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Tesla-Toyota Team-up Tentative

June 14, 2010

Can A Silicon Valley Tech Start-up and A Trouble Japanese Auto Giant Find Happiness with Government Help?

Our May 22 post discussed the industry changing potential of the Tesla and Toyota proposed partnership. There’s a lot of high-stakes drama in this tentative deal that involves Telsa, Toyota, Tax dollars, the Terminator and the Teamsters (UAW really).

The tentative agreement of Toyota investing $50 million in the sexy but risky Tesla Motors is dependent on a successful Initial Public Offering (IPO) for Tesla stock before year’s end. Telsa has great brand recognition, leading edge Electric Vehicle (EV) technology, blistering performance in a head-turning beautiful body.  But, the company is not yet profitable and the stock market is still cautious and skeptical of chancy IPOs.  See the initial public offering of shares of common stock of Tesla Motors, Inc.  Here…

In addition, Tesla is already partially owned by Mercedes-Benz parent Daimler AG. Autopia reported. “Daimler’s investment in Tesla Motors provides both companies with something they desperately need and could be the first step down the aisle toward marriage.” But now Tesla is proposing a tryst with Toyota? And isn’t Tesla Motors‘, CEO Elon Musk in the middle of a messy personal divorce where he just claimed. “About four months ago, I ran out of cash.”

Daimler the world’s oldest automaker hitched its electric wagon to Tesla on May 18, 2009 when it bought nearly 10 percent of the company and a seat on its board. Neither side is discussing specifics of the deal, reportedly worth $50 million, but both sides walk away winners.

Tesla gets a much-needed infusion of cash and help building the gorgeous Model S sedan. More importantly, Tesla gains legitimacy as it continues raising funds. Having the company that invented the automobile as a partner makes you much more attractive to investors.” Read More in Autopia…

In January 2010, Tesla received a $465 million loan from the U.S. Department of Energy to help the company produce the Model S and build a manufacturing center to assemble the cars. It was the second company to draw from a $25 billion loan program passed by Congress to help automakers meet tougher fuel economy and emissions standards. Elon Musk, Tesla’s CEO, said the money would be used to “further accelerate” the production of electric cars.

$42 million of the loan would be used to purchase the NUMMI plant in Fremont, CA, from New United Motor Manufacturing Inc., or NUMMI, which is a joint venture between Toyota and Motors Liquidation Co. Formerly a joint venture with General Motors, NUMMI was the Toyota’s only U.S. union plant. The UAW was brought into NUMMI due to GM’s agreements with the UAW.

It is hoped that Toyota would help Tesla learn how to bring their Roasters and new Model S into profitable production in the retooled facility.

“Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from Tesla’s challenging spirit, quick decision-making and flexibility. That is a big part of the reason we decided to partner with Tesla.” – Toyota President Akio Toyoda

May 21, 2010 — Toyota and Tesla will cooperate on the development of electric vehicles, parts, and production system and engineering support. See the complete story at TheAutoChannel.com.

Not everyone thinks this is a marriage of compatible partners. The NY Times reported.  James Bell, an executive market analyst at Kelley Blue Book, is skeptical. “I think it opens up more questions than it answers,” he said. “It’s a real confirmation for Tesla, its vision and what it’s trying to do, but it also indicates that Toyota’s electric car technology could be lagging behind Nissan’s. It’s a partnership that could be ripe for unraveling. Toyota is sort of slow and methodical, and how well will that integrate with Tesla, which shoots from the hip as it makes deals and partnerships to build up its business?”

Union urges and spurned ex-lovers…

“In terms of the infrastructure of the building, I know pretty much a lot about its detail. In terms of moving in there, probably this fall we will have access to the facility,” Tesla’s Vice President of Manufacturing Gilbert Passin said.

Tesla will start by hiring about 500 people and says by the time production begins in 2012 on the Model S, it will need 1,000 new employees.

The United Auto Workers or UAW is pushing for the joint venture operation to have a union shop but Tesla is not making any promises.

“It’s a little early to talk about that. Honestly, we are looking to establish a Tesla culture where we have a very good rapport with our team members,” Passin said.

View the ABC News on the deal see this report…

Union says NUMMI Plant, Former Workers ‘Should Be Hired First’

by Steven J. Ewing (on May 21st 2010 at 3:01PM, [Source: Reuters |

Yesterday, Toyota and Tesla announced that the two companies would be collaborating on electric vehicle development. Tesla will be taking over the NUMMI factory in Fremont, California, which was recently closed. Now, the United Auto Workers is urging Toyota to hire union workers to operate the plant, giving jobs back to the people who were rendered unemployed after the NUMMI shutdown.

UAW president Ron Gettelfinger has issued the following statement:

“Our union’s hope is that this venture will give first hiring preference to former NUMMI employees who are already trained and highly skilled.”

As you’ll recall, NUMMI was closed at the beginning of April after the Toyota/General Motors joint venture fizzled, a development that left roughly 4,500 union workers unemployed. Thus, it only makes sense that the UAW would be fighting to reinstate these workers’ jobs now that Tesla plans to build its Model S sedan at this facility.

Read full article and illuminating pro/con comments from readers about unions and NUMMI here…

Local NUMMI union workers have expressed frustration with the UAW leadership in the following Feb. 4, 2010 video.

UAW 2244 workers at the NUMMI Toyota GM plant speak out about the closure of the plant, the bankruptcy of GM and the strategy of the UAW international and local union officials.

So will this high tech entrepreneurial and industry giant match-up lead to automotive bliss? Or is it too tentative, too tenuous and too traumatic to make a lasting relationship? Will the UAW be able to keep a place on the plant floor? And what about the spurned Tesla lovers in Downey, left high and dry? Will they hold their peace as Toyota and Tesla walk down the aisle? Or what kind of nasty retribution are they plotting?

Stay tuned, the drama continues…

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