Telsa, Toyota Unveil Extensive Electric Vehicle Development Agreements; Specifics of Lexus Recalls Come Out
PALO ALTO and TORRANCE, Calif. — Late last week, Tesla Motors and Toyota Motor Corp. revealed extensive engineering, financial and production agreements, all stemming from development of electric vehicles and parts.
Toyota also shared more details and a remedy plan about its latest round of recalls connected with several Lexus models.
Furthermore, Toyota has agreed to purchase $50 million of Tesla's common stock issued in a private placement. Executives said the purchase would close immediately subsequent to the closing of Tesla's currently planned initial public offering.
And in a related development, Tesla announced it has purchased the former NUMMI factory in Fremont, Calif., a plant formerly utilized by Toyota. Tesla intends to build the Model S sedan and other future vehicles at the facility.
Both Tesla and Toyota went on to emphasize their commitments toward more vehicle technology that uses alternative energy and how this new cooperation aids those efforts. The two companies intend to form a team of specialists to further all of these those efforts, including a production system and engineering support.
Toyota reiterated that the Prius hybrid vehicle rolled out in 1997, and that the automaker began to lease a plug-in hybrid version of the unit late last year. Executives hope to introduce electric vehicles by 2012.
Meanwhile, Telsa contends it's currently the only automaker in the United States that builds and sells highway-capable electric vehicles in serial production. The company insists the Tesla Roadster can accelerate faster than most sports cars yet produce no emissions.
"I sensed the great potential of Tesla's technology and was impressed by its dedication to monozukuri (Toyota's approach to manufacturing)," noted Toyota president Akio Toyoda.
"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," Toyoda continued.
"Decades ago, Toyota was also born as a venture business," he added. "By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business spirit,' and take on the challenges of the future."
Tesla chief executive officer and co-founder Elon Musk echoed Toyoda's enthusiasm about the potential of the cooperation between the automakers.
"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," Musk stated.
"We look forward to learning and benefiting from Toyota's legendary engineering, manufacturing and production expertise," Musk went on to say.
More Details about Tesla's NUMMI Factory Acquisition
Tesla believes the NUMMI factory that was used by Toyota to produce the Corolla and Tacoma is one of the largest, most advanced and cleanest automotive production plants in the world.
Executives emphasized that the plant is capable of producing half a million vehicles per year or approximately 1 percent of total worldwide vehicle production. They also mentioned the facility was the birthplace of the Toyota Production System, a strategy Tesla thinks has been widely copied by other companies. Tesla stressed the system leads to dramatic quality improvements and unprecedented manufacturing flexibility and worker satisfaction.
Telsa highlighted how the facility is located in Fremont near northern California's Silicon Valley and the automaker's Palo Alto headquarters. Executives are looking to hire top engineers from the region while maintaining a tight feedback loop between engineering, manufacturing and other divisions within the company.
Toyota produced its last vehicle at the NUMMI factory last month. Tesla indicated that it began discussions to acquire the site this spring when it was also evaluating opportunities in Downey and Long Beach. Executives noted the turnkey nature of the facility with its recent production of vehicles and its considerable room for expansion made it stand out from other sites.
"The Tesla factory effectively leverages an ideal combination of hardcore Silicon Valley engineering talent, traditional automotive engineering talent and the proven Toyota production system," Musk explained.
"The new Tesla factory will give us plenty of room to grow," Musk added.
One of the first vehicles expected to be built at this newly acquired plant is the Model S. Tesla unveiled the unit in March of last year with anticipated base price of $49,900, including a federal tax credit. The company projects the vehicle can travel more than 300 miles per charge.
"The Model S is expected to be the first pure electric premium sedan and is designed from the ground up to take full advantage of the electric vehicle architecture," Tesla executives stated.
Notification, Remedy Plans for Latest Lexus Recalls
Also coming out late last week, Toyota Motor Sales USA executives officially announced the details of their latest voluntary safety recall. This one includes approximately 3,800 Lexus units — late 2009 and certain 2010 model year LS 460 and LS 600h L vehicles in the United States. These vehicles are equipped with Variable Gear Ratio Steering (VGRS).
The recall is meant to address a temporary steering wheel off-center condition that may develop under a specific driving maneuver. The automaker insisted no other Toyota, Lexus or Scion vehicles are involved in this recall.
As soon as the remedy parts are available, Lexus officials plan to send notification letters by first class mail to owners of the involved vehicles. They said the letter will advise owners to bring their vehicle to a Lexus dealer to have the steering control computer replaced with a newly designed one at no charge.
Company officials expect the computer replacement to take less than one hour, depending on dealer workload.
"We have developed a remedy that will be quickly put into place to help address customer concerns," explained Mark Templin Lexus group vice president and general manager.
"We will be notifying owners of involved 2009 and 2010 LS models to modify the Variable Gear Ratio Steering system, and Lexus dealers will be contacting owners shortly to set up appointments," Templin continued.
"Our dealers will service customers' vehicles as quickly and conveniently as possible by providing remote repairs and pick-up and delivery service, and fueling and washing customer cars," he went on to highlight. "We will provide a courtesy vehicle to anyone who has purchased a 2009 or 2010 LS requiring this modification and has concerns about driving it until the work has been completed."
The company explained the VGRS system enables easier handling during low-speed driving and provides better stability during high-speed driving than conventional steering by changing the gear ratio.
Officials believe the VGRS system may exhibit a temporary steering wheel off-center condition after driving away quickly from a very tight turn where the steering was at full lock position. They went on to state the steering wheel off-center position will automatically be corrected in approximately five seconds by the VGRS system as the vehicle is driven. The automaker contends the driver may notice the system auto correcting as the steering wheel slowly moves to the center position while driving straight during the VGRS correction.
Due to the specific driving circumstances, OEM executives stressed this condition will not occur during normal driving such as changing lanes or turning at intersections. Lexus officials recently received one customer report in the U.S. regarding this condition, adding that no accidents or injuries have been reported.
"Our entire company is taking major steps to become a more responsive and safety focused organization," emphasized Steve St. Angelo, Toyota's chief quality officer for North America.
"We're listening closely to our customers and taking action to address this steering issue in certain Lexus models quickly," St. Angelo added.
More information is available at through the Lexus customer satisfaction department at (800) 255-3987 or at www.lexus.com/recall.