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Inside Tesla and Toyota’s deal to co-build the all-electric RAV4

Two months after announcing their informal intention to build an electric vehicle together, Tesla Motors and Toyota have made their relationship official, inking a deal to co-produce an all-electric edition of Toyota’s RAV4 SUV.

According to the companies, two prototypes already exist, and the car could be ready for mass production as soon as 2012 — tying Tesla’s all-electric sedan, the Model S, to market. The new RAV4 will be distributed and sold by Toyota, but Tesla will be providing the secret sauce: its electric powertrain, including the battery pack.

In addition to the tandem-produced car, the formal deal between the two companies includes the joint development of automotive components, manufacturing processes and engineering systems. Most of this will be played out at the 379-acre former-NUMMI automotive plant in Fremont, Calif., which Tesla bought for $42 million at the same time it announced its partnership with Toyota.

For a while, there was doubt that a Toyota-Tesla car was even on the horizon. Shortly after the agreement was announced in May, it became clear that there was no official deal between the two companies to jointly produce a vehicle. Toyota said it would pump $50 million into Tesla upon its IPO (acquiring a 3 percent stake), but that was it. Now, after Tesla’s lucrative public sale, the partnership is forging ahead.

The original RAV4 (pictured above) is an older Toyota model that launched in 2003 and saw lackluster sales. It is one of two electric prototypes Tesla says it will be co-developing with Toyota — the other will be based on Toyota’s Lexus RX, according to an inside source. The plan is to first develop a fleet of the cars within the next year for testing before taking them to market. That said, there’s no guarantee they will actually make it into showrooms, at least yet.

The same source says that Toyota may be working independently on an all-electric version of its Corolla, which isn’t as well suited to Tesla’s powertrain systems, particularly the weight of the battery packs involved.

[Update: Referring back to the official press release, a Tesla spokesperson said that the two companies' current plans are limited to the RAV4.]

The cars Toyota and Tesla are partnering on are expected to have a driving range of at least 150 miles on a single charge, and cost around $40,000 — competitive with Tesla’s forthcoming Model S, but not so competitive with the cheaper Chevrolet Volt and Nissan Leaf, both of which are coming out later this year and slated to cost around $30,000 before rebates.

If both cars do become a reality, Tesla won’t have to worry about taking advantage of the Fremont factory’s capacity. Before the official deal to build cars together, analysts wondered whether the electric car maker would be able to afford the facility — capable of churning out 500,000 cars a year — especially with its plans to make only 20,000 Model S sedans there a year. Now this future is starting to look more certain.

The development seems to have had an impact on both companies’ stock prices. Tesla (TSLA) jumped 6.15 percent today to close at $21.91 a share, rising above its initial public offering price of $19, and coming almost level with its impressive $23.89 first-day close. The recent news clearly improved investor confidence.

Toyota’s (TM) share price eked up 0.66 percent to $71.22 today.

Also today, Tesla announced that it has expanded its Roadster’s footprint, delivering units to Japan, Hong Kong, Poland, Turkey and Canada. About 1,200 of the cars have been sold in 28 countries to date.

http://green.venturebeat.com/2010/07/19/tesla-toyota-rav4/