Tesla Confirms Toyota Will Ditch Electric Car Partnership Later This Year

Toyota’s RAV4 EV is one of the most versatile plug-in cars on the market today, thanks in part to its Tesla-engineered battery pack and drivetrain.

Tesla's partnership with Toyota is about to end.

Tesla’s partnership with Toyota is about to end.

But come the end of this year, when Toyota reaches its mandated-by-law sales target of 2,600 units in the state of California, the Japanese automaker will end production of the plug-in SUV. And that means it will end its partnership with Tesla Motors [NASDAQ:TSLA] too.

Revealed in the Q1 earnings report made last week, Tesla has confirmed that Toyota’s reliance on it for battery packs and drivetrains for its RAV4 EV will come to an end this year.  Initially valued by Tesla CEO Elon Musk as being worth $100 million to the company, the three-year agreement between the two firms was inked in 2011, just as Tesla was preparing its Model S sedan for market.

When the agreement was first signed, it was mutually beneficial to both companies. Toyota — which had purchased $50 million in Tesla stock the year before — was able to rely on Tesla’s expertise to produce a drivetrain and battery pack for a car it was being forced to make under Californian law instead of developing the technology in-house. Tesla meanwhile, was given a line of income at a time at a point where it had yet to start Model S production but was incurring high research and development fees and rapidly expanding business costs.

In its Q1 filings, Tesla is pretty specific. “Toyota is expected to end the current RAV4 EV model this year,” it said. Yet Toyota isn’t quite as committal. In a public statement to BloombergToyota Spokesperson John Hanson said Toyota hasn’t made a decision on what comes next.

“This was a project for a specific number of vehicles that we planned to sell for a specific number of years,” he said. “We have not made any announcement about the relationship or what we’ll do with Tesla in the future.”

Tesla says Toyota will end its partnership this year. Toyota says nothing.

Tesla says Toyota will end its partnership this year. Toyota says nothing.

Yet Toyota, which is mandated by Californian law to produce a specific number of zero-emission vehicles under Californian Zero Emission vehicle (ZEV) mandates, has another ZEV qualifying car in the pipeline: the as-yet unnamed by heavily promoted hydrogen fuel-cell sedan Toyota says it will bring to market next year.

As a consequence, Toyota no longer needs an electric car in order to meet California’s ZEV requirements.

What’s more, the Toyota RAV4 EV is currently costing Toyota a lot of money, with the Japanese automaker stumping up lease deal incentives totalling more than $16,500 in an attempt to ensure enough of them are sold before the end of the year.  Add to that an historical mistrust of electric car technology on the part of Toyota — demonstrated nicely by anti-plug-in ads from its luxury brand Lexus last week — and it’s clear to see that Toyota’s near future doesn’t contain an all-electric vehicle.

Of course, the ending of the three-year deal isn’t exactly news per say: we’ve known the symbiotic Toyota-Tesla partnership on the RAV4 EV was transient in nature and would only endure as long as it was beneficial for both parties. With the goods all but delivered to Toyota and Tesla ramping up to provide batteries and power trains to Daimler for its soon-to-launch Mercedes-Benz B-Class Electric Drive, the Californian automaker won’t lose much sleep over the closing of its Toyota partnership.

But for Toyota? With less than a year to go before its hydrogen fuel cell car hits the market, no official name given and hydrogen fuel cell refuelling infrastructure far less common than even electric car charging infrastructure was when cars like the Nissan LEAF launched in 2010, we’re curious to see what happens next — and if Toyota can make good on its promises of a truly affordable, mass-market H2 car by the end of next year.


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  • Andyj

    One thing I’d make clear to Toyota. I won’t want any car with an H2 tank within 150′ of my person.nnnThey are an engineering basket case who’s fuel is CO2 dirtier than an energy hungry steam train and costs a minimum of $11/litre to buy — in bulk!nAny idiot who plays nice to this technology has zero credibility when it comes to independence from fuel providers.nnnNo thank you!

    • Hydrogen cylinders are actually amazingly safe and the fuel can be made from renewables, mandated in CA. nnFuel is also free on all upcoming hydrogen leases like on the Tucson.

      • Andyj

        Of course H2 cylinders are amazingly safe. They are tested often. Replaced often. Stored correctly. Few connectors, pipes and equipment stays bolted to. There is no way you can keep a pressure vessel of H2 under your car, unchecked for a decade. Hydrogen embrittlement happens. The parts that attach more so. Storage in unventilated areas are a no-no.nPeople whine Li-cells use “rare Earths” which are barely rare Earth. These units use expensive nobel elements by the bucket load. God help you when they get dirty.nH2 is simply a scam to keep people trapped into buying from a central resource. It’s u00a311/litre. Totally pointless.

  • Ed Logan

    I wonder what is going to happen when people need Tesla Rav 4 EV parts. Any one know?

    • Tesla will take care of them. I’m sure there is a law (and warranty coverage) for a decade at least of parts. Plus, people will want to hack and upgrade them as batteries improve and become cheaper. It needs to be modded for QC, for sure!

  • “At Toyota, we’re doing as little as legally required to promote electric and pollution free transportation.” nnThe Prius used to be the cool green car, now people just laugh at their polluting idling on startup, gasoline and motor oil use. The Leaf and Fiat 500e, Spark, Soul EV, all twenty minute quick charging cars are far cooler!nn

  • I drove the EV RAV 4 in Marin as it’s mostly Tesla parts and the Model S had a long wait list. It’s an amazing vehicle, so fast and silent, great power. It’s really sad Toyota pushes so many gas hogging trucks and massive SUVs no Japanese would ever buy in their home country. nnPrius used to be a cool green car, now even the plug in is just sad and a super vote for mediocrity in the face of all these excellent, twenty minute quick charging EVs.

  • danwat1234

    Toyota still needs a Tesla electric motor, or an in-house electric motor is order to deliver power to the wheels of their hydrogen cars! Their hydrogen cars will still have an electric drivetrain. But no need for a large battery pack, just a small one.

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