Tesla Wins $100 Million Supply Deal With Toyota for RAV4 Electric Cars

Tesla Motors Inc., maker of electric Roadster sports cars, it reached a three-year agreement with Toyota Motor Corp. to supply powertrain equipment worth about $100 million.

Toyota, which previously agreed to pay Tesla $60 million to develop lithium-ion batteries and motors for use in electric vehicles RAV4, is paying the additional funds for packs and motors for the vehicle that goes into production next year, Tesla said in a regulatory filing.

"Toyota has reasonable confidence Tesla is well-positioned within the battery-vehicle market," said Alan Baum, principal of automotive consultant Baum & Associates in West Bloomfield, Michigan. The $100 million "isn’t a huge amount for Toyota, so this allows them, with only modest downside risk, to participate in what Tesla is doing."

Toyota, the maker of the Prius, the world’s best-selling gasoline-electric hybrid, is planning next year to sell more electric-drive models, including a version of the Scion iQ subcompact and a plug-in version of the Prius that runs about 13 miles on battery power before the engine kicks in and the car starts running like a regular Prius.

The automaker bought a 2.9 percent stake in Tesla last year, as part of a deal in which the startup, led by Elon Musk, acquired a former Toyota-General Motors Corp. auto-assembly plant in Fremont, California.

Tesla is to begin making its Model S electric sedan by mid-2012 at the factory, where it will also make the battery packs and motors for the Toyota model. The plant was shed by GM when it filed for bankruptcy in 2009 and is not part of the current General Motors Co.

"This is just the next step as the relationship progresses," said Mike Goss, a spokesman for Toyota’s North American engineering and manufacturing unit. Toyota hasn’t decided the final production site for the electric RAV4, he said. The gasoline-powered RAV4 is built at Toyota’s Woodstock, Ontario plant.