Toyota to invest $50 million in Tesla

Toyota has agreed to invest $50 million in Tesla, the niche US builder of battery-powered sports cars, it has been announced.  The move comes as Toyota seeks to extend its dominance in petrol-electric hybrids into next-generation green vehicles. The deal will save a California Toyota plant from closure and could help to rebuild the Japanese company's reputation in the US following its recall of millions of its cars over safety fears. As part of the deal, Tesla will take over ToyotaÔÇÖs New United Motor Manufacturing plant in Fremont, California, which has the capacity to build 400,000 vehicles a year. The Japanese company had closed the plant in April. California's governor Arnold Schwarzenegger said that re-opening the plant would create 1,000 jobs in Fremont, going some way to offsetting the 4,500 jobs lost when the plant was closed. Tesla is a six-year-old start-up founded by Elon Musk, creator of the PayPal internet payment service, and backed by other Silicon Valley entrepreneurs. Toyota is the second big car maker to invest in the company after GermanyÔÇÖs Daimler paid $50 million for a 10 percent stake last May. Palo Alto, California-based Tesla makes the $109,000 Roadster electric sports car, of which it has so far sold around 1,000. Tesla will use the Fremont plant to produce its first high-volume vehicle aimed at mainstream buyersÔÇöthe Model S four-door family saloonÔÇöwhich is expected to have a price tag of around $50,000. It is hoped that production of the 300-mile-range car will eventually reach 20,000 units a year. Tesla will also help Toyota to develop its own electric offerings, the first of which, a short-range ultra-compact model, is expected to go on sale in 2012. Commenting on the deal, ToyotaÔÇÖs president Akio Toyoda said: "IÔÇÖve felt an infinite possibility about TeslaÔÇÖs technology and its dedication to monozukuri (ToyotaÔÇÖs approach to manufacturing). Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from the challenging spirit, quick decision-making, and flexibility that Tesla has. ÔÇ£Decades ago, Toyota was also born as a venture business. By partnering with Tesla, my hope is that all Toyota employees will recall that ÔÇÿventure business spirit,ÔÇÖ and take on the challenges of the future." Tesla CEO and co-founder Elon Musk added: "Toyota is a company founded on innovation, quality, and commitment to sustainable mobility. It is an honor and a powerful endorsement of our technology that Toyota would choose to invest in and partner with Tesla. We look forward to learning and benefiting from ToyotaÔÇÖs legendary engineering, manufacturing, and production expertise." The size of ToyotaÔÇÖs equity holding in Tesla has not been revealed, though it is estimated that the investment will give it a stake of around 2.5 percent. Toyota introduced the first-generation Prius hybrid vehicle in 1997, and has produced approximately 2.5 million hybrids in the 12 years since.