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Toyota RAV4 to Go Electric in 2012, as Result of Tesla Supply Deal
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July 20, 2011

Toyota RAV4 to Go Electric in 2012, as Result of Tesla Supply Deal

By Cheryl Kaften
TMCnet Contributor

According to a June 15 filing with the U.S. Securities and Exchange Commission, innovative electric automaker Tesla Motors of Palo Alto (News - Alert), California, has closed a $100 million supply deal with Toyota Motor Corp., to produce an electric version of Toyota’s RAV-4.

In a company statement, Japan-based Toyota commented that the new RAV4 EV vehicle would represent an important milestone in Toyota’s unique collaboration project with Tesla.

Tesla and Toyota have had an EV research and development agreement for the past year. At that time, Toyota agreed to purchase $50 million worth of Tesla’s common stock issued in a private placement to close immediately subsequent to Tesla’s initial public offering, in July 2010. 

Under the current deal, Toyota explained, “Tesla is responsible for supplying the powertrain and related components according to Toyota engineering specifications while [we work] to seamlessly integrate the powertrain.” According to the filing, the electric powertrain comprises a battery, charging system, inverter, motor, gearbox, and associated software.

Tesla Motors likes to describe its own cars as “No hybrids. No hydrogen. No hype.” The company was founded in 2003 by a group of Silicon Valley engineers who were committed to designing the best EVs, and nothing else. There are now 18 Tesla stores and more than 1,650 emissions-free, high-end cars on the road worldwide.

In addition, Tesla uses its electric drivetrain to convert other makes into “vehicles powered by Tesla.” Within the past few years, Tesla has worked with Germany's Daimler AG on powertrain components for an electric version of the German company's Smart two-seater city car.

The new RAV4EV is expected to be on the market by 2012. In comparison to the RAV4 V6, Toyota said that the RAV4 EV electric powertrain would add 220 pounds, yet the rate of acceleration would be nearly equal. Actual real-world driving range for the EV is estimated to be 100 miles from a full battery charge.

According to, this deal comes at a really important time for Tesla, which may experience a difficult financial period after it stops producing its inaugural car, the Roadster, at the end of 2011 (which generated the bulk of its revenues), and before it launches its second EV, the Model S sedan, in 2012. But this supply deal will go a long way toward keeping the revenues coming in.

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 said in March that the current RAV4 EV R&D deal was 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 the R&D portion of the Toyota RAV4 EV deal -- not including the initial $50 million investment by Toyota in 2010.

For more information on the RAV4EV, visit the Toyota website.

Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.

Edited by Tammy Wolf

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