'Historic' Toyota/Tesla deal will use NUMMI plant

Electric cars to be produced at former Fremont New United Motor Manufacturing plant

A partnership between Toyota Motor Corporation and Tesla Motors to produce electric vehicles will bring jobs back to the New United Motor Manufacturing (NUMMI) plant in Fremont, CEOs Elon Musk and Akio Toyoda announced this afternoon in Palo Alto.

Toyoda waxed poetic about his first drive in a Tesla Roadster in Southern California six weeks ago:

"I felt the wind -- the wind of the future," he said.

Toyota is investing $50 million in stock in the company and will partner with Tesla to manufacture electric vehicles, Toyoda said.

Musk said Tesla is purchasing the NUMMI plant, for an undisclosed sum. Toyota and General Motors Co. closed the plant in early April and terminated 4,700 workers, but thousands of others who worked for parts suppliers -- as many as 25,000 by some accounts -- were also affected.

Tesla will begin production of its Model S electric sedan in 2012. A 300-mile range, seven-seat SUV will also be manufactured at NUMMI, he said. Once it reaches full production, Tesla expects to produce 20,000 vehicles a year at the NUMMI plant.

Initially only a small corner of the 5.4-million-square-foot plant will be used, but Musk said he expects the entire facility will eventually be utilized.

Musk said he expects a third-generation vehicle in the $30,000 range will be produced "in the hundreds of thousands." He pointed to Toyota's Corolla as inspiration.

The partnership could create 1,000 jobs initially and eventually as many as 10,000 worldwide. Half of the jobs are expected to be at NUMMI and the other half would be with suppliers, Musk said.

Fremont City Councilwoman Suzanne Lee-Chan said the city is still sorting out the effects of the plant's closure.

"It's a shot of fresh air because of all the things happening. There is always a concern when a large plant or military installation closes that it could just sit there and decay," she said.

Toyoda recalled that decades ago Toyota was also a young venture business like Tesla.

"Toyota will provide the DNA of car making that NUMMI developed over 25 years will continue on," he said.

Gov. Arnold Schwarzenegger, who also spoke, said the deal was aided by tax incentives.

"What we are witnessing today is an historic example of California's transition to a cleaner, greener, more prosperous future," he said.

Musk said the company will receive a sales-tax rebate on equipment for capital equipment purchases that could amount to $20 million. But he stressed the company only gets that incentive if it buys the equipment -- and Tesla will only buy the equipment if it sells cars.

Musk said Toyota and Tesla came to their agreement quickly. "Toyota was just as fast as Tesla," he said, punning on the car's acceleration.

Tesla will produce powertrains for Toyota and other car manufacturers. "We're not trying to hold our technology close to our vest," Musk said.

Tesla will ship its first Roadsters to Japan next month and perhaps as early as in a week, he said. The market in Japan is expected to be significant, he added.

Asked about Toyoda's test drive of the Tesla, Musk said the veteran car manufacturer handled the car confidently.

"He was really putting it through its paces," he said.

Rep. Anna G. Eshoo issued a statement upon Tesla's announcement of its partnership and plans to use the NUMMI plant.

"Tesla is an instructive example of what Silicon Valley represents -- a business expanding America's intellectual and technological horizons.

"Continuing this tradition, today Tesla is turning a Bay Area loss into a national win. The partnership at NUMMI will create hundreds of green jobs and drive the advancement of electric vehicle and clean energy technology," she said.

Eshoo said the Department of Energy's Advanced Vehicles Technology Manufacturing Incentive Program, from which Tesla secured a loan, "is proving its value, making smart investments in 21st Century technologies which will position America to compete and become the global leader in producing clean energy."

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Like this comment
Posted by R.GORDON
a resident of another community
on May 21, 2010 at 11:34 am

R.GORDON is a registered user.

This is all about a few individuals making money with a product which is going to be outdated by the time it makes its first experience.
All to save face for the Govt. giving substantial bucks--$500 million to develop this "luxury vehicle" which one can buy today but will not see mass production, probably----never.
Toyota is the very worst partner TESLA could have picked when they announced yet ANOTHER 5000 cars recalled today......Talk of giving jobs to 2,500 people is great, but it is going to be temporary when this sad attempt to make a "Volkswagen" like Ferdinand Porsche and Hiltler succeeded in doing. Not a millionaire's sportscar with a very weak partner in Toyota and since the private plane crash deaths of the developers recently from TESLA. Who can you count on?
In case no one knows it....California is broke. The investors in this I can guarantee will come from the multi millionaire's who lost in the banking scandals who will find a way to make points without investing a dollar of their own. This is just an extension of greed and not practicality.

Like this comment
Posted by R.GORDON
a resident of another community
on May 21, 2010 at 11:39 am

R.GORDON is a registered user.

CORRECTION......."Appearance" instead of "experience".

Ahnold would be a lot wiser to stand behind HSR instead of leaving his California legacy in the hands of a HUGE gamble and a lot of millionaires. I will bet he has his own money in this venture since he is not as rich as before and is too old to beat up anyone on screen.

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