Tesla to Supply Electric Powertrains for Toyota SUV

July 22, 2011
$100-million, three-year supply deal for RAV4 EV program

Tesla Motors Inc. has landed a $100-million supply contract from Toyota Motor Corp. to produce electric powertrain systems for the all-electric SUV that Toyota intends to introduce in 2012. This follows a $60-million, three-year contract that Toyota placed with Tesla last fall, in which the start-up indicated it was developing a battery, power electronics module, motor, gearbox and associated software for electric vehicles.

The supply contract is set to run for three years through 2014. Neither Toyota nor Tesla have provided specific details of the agreement.

Toyota has confirmed it will introduce the RAV4 EV to North American consumers next year. It will join the Nissan LEAF and Chevrolet Volt among the new electric vehicles competing for market share, and it will be a reincarnation of the electric RAV4 discontinued in 2003 as Toyota turned its focus to hybrid vehicle technologies. Toyota also plans to introduce all-electric versions of its Prius hybrid and Scion iQ compact models (the latter for fleet sales only) as it expands its EV offerings.

It’s believed that Tesla is adapting the lithium-ion battery system already used in its Tesla Roadster luxury sports cars for the new Toyota RAV4 EV.

While the Roadster is manufactured in England, Tesla is preparing build its more moderately priced Model S sedan EV at the former Toyota assembly plant in Fremont, Calif., for introduction in 2012. That plant has a stated capacity of 500,000 vehicles per year, raising speculation that the Toyota RAV4 EV will be built there, too.

That plant also manufactures the battery packs and motors to be supplied to Toyota.

Toyota has been building its involvement with Tesla over the past 18 months. In addition to the technology development and supply deals, Toyota sold the defunct Fremont plant (made useless by General Motors’ departure from their joint venture) to Tesla for a comparative bargain of $42 million, and it invested $50 million to acquire a 3% holding in the start-up automaker.

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