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Well, goodbye to all that. Toyota will not renew its partnership with Tesla, an electric-vehicle maker, this year. Many people were surprised when Toyota began the partnership just four years ago. Toyota had successfully developed the gas-electric Prius on its own, so enlisting help for an all-electric vehicle was unexpected.
Tesla agreed to buy a plant from Toyota (the site of another quitted partnership, that time by GM and Toyota) and in return Toyota invested $50 million in the hip, flashy company for a three percent ownership stake. The two companies agreed to develop electric vehicles together with Tesla going for the high-class market and Toyota taking everything else. Win-win, right?
Apparently not. The only Toyota vehicle produced from the partnership was an electric version of the RAV4. It was made available to California only, and has had trouble meeting its sales targets. Given that the cost of development was $100 million, meeting sales volume was kind of a big deal. In 2010 the market must have appeared more ready for electric vehicles than it actually was.
So what happens now? Toyota is retaining its ownership stake in Tesla, but will not pursue electric vehicles further. That will make Toyota quite different from many automakers. It might have simply been that Toyota saw the opportunity to invest in a highly-exciting company and bit off a bit more than it could chew. Tesla still owns the factory it purchased from Toyota and uses it to produce the Model S, which was the best-selling full-size luxury sedan category in the U.S. last year.
By ending the partnership, Toyota will have more resources to make its hybrid vehicles even better, and explore new technologies, like hydrogen fuel cell vehicles. For now, we’ll remember the good times with Tesla and how great it was at the beginning.
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