Tesla-Toyota Alliance Takes Shape: First Up, Conversions

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When Tesla Motors (s TSLA) and Toyota Motor Corp. (s TM) first announced plans to collaborate on electric vehicle projects back in May, many of the details on how the partnership would unfold remained fuzzy. Now some of the fog is lifting, as Tesla has said that by the end of this month it plans to deliver two prototypes of electric vehicles to Toyota — both converted from current Toyota models.

Toyota, for its part, has pulled back the curtain a bit on its goals and motivation for working with Tesla, explaining on Friday in Japan that it aims to evaluate the potential benefits of Tesla’s battery pack design, which involves thousands of lithium-ion battery cells (like the kind used in laptop computers), rather than larger cells and fewer of them.

At this stage of Tesla and Toyota’s alliance, it sounds a lot like what California Governor Arnold Schwarzenegger described when he leaked word of the deal at a Google (s GOOG) event several hours before the official announcement at Tesla. At the time, Schwarzenegger said the two automakers would be, “forming a partnership, where they take one of the Toyota cars and make them electric.”

Tesla later said that Toyota had agreed to invest $50 million in the company following its IPO (giving it an approximately 3 percent ownership stake), that Tesla planned to buy the old NUMMI plant in Fremont, Calif. (from Toyota and Motors Liquidation Co., aka the Old GM), and that the pair planned to “form a team of specialists” to “cooperate on the development of electric vehicles, parts, and production system and engineering support.”

In a filing with the SEC, Tesla also said it expected to “receive Toyota’s support with sourcing parts and production and engineering expertise for the Model S,” while acknowledging that firm supply agreements were not in the bag. Tesla wrote that it had “not entered into any agreements with Toyota for any such arrangements, including any purchase orders, and we may never do so.”

Outfitting a pair of Toyota vehicles (rumored today to be a RAV4 and a Lexus RX) for prototype testing with Tesla battery packs and motors might sound like a let-down compared to grand visions of Toyota cranking out electric cars in larger numbers with Tesla tech inside. But it’s an important first step that may or may not lead to a more lucrative, longer-term supply deal for Tesla, and a reality check on the lengthy process for bringing new technologies from young companies into production vehicles.

As we’ve written before, the Toyota deal is not a silver bullet for Tesla’s mass market goals, but it might help and as long as stockholders and potential customers have a realistic picture of how the alliance is taking shape (avoiding the unpleasantness of disappointment and disillusionment), it probably can’t hurt.

Photos courtesy of NAIAS and Tesla Motors

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Nooo Josie, where is my daily tesla stock price update? I can’t live wiiithout it!! ;)

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