Toyota’s Electric RAV4: Will Tesla Get the Supply Deal?


Toyota (s TM) and Tesla (s TSLA) have been working on prototypes outfitting Toyota’s classic SUV, the RAV4, with Tesla’s electric vehicle tech. We even checked out an early version of the so-called RAV4 EV at the L.A. Auto Show last year (see video below). But will the commercial version of Toyota’s RAV4 EV, which Toyota wants to sell in 2012, end up using Tesla as a supplier? That still doesn’t seem like it’s been determined yet, according to Tesla’s latest S1, which it filed yesterday detailing that it is raising another $214 million in a combination of a public offering and a private placement.

Tesla says it has been on track delivering samples and prototype RAV4 EVs to Toyota, and for the most recent quarter that ended March 31, 2011, Tesla’s development services revenue hit $15.4 million, largely driven by its work on the RAV4 EV. Tesla says it has been hitting all the milestones for the RAV4 EV agreement, and that the current RAV4 EV deal is expected to deliver another $45 million in additional revenue for “the remaining development services which we currently expect to complete in the fourth quarter of 2011 or the first quarter of 2012.” In total, Tesla expected to reap about $60 million from Toyota for the deal.

However, Tesla’s current RAV4 EV deal seems to end there with development and prototypes, and Toyota doesn’t seem like it has determined yet if Tesla will have the deal as the supplier of technology for the 2012 production RAV4 EV (or at least hasn’t informed Tesla yet). Tesla says “we are negotiating with Toyota to finalize a separate agreement to supply production parts for that [2012 RAV4 EV] project; however, no agreement has yet been executed and there are no assurances that we will be able to enter into any such agreement.” Tesla says it doesn’t have any signed agreements for powertrain component sales after 2011, according to its filing.

Toyota invested $50 million in Tesla following its IPO for an approximately 3 percent ownership stake, and clearly turned to the company for its technology expertise and innovation. It’s a big win for Tesla to have the support of Toyota on its side. But we’ll see if Toyota ends up doing the RAV4 EV production deal with Tesla. As we noted back in 2010, prototype deals don’t always turn into supply agreements for production cars. Toyota engineer Greg Bernas told me at the L.A. Auto Show (see video below) that while the prototype RAV4 EV is basically a RAV4 with Tesla’s Roadster tech inside, the next generation “Phase 1” RAV4 EV vehicle will be a completely different vehicle.

This isn’t the first time Toyota has decided it wants to launch an electric version of its RAV4. Toyota produced and sold about 300 units of the plug-in SUV before discontinuing it in 2003. But this time around, Toyota has been particularly interested in evaluating the potential benefits of Tesla’s battery pack design, which involves thousands of lithium-ion battery cells like those used in laptop computers.



I’ve read that 35 proto-type e RAV4’s were to be produced. Do you know if the $9 million plus $60 million that Tesla’s CFO mentioned in a conference call covers both the development services and the 35 drive trains?

Also, some of Tesla’s follow-on public offering is to be used for the Model X, do you think if Toyota does use Tesla for the production e RAV4’s, Toyota may skim off potential Model X buyers since it will be earlier and cheaper with essentially the same technology for the drive train.


Toyota may be just using Tesla as a way to start up their EV technology, with the intention to change to Toyota’s own for production. Greg Bernas’ statement seems to support this idea, and I don’t see Toyota as a company that would choose to use someone else’s tech.

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