Two forces we follow closely on the blog have decided to join teams, while another partner looks on from the sidelines. No, we are not referring to Elon Musk’s wife and girlfriend, where ongoing divorce proceedings may or may not affect a Tesla IPO, but instead a partnership between Tesla and Toyota, with Daimler playing the role of existing and current partner. The deal is the single, largest clue for investors as to the future of both firms.
Yesterday, May 20, Governor Schwarzenegger helped announce the partnership between Toyota and Tesla where the large Asian OEM is expected to invest $50MM in exchange for an undisclosed ownership percent of Tesla. Tesla will also buy a closed Toyota plant in Fremont, CA to manufacture its upcoming Model S. The partnership also extends to engineering, parts, production systems and of course, cars. Daimler AG, on the other hand, invested $50MM in May 2009 in exchange for 10% of the company and a partnership that includes the sale of battery packs. Later, in July 2009, Daimler sold half of its 10% stake to its largest investor, Aabar Investments PJSC.
A Daimler spokeswoman mentioned to Business Week that they welcome the partnership with Toyota which has shared goals and that this new agreement will not impede its previously existing relationship. For information’s sake it would be interesting to know what percent of Tesla the Toyota capital purchased so we could compare valuations however that knowledge is not public at the moment.
The focus on this deal should be on both Toyota and Tesla. This may now help answer the question about Toyota’s less than assertive direction beyond hybrids that we discussed previously. Toyota does have an electric model planned, although it looks like a toy and has a range of 50 miles. One simply need to look at the planned Tesla Model S to see what Elon Musk’s company can bring to the table. A combination of the resources and capital from Toyota with the vision and expertise of Tesla may prove to be a very potent combination. Toyota is the world’s leading seller of hybrid cars and practically created the industry.
“I’ve felt an infinite possibility about Tesla’s technology,” said Akio Toyoda, chief executive officer of Toyota, founded by his grandfather. “By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business’ spirit.” We too would like to see the large scale success of Toyota combined with the design, performance and abilities of a Tesla.