’s—expected to follow GM’s.

Chrysler Group LLC said it is considering a public stock offering sometime in 2011, Sergio Marchionne said on May 20. Marchionne said there is enough demand in the marketplace to support initial public offerings for Chrysler and GM, both of which were restructured in government-funded bankruptcy protection cases last year. He said he never wants to see the company lose money again.

“I expect 2010 will be a much better year than we originally forecast,” he said, predicting that U.S. vehicle sales to top 11 million this year and 12 million in 2011.

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