Toyota-Tesla deal to develop electric cars in danger?

Article by Christian Andrei, on August 25, 2010

In a regulatory filing, Tesla Motors Inc. announced that it has yet to enter a formal deal with Toyota Motor Corp. and that it only had "announced an intention to cooperate" with regards to a plan to offer low-polluting vehicles in the US. Many take this to mean that the impending deal between the two seem to be suffering setbacks.

Last week, Tesla and Toyota revealed a joint bid to develop electric cars, auto components, production systems and engineering support. Toyota then said that it will purchase an undisclosed stake in Tesla for $50 million.

Tesla also disclosed a plan to buy for $42 million a closed Toyota-General Motors Co. joint venture factory, the NUMMI (New United Motor Manufacturing Inc.), in California, where it will produce the Model S, a sporty electric sedan, and other vehicles.

 Some cracks in the deal are said to appear when Toyota said it will still develop its own range of electric vehicles. Toyota made a statement that Tesla's long-distance models would mean more options.

With Tesla's filing that disclosed that Toyota's $50 million stake buy offer will lapse if it fails to go ahead with a planned initial public offer (IPO) this year, many commented that all may not be going smoothly.

Last January 29, Tesla had announced that it wants to go public and raise about $100 million from the initial share sale and together with a $465 million government loan, it aims to pay for factories and equipment calculated to cost up to $125 million this year and for acquisitions.

In Tesla's amended IPO filing, the two companies are described to only have plans but still have no agreement to make the electric vehicles. In the prospectus, Tesla said that it has not reached any deals with Toyota, that there are no purchase orders, and that [it] may never do so."

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